Frequently asked questions.

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General Questions

This segment answers your basic queries on the concept of composite supply and mixed supply

Under GST, a composite supply would mean 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.

Example: Supply of television with free installation service where supply of telivision is the principal supply and installation service is the other taxable supply which are naturally bundled.

As per Section 2(90) of CGST Act, Principal supply means 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.

The concept of composite supply under GST is identical to the concept of naturally bundled services prevailing in the existing service tax regime.

A Bundled service means a bundle of provision of various services wherein an element of provision of one service is combined with an element or elements of provision of any other service or services.

An example of ‘bundled service’ would be air transport services provided by airlines wherein an element of transportation of passenger by air is combined with an element of provision of catering service on board. Each service involves differential treatment as a manner of determination of value of two services for charging service tax is different.

The rule is – ‘If various elements of a bundled service are naturally bundled in the ordinary course of business, it shall be treated as provision of a single service which gives such bundle its essential character’

Under GST, a 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.

Example: A gift package where two unrelated independent items say fruits and dry fruits. Here, nothing can be said to a principal supply and hence it is a mixed supply.

 

CONCEPTS:

This part explains 'How composite and mixed supply works?'

In order to identify if the particular supply is a mixed supply, the first requisite is to rule out that the supply is a composite supply. A supply can be a mixed supply only if it is not a composite supply. As a corollary, it can be said that if the transaction consists of supplies not naturally bundled in the ordinary course of business then it would be a mixed supply.

Once the amenability of the transaction as a composite supply is ruled out, it would be a mixed supply, classified in terms of supply of goods or services attracting the highest rate of tax..

The tax liability on a composite or a mixed supply shall be determined in the following manner:

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) 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

In case of composite supply, one must determine the principalsupply among the mix of supplies and the GST rate applicable to such principal supply is applicable to whole composite supply.

In case of mixed supply, the highest tax rate among the tax rates applicable to different components of the mixed supply shall apply to the whole supply.

If the composite supply involves supply of services as principal supply, such composite supply would qualify as supply of services and accordingly the provisions relating to time of supply of services would be applicable. Alternatively, if composite supply involves supply of goods as principal supply, such composite supply would qualify as supply of goods and accordingly, the provisions relating to time of supply of goods would be applicable.

he mixed supply, involving supply of a service liable to tax at higher rates than any other constituent supplies, would qualify as supply of services and accordingly the provisions relating to time of supply of services would be applicable. Alternatively, the mixed supply, involving supply of goods liable to tax at higher rates than any other constituent supplies, would qualify as supply of goods and accordingly the provisions relating to time of supply of services would be applicable.

Difference :

Know how composite and mixed supply are poles apart

Composite supply is a supply where goods and services are naturally bundled whereas mixed supply is a supply where goods and services are not naturally bundled.

In composite supply, goods and services are supplied in conjunction with each other. But in mixed supply, although, the supply can be made independently, still supplied together.

In composite supply, one of the goods is a principal supply, In mixed supply, principal supply cannot be identifiable.

GST shall be charged at the rate, as applicable on the principal supply in composite supply at the same time in mixed supply, GST shall be charged at the rate applicable to the supply, which attracts the highest rate.

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