Composite and mixed supply of goods and services
Hemlata Khandenwal / 2020-06-01 11:49:31

If supply of goods and services is made, then the GST will be applicable to it. The GST law lays down the tax rate of all goods or services, according to which the supply of any goods or services can be taxed. If anyone goods or services are being supplied, then you will not face any problem in imposing GST on it. However, in many cases, two or more goods or services are supplied together, on which the tax rate is different.

For example: In a charger with a mobile or a gift pack, supply of chocolates, sweets, balloons, or any other item with one thing, etc. In such a case, the rate at which goods or services will be levied on GST, it can be quite troublesome.

Such situations are named composite or mixed supply in GST law. In this (composite and mixed supply of goods and services under GST) we’ll be going to learn about:

How the GST rate will be determined in composite and mixed supply? 

What is Composite Supply in GST?

In GST law, both composite supply and mixed supply are different. The most important thing to separate the two is to see if the supply of any goods or services in normal business practice is "natural bundled" or not natural bundled ".

Composite supplies will be considered -

  • A supply that includes 2 or more goods or services, or a combination of both,
  • This supply is "natural bundled" in normal business practice,
  • This type of supply has a "principal supply"

If these three conditions are met, then it will be considered as composite supply.

What is the principal supply?

In the supply of two or more goods or services, the goods or services of which the element is the highest and other goods or services are only its subsidiaries, then the supply of such goods or services shall be deemed to be the principal supply.

The meaning of principal supply can also be seen that the supply of 2 or more goods or services cannot be supplied separately.

Like (example of composite supply)-

Flight from Jaipur to Delhi includes meals, insurance along with tickets, and then it will be considered a bundled supply. In this case, the principal supply will be considered as passenger transportation, as food and insurance are being provided only to facilitate the passenger. That is, it is being given only as an assistant to the principal supply.

If a warranty or guarantee or insurance is provided with an air conditioner or any other item, it is also a "bundled supply", in which case it will be treated as a composite supply, the supply of the air conditioner is the main supply and the warranty or guarantee is only as an assistant. No warranty or guarantee can be made without supplying an air conditioner. Therefore the principal supply will be considered as a supply of air conditioner.

Works contracts and restaurant service which has GST registration are the best examples of mixed supplies, but the GST law lays out different rates for both these types of supplies. However, prior to GST, both of these were considered to be composite supplies.

GST rate for overall supply -

In the case of a composite supply, the GST rate of the principal supply will be charged on overall supply, because if the principal goods or services are not supplied, there will be no such supply.

For example, if the charger and other accessories are supplied from the mobile, in this case, the GST rate of the mobile will be charged to tax, as other goods are only supporting the mobile. In this case, the supply of mobile is the major supply.

How to know about services whether it is a natural bundled” or not a natural bundled?

To consider the supply of any goods or services as an overall supply, the most important thing is that the supply must be bundled naturally.

If the supply is not inherently bundled, then all these goods or services will be taxed at different rates.

There is no definitive formula to find out if any services are inherently tied into general business practice, but there are still some things that can be traced.

Like -

1. If the majority of people receiving the service expect that a service will be provided in a package, then the services offered in such a package will naturally be considered bundled.

2. Most service providers in a region provide some type of services in the package itself, and then such services would also be considered natural bundles.

3. If a service is provided in a package that helps the business, then it will naturally be considered bundled services as well.

4. If two or more services are provided in a package and such services are written on these packages, due to which these services cannot be separated, this would naturally be considered an example of bundled services.

Mixed Supply under GST -

Any supply of two or more goods or services or combination of both shall be deemed to be a mixed supply when it is not natural bundled and a separate supply of these goods or services may also be made.

If a supply is natural bundled, then it will be considered as composite supply and not natural bundled, then it will be considered as a mixed supply.

Like -

  • If a shopkeeper offers water bottles free of cost with the refrigerator, this supply is not bundled natural, as refrigerators and water bottles can also be supplied separately. Therefore, this supply will be considered a mixed supply.

  • The three floors of a flat are rented to a single person with a single rent deed, for which a lump sum amount is charged and which he uses for different work, and then it is also considered as a case of mixed supply will go because these flats could also be rented separately.

Also, read about the GST rates applicable on insurance policies

Taxation of mixed supplies:

The highest rate of goods or services will be taxed for which 2 or more goods and services are treated as mixed supplies.

For example, if any 3 types of goods or services are being supplied and the tax rate is 5%, 14%, and 28% and this supply is mixed supply, then GST at the rate of 28% on the value of such supply will be applied.

The concept of mixed and composite goods and supply under GST is clear as per my preference. If you have any query visit on and put your question into the comment section. Always be ready to take service with us related to GST return filing and GST registration and many more.

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