Tax on Carton Gift boxes and Shipping Charges
This query is : Resolved
15 February 2023
We are selling Sarees online which attracts 5% GST, we are thinking of enabling the "Gift box" option where customer can choose that if they want to gift wrap the product.
We need to know the % for the Gift box (Carton box), and the % on shipping charges.
If Gift box attracts 18%, then Shipping attracts 18% or 5% (saree %)?
We need to know the % for the Gift box (Carton box), and the % on shipping charges.
If Gift box attracts 18%, then Shipping attracts 18% or 5% (saree %)?
16 February 2023
GST will be applicable 18% on box.
20 February 2023
Hi Sir,
Thank you for your response, my query is, if Gift box attracts 18% then shipping also attracts 18% (higher tax rate) and if at all the supply is considered as Mixed then the Saree which is 5% now will also attract 18%?
Thank you for your response, my query is, if Gift box attracts 18% then shipping also attracts 18% (higher tax rate) and if at all the supply is considered as Mixed then the Saree which is 5% now will also attract 18%?
26 July 2025
This is a **very relevant query** for e-commerce sellers bundling products and services like **gift wrapping and shipping**. Let's address your concerns clearly with **GST rules** and implications for **Sarees + Gift Box + Shipping**.
---
## 🔍 Your Scenario:
* You sell **Sarees (5% GST)**.
* You want to offer a **gift box/wrapping** option (possibly at additional charge).
* You're charging **shipping** (delivery) separately.
* You're concerned about whether this leads to:
* **Mixed supply**, and
* Higher GST (18%) applying to the whole invoice.
---
## ✅ Key Concepts in GST:
### 1. **Composite Supply**:
* **Naturally bundled** items where one is the **principal supply**.
* GST rate of the **principal supply applies** to the whole bundle.
Example: Saree + shipping → Saree is principal, GST = 5%.
### 2. **Mixed Supply**:
* **Artificially bundled** items sold together for a single price, each having different tax rates.
* **Highest GST rate applies** to the entire bundle.
Example: Saree + chocolate box (18%) sold as a gift hamper → Entire bundle taxed @18%.
---
## 🧾 Application to Your Case
### A. **Gift Box Option – Optional Add-on**
If **gift wrapping is optional** and **charged separately**, then:
* **Saree**: 5% GST
* **Gift Box**: 18% GST
* **Shipping Charges**:
* If charged separately: **follows principal supply**, i.e., **5%** (as per CBIC Circular No. 47/21/2018-GST)
* If shipping is for gift box only: **18%**
* If bundled together as one price: Risk of **mixed supply** if not clearly separated
✅ **Best Practice**:
* Invoice clearly showing:
* Saree @ 5%
* Gift box (optional) @ 18%
* Shipping as a separate line linked to saree → charge 5%
---
### B. **If Gift Box is Mandatory or Included in Price**
* If customer has **no choice**, and it's always included → could be treated as **composite or mixed supply**.
* If **gift box is incidental** → 5% applies to full value (composite).
* If it's a separate product (significant value), and **not naturally bundled** → risk of **mixed supply**, and **18% may apply to entire amount**.
---
## ✅ Final Answer:
| Component | Tax Rate (if billed separately) |
| ---------------------------- | ------------------------------------------------ |
| Saree | 5% |
| Gift box/wrapping (optional) | 18% |
| Shipping (on saree) | 5% (if separately mentioned and linked to saree) |
### 🔐 Important:
Avoid combining all into **one single price** — keep items **separately shown in invoice** to avoid **mixed supply implications**.
---
## 📌 Recommendation:
* Treat saree as **principal supply**.
* Keep **gift box as optional**, billed separately.
* Ensure **shipping is linked to saree**, not to the gift box.
---
Let me know if you'd like a sample tax invoice or billing format to minimize GST exposure.
---
## 🔍 Your Scenario:
* You sell **Sarees (5% GST)**.
* You want to offer a **gift box/wrapping** option (possibly at additional charge).
* You're charging **shipping** (delivery) separately.
* You're concerned about whether this leads to:
* **Mixed supply**, and
* Higher GST (18%) applying to the whole invoice.
---
## ✅ Key Concepts in GST:
### 1. **Composite Supply**:
* **Naturally bundled** items where one is the **principal supply**.
* GST rate of the **principal supply applies** to the whole bundle.
Example: Saree + shipping → Saree is principal, GST = 5%.
### 2. **Mixed Supply**:
* **Artificially bundled** items sold together for a single price, each having different tax rates.
* **Highest GST rate applies** to the entire bundle.
Example: Saree + chocolate box (18%) sold as a gift hamper → Entire bundle taxed @18%.
---
## 🧾 Application to Your Case
### A. **Gift Box Option – Optional Add-on**
If **gift wrapping is optional** and **charged separately**, then:
* **Saree**: 5% GST
* **Gift Box**: 18% GST
* **Shipping Charges**:
* If charged separately: **follows principal supply**, i.e., **5%** (as per CBIC Circular No. 47/21/2018-GST)
* If shipping is for gift box only: **18%**
* If bundled together as one price: Risk of **mixed supply** if not clearly separated
✅ **Best Practice**:
* Invoice clearly showing:
* Saree @ 5%
* Gift box (optional) @ 18%
* Shipping as a separate line linked to saree → charge 5%
---
### B. **If Gift Box is Mandatory or Included in Price**
* If customer has **no choice**, and it's always included → could be treated as **composite or mixed supply**.
* If **gift box is incidental** → 5% applies to full value (composite).
* If it's a separate product (significant value), and **not naturally bundled** → risk of **mixed supply**, and **18% may apply to entire amount**.
---
## ✅ Final Answer:
| Component | Tax Rate (if billed separately) |
| ---------------------------- | ------------------------------------------------ |
| Saree | 5% |
| Gift box/wrapping (optional) | 18% |
| Shipping (on saree) | 5% (if separately mentioned and linked to saree) |
### 🔐 Important:
Avoid combining all into **one single price** — keep items **separately shown in invoice** to avoid **mixed supply implications**.
---
## 📌 Recommendation:
* Treat saree as **principal supply**.
* Keep **gift box as optional**, billed separately.
* Ensure **shipping is linked to saree**, not to the gift box.
---
Let me know if you'd like a sample tax invoice or billing format to minimize GST exposure.
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