Section 8 of CGST ACT, 2017:

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) 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.

A. Composite supply:

If it involves more than one goods and/ or services which are naturally bundled together: These are referred to as composite supply of goods and / or services. It shall be deemed to be a supply of those goods or services, which constitutes the principal supply therein.

Example No. 1: 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. This implies that the supply will be taxed wholly as supply of goods.

Example No. 2: If a contract is entered for (i) supply of certain goods and erection and installation of the same thereto or (ii) supply of certain goods along with installation and warranty thereto, it is important to note that these are naturally bundled and therefore would qualify as ‘composite supply’. Accordingly, it would qualify as supply of the goods therein, which is essentially the principal supply in the contract. Thus, the value attributable to erection and installation or installation and warranty thereto will also be taxable as if they are supply of the goods therein.

Example No. 3: A laptop seller sold laptop to customers along with laptop bag, now 1st test is satisfied that there are two products and sold together but 2nd test is failed because bag and laptop are not naturally bundled means bag and laptop can be sold separately also. Therefore it is NOT composite supply, will be treated as mixed supply.

B. Mixed Supply

If it involves supply of more than one goods and / or services which are not naturally bundled together: These are referred to as mixed supply of goods and / or services. It shall be deemed to be a supply of that goods or services therein, which are liable to tax at the highest rate of GST.

A supply of more than one goods and / or services as a bundle will be reckoned as ‘mixed supply’ if:

(i) such goods and / or services are supplied together for a single price

(ii) they are not naturally bundled together and (iii) it does not qualify as composite s

Example No. 4: A supply of a package consisting of canned foods, sweets, chocolates, cakes, dry fruits, aerated drink 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. This implies that the supply will be taxed wholly as supply of those goods which are liable to the highest rate of GST.

Example No. 5: If a tooth paste (say for instance it is liable to GST at 12%) is bundled along with a tooth brush (say for instance it is liable to GST at 18%) and is sold as a single unit for a single price, it would be reckoned as a mixed supply. This would therefore be liable to GST at 18% (higher of 12% or 18% applicable to each of the goods therein).

However, every supply should be independently viewed .

Description Composite Supply Mixed Supply
Naturally bundled Yes No
Supplied together Yes Yes
Can be supplied separately No Yes
One is predominant supply for recipient Yes No
Other supply is not ‘aim in itself’ of recipient Yes No
Each supply priced separately No No
All supplies are goods Yes Yes
All supplies are services Yes Yes
One supply is goods and other supply is services Yes Yes

Watch highlights of 22nd GST council meeting held on 6th Oct, 2017

https://youtu.be/_R_cz7v0gA8

Author Bio

Qualification: CA in Job / Business
Company: Own Practice
Location: Delhi, New Delhi, IN
Member Since: 16 Sep 2017 | Total Posts: 25
I am member of ICAI since Novemer, 2011. Having experience in Taxation and public speaking. i also posted few videos on you tube for GST. View Full Profile

My Published Posts

More Under Goods and Services Tax

6 Comments

  1. JIGNESH SHAH JIGNESH SHAH says:

    CLEARING FORWARDING AGNECY GIVES OTHER SERVICES LIKE MAKING SHIPPING BILL,THC CHARGES,AGENCY CHARGES,EXAMINATION CHARGES COO CHARGES ARE COMPOSITES SUPPLY OR MIXED SUPPLY

  2. RITIKA RITOLIA says:

    Suppose, we are selling 2 goods, say Sugar (5%) and dal(exempt) to a particular customer. Then is it necessary to issue two bills?

Leave a Comment

Your email address will not be published. Required fields are marked *

Search Posts by Date

November 2020
M T W T F S S
 1
2345678
9101112131415
16171819202122
23242526272829
30