Composite Supply: A Composite supply is a supply when two or more goods are sold together in combination of each other which are naturally bundled. The elements of composite supply are dependent on the ‘Principal Supply’.
Section 2(30) “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:
Section 2(90) “Principal Supply” means the supply of goods or services which constitutes the predominant element of a composite supply and to which any other supply forming part of that composite supply is ancillary.
(1) A travel ticket form Delhi to Kolkata may include service of food being served on board, free insurance and use of airport lounge. In this case transport of passenger is principal supply and other supplies are ancillary. Tax shall be calculated on the price of ticket.
(2) When a consumer buys a TV and also get warranty and a maintenance contract with the TV, this supply is a composite supply. Here supply of TV is a principal supply, warranty and maintenance are ancillary. Tax shall be calculated on the price of TV.
(3) A 5-star hotel provides 2-days and 1-night packages with breakfast. This is a composite supply as the package of accommodation facilities and breakfast is also provided. In this case, hotel accommodation is the principal supply and breakfast is secondary to the hotel accommodation. Hotel accommodation attract 18% tax while breakfast as restaurant service attract 28% tax. In this case, Hotel accommodation is the principal supply and this supply will be taxed at 18%.
(4) A Laptop bag is supplied with the laptop in the ordinary course of business, the principal supply of laptop and bag is ancillary. It is composite supply and rate of tax would be applicable on a laptop.
Section 2(74) of 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.
Mixed supply consisting of two or more supplies shall be treated as the supply of that item which has the highest rate of tax.
(1) Diwali gift hamper which consists of different Items like sweets, chocolates, cakes, dry fruits packed in one pack is mixed supply as these items can be sold separately and it shall be treated as a supply of that particular item which attracts the highest rate of
(2) A shopkeeper selling water bottles along with refrigerator. Both bottle and refrigerator can easily be priced and sold independently and are not naturally bundled. So such supply is called mixed supply. The Product which the highest rate will be applied to mixed supply.
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