Composite and mixed Supply is always a dubious and confusing topic

In this article, I tried to make it simplified by doing a detailed analysis of it with various illustrations while using bare text language also.

First, we will discuss composite supply only

Definition of  composite supply Section 2(30) of CGST Act

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 Principal supply

Illustration: Where goods are packed and transported with insurance, the supply of goods, packing materials, transport and insurance is a composite supply

and the supply of goods is the principal supply.

Definition of Principal supply:- Section 2(90) of CGST Act

“supply of G/S which constitutes the predominant element of a composite supply and to which any other supply forming part of that composite supply is ancillary.

Now we will do analysis of mentioned provisions with related to Composite Supply 

These all need to be satisfied for a composite supply.

1. If two things are sold together then we need to know whether they are composite supply or not.

2. Both supplies should be taxable supply, both of them or one of them is non-taxable (like petrol) then it can’t be classified as composite supply. 

(please read definition of taxable supply, non-taxable supply carefully)

3. These should be naturally bundled in ordinary course – means it is common practice to supply such combos 

like u took 2 floor on rent, one is commercial and other one is residential it is not natural to sell such combo so it is not naturally bundled

And like u paid 1400₹ for room and ad well for breakfast it is common practice to offer such combo so it is composite supply.

4. One must be Principal supply.

Means role of one supply in combo should be main, like in rented floor example both have same role.

But in hotel room example, breakfast is supplied in support to hotel rent service.

Service of breakfast is ancillary it depend on hotel room.

Same in case of supply of goods, insurance/Transport is ancillary here supply of goods is main or principal.

Like if someone supply toothpaste and toothbrush together.

Here both are Principal goods. So it is not composite supply.

Now lets move to

Composite Supply Taxability 

Section 8 of CGST Act

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;

(b) discuss later with mixed supply

Means tax rate will be same as on Principal supply

Like say tax on room is 12%

And tax on food service is 18%

Since it is composite supply and room rent is Principal supply n

Here tax on whole package will be 12% even if both item have seprate value mention or combined on bill

Now lets analysis Mixed Supply 

Section 2 (74) defines “mixed supply” it 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 a mixed supply.

Each of these items can be supplied separately and is not dependent on any other.

It shall not be a mixed supply if these items are supplied separately.

Taxability of Mixed Supply

Section 8 of CGST Act


A mixed supply comprising two or more supplies shall be treated as supply of that particular supply that attract highest rate of tax.

Like combo of Commercial and residential building rent

Here residential is exempt and commercial is taxable

So we will charge rate of commercial on whole package including Residencial building.

I hope this article cleared your all Doubts regarding Composite and mixed Supply.  For any queries feel free to comment.

Author Bio

Qualification: CA in Job / Business
Company: N/A
Location: Rajasthan, IN
Member Since: 06 Oct 2020 | Total Posts: 1

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April 2021