CA Umesh Sharma

CA Umesh SharmaArjuna (Fictional Character): Krishna, What is Composite and Mixed Supply in GST?

Krishna (Fictional Character): Arjuna, in GST, Composite Supply, Mixed Supply, Taxable Supply, Zero Rated Supply, Exempt Supply, Continuous Supply, Intrastate Supply, Inter-State Supply, etc. are the types of Supply. Among these types Composite Supply and Mixed Supply are the important types. While computing GST on goods or services it is important to understand that whether it is Composite Supply or Mixed Supply.

Arjuna: Krishna, What is Mixed Supply in GST?

Krishna: Arjuna, Mixed supply under GST means two or more individual supplies of goods or services, or any combination, made together with each other by a taxable person for a single price.

Arjuna: Krishna, Exactly what type of supply is covered under Mixed Supply?

Krishna: Arjuna, when more than one goods or services are supplied together for single price it is called as mixed supply. If anything can be supplied independently or supply of anything is dependent on other it will not be classified as mixed supply. For e.g. Gifts given on occasion of diwali consisting of box of dry fruits having cashew nuts, walnuts, almond, pistachio, etc. are purchased. For seller it will be considered as mixed supply.

Arjuna: Krishna, How will be tax computed on mixed supply?

Krishna: Arjuna, Mixed supply comprising two or more supplies shall be treated as supply of that particular supply that attracts the highest rate of tax. For e.g. Dry fruit box will be taxed at the rate of the item attracting highest tax liability. In the above example some items are under 12% tax rate and some are Zero-rated items, but the entire dry fruit box will be taxed at 12%. In another example if we supply Corporate Kit consisting of Pen – 12%, wrist watch – 28%, Wallet – 28% and diary -18%, then corporate kit will be taxed at the rate 28%.

Arjuna: Krishna, What is composite supply of Goods and Services?

Krishna: Arjuna, The composite Supply means a supply made by a taxable person to a recipient comprising two or more supplies of goods or services, or any combination thereof, which are naturally bundled and supplied in conjunction with each other in ordinary course of business, one of which is principle supply. For e.g. at the time making sales invoice packing charges, transportation charges, insurance charges are charged then it will be treated as composite supply.

Arjuna: Krishna, How GST will be computed on composite supply?

Krishna: Arjuna, Composite supply compromises two or more supplies, one of which is a principle supply, shall be treated as supply of such principle supply and will be taxed at the rate of such principle supply. In the above example the supply of goods will be treated as principle supply and packing materials, transport and insurance will be taxed at the rate of such principle supply. For e.g. If TV of Rs. 25,000/- sold with Rs. 500/- for packing and installation charges then GST will have to be paid on Rs. 25,500/-.

Arjuna: Krishna, what one should learn from this provision of GST?

Krishna: Arjuna, there is huge impact of mixed supply and composite supply on every person. There was no such concept under current tax regime. It is necessary for Buyer and seller to understand the concept of mixed supply and composite supply and act accordingly. If mixed supply and composite supply is not taxed as per provisions in the act, then department will collect excess tax, interest and penalty from taxpayer. Similarly if purchaser has not understood the same he may have to pay higher tax.

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2 responses to “If two or more goods or services are supplied then How GST will be levied on it?”

  1. krishna kumar says:

    PLEASE CLARIFY THE DOUTS
    IN THE COMPOSIT SUPPLY IF THE RATE OF TAX OF A ITEMS IS 5% AND TRANSPORT CHARGES SERVICE IS 18% SHOULD I ADD THE TRANSPORT AND CHARGE 5% ON THE VALUE, OR SHOULD I CHARGE 18 % FOR THE WHOLE AMOUNT.

    • K. Raji Reddy says:

      Please note that supply of items(goods) attracting 5% tax according to you is naturally bundled with transportation service attracting 18%( rates provided by you). Such supplies are known as composite supplies in which principal supply of the goods or services would determine the rate applicabilty as per Section 8 of CGST Act. Section 8 reads;The tax liability on a composite or a mixed supply shall be determined in the following
      manner, namely:—
      (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; and
      (b)…… . Thus in your case tax applicable to goods (principal supply)may be the rate applicable in my view.

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