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Composite and Mixed Supplies under GST
Detailed look at Composite and Mixed Supplies under GST
Under GST, there are two very important concepts which are used in common day to day activities and thus we have made an attempt here to decode these in this article.
The two concepts which are specifically defined under GST are :
- 1.Composite Supply
- 2.Mixed Supply
We take each one of them in details here.
- 1.Composite Supply
As per Section 2(30) of the CGST Act, composite supply is defined as under :
"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;
From the above, it is clear that for composite supply there must be two or more supplies which are naturally bundled i.e. they are supplied with each other and are dependent on each other. However one of the supply is the main or principal supply and other supplies are made in conjunction with the principal supply.
For Example :
(a) Supply of restaurant services i.e. Room services alongwith the renting of Room in a Hotel is a composite Supply in which the principal supply is renting of Room.
(b) Supply of goods alongwith transportation, packing and insurance is a composite supply in which the principal supply is sale of goods and transporation, insurance, packaging etc. are other supply made in conjuction with main supply.
2. Mixed Supply
As per Section 2(74) of CGST Act, mixed supply is defined as :
"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.
Thus in mixed supply, there are two or more individual supplies made for single price but the supplies are not of similar nature or things i.e. they can be any supply but made and bundled together for a single price.
For Example :
Supply of package containing food, chocolates, cakes, dry fruits etc. when supplied for single price is a mixed supply. They can be sold individually also and in that case it won't be mixed supply.
Tax liability on Composite and Mixed Supply :
As per Section 8 of CGST Act, the tax liability in case of composite and mixed supply is determined as under :
(a) In case of Composite supply, it is treated as supply of principal supply out of two or more supplies which are bundled together and tax rate is chaged of that principal supply only.
(b) In case of mixed supply, it shall be treated as supply of that particular item which attracts highest rate of tax out of all those items.