What is the difference between composite supply and mixed supply under GST?
GradeHunt_TeamGradeHunt Team · · CA Intermediate
In CA Inter Taxation (GST part), some questions give a bundle of goods or services and ask the tax rate. How do I decide if it is composite or mixed supply?
gstcomposite supplymixed supplysection 8
1 answer
0
Both involve two or more supplies made together by a taxable person. A mixed supply must be for a single price. A composite supply usually is too, but its legal test is natural bundling with one principal supply. So the real difference is whether the items are naturally bundled.
Composite supply (Section 2(30) of the CGST Act):
- The supplies are naturally bundled and supplied together in the ordinary course of business.
- One of them is the principal supply.
- Tax: the whole bundle is taxed at the rate of the principal supply (Section 8(a)).
- Example: a laptop sold with a carry bag and charger. The laptop is the principal supply.
Mixed supply (Section 2(74)):
- The supplies are NOT naturally bundled. Each item could be sold separately, but the supplier sells them together for one price.
- Tax: the whole bundle is taxed at the rate of the item with the highest rate (Section 8(b)).
- Example: a festive gift pack of sweets, a juice bottle and dry fruits for one price.
A quick test you can apply in the exam:
1. Would a buyer normally expect these items together in the ordinary course of business?
2. Can you identify one main supply that the others support?
3. If both answers are yes, it is composite. If either answer is no and the bundle is sold for a single price, it is mixed. If either answer is no and each item is priced separately, each item is a separate supply taxed at its own rate.
Exam tip: write the section number and the reason in one line before applying the rate. That shows how you reached the rate, not just the rate itself.
Chat on WhatsApp