Composite supply

DEFINITION as per GST Law :

As per the Provision of Section 2(30) of the CGST Act 2017 : "Composite Supply" means a supply made by a taxable person to a recipient consisting of two or more taxable supplies of goods or services or both, or any combination thereof, which are "naturally bundled" and supplied in conjunction with each other in the ordinary course of business, one of which is a "PRINCIPAL SUPPLY".

An Illustration has been provided in the Law to understand what is composite supply :

Illustration : Where goods are packed and transported with insurance, the supply of goods, packing materials, transport and insurance is a COMPOSITE SUPPLY and "Supply of Goods" is the PRINCIPAL SUPPLY.

Now, let us understand the TAX LIABILITY OF COMPOSITE SUPPLY :

As per the Provision of Section 8 clause (a) of the CGST Act 2017, The tax liability on a Composite Supply shall be determined in the following manner :

(a). A Composite Supply comprising two or more supplies, one of which is a principal supply, shall be treated as a "SUPPLY OF SUCH PRINCIPAL SUPPLY."

This means that the GST Rate on Composite Supply would be the GST Rate applicable to the "PRINCIPAL SUPPLY".

And GST apply as per principal supply or whichever is higher

GST rate applicable as per Principal Goods being supplied.

If principal goods are 12%
freight also 12%

@ Sumit,

The GST Rate is applicable as per PRINCIPAL GOODS GST Rate.

If Principal Goods are taxed at 12% then the Freight will also be taxable at the rate of 12%. Because it is a Composite Supply.

- supply of two or more taxable supplies in the combination of goods or service or both 

- naturally bundle 

- rate of principal goods rate is applicable 

 

example : charger with Mobile Phone > rate of Mobile Phone (principal good) shall be applicable to whole consideration . 

Mixed supply?

Q1). What is MIXED SUPPLY ?

ANSWER : As per the Provision of Section 2(74) of the CGST Act 2017, "MIXED SUPPLY" means two or more individual supplies of goods or services, or any combination thereof, made in conjunction with each other by a taxable person for a 'single price' where such supply does not constitute a composite supply.

Illustration :  A supply of a package consisting of canned foods, sweets, chocolates, cakes, dry fruits, aerated drinks and fruit juices when supplied for a single price is termed as Mixed Supply.

Q2). How to determine / What is the Tax Liability of MIXED SUPPLY ???

ANSWER : As per the Provision of Section 8 clause (b) of the CGST Act 2017, "TAX LIABILITY OF MIXED SUPPLY" will be -

"A Mixed Supply comprising two or more supplies shall be treated as a supply of that particular supply which attracts the HIGHEST RATE OF TAX."