Mixed Supply Under GST

In Mixed supply two or more individual supplies combination of goods or services with each other for a single price. Each of these items can be supplied separately and is not dependent on each other. In other words, the combination of goods or services are not bundled due to natural necessities, and they can be supplied individually in the ordinary course of business.

For tax liability purpose, mixed supply consisting of two or more supplies shall be treated as a supply of that item which has the highest tax rate.

Example:

Many shops offer combo packs of Tie, watch wallet, pen and they are bundled as a kit and this kit is supplied for a single price and the supply of one item does not naturally necessitate the supply of other elements. Hence the supply is a mixed supply. Now let us assume that tax rate for a tie, watch, wallet, pen are 12%, 18%, 5%, 4% respectively. In this case, watch attracts the highest rate of tax in the mixed supply i.e., 18%. Hence, the mixed supply will be taxed at 18%.

 

Composite Supply Under GST

Composite supply consists of two or more goods/services, which is naturally supplied with each other in the ordinary course of business and one of them is a principal supply. The items cannot be supplied separately. In other words, goods and services are bundled owing to natural necessities. The elements in a composite supply of goods and services are dependent on the ‘principal supply’ of goods or services.

Principal supply means the supply of goods or services which constitute the predominant element of a composite supply and to which another supply is ancillary/secondary.

The following conditions are necessary for composite supply under GST:

• Supply of two or more goods or services together, AND
• It should be a natural bundle and they cannot be separated

Note:- If the second condition is not fulfilled then it becomes a mixed supply. For tax liability purposes, the tax rate applicable to the principal supply will be effected on the composite supply.

Example:

A Five-star hotel provides four days and three-night package, with breakfast. This is a composite supply as the package of accommodation facilities and breakfast is a natural combination in the ordinary course of business for a hotel. In this case, the hotel accommodation is the principal supply, and breakfast is ancillary to the hotel accommodation. Now, Let us assume, the hotel accommodation attracts 18% tax and the restaurant service attracts 12% tax. As per the example, hotel accommodation is the principal supply, and the entire supply will be taxed at 18%.

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