The tax liability on a composite or a mixed supply shall be determined in the following manner, namely:—
- 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; and
- 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.
The different taxation of Mixed & Composite Supply has created confusions on which tax to be charged on pack of service or goods supplied together. For understanding of the rate structure on a bundled service or goods supplied we needs to understand the diffrence between Composite supply or Mixed supply.
Composite Supply: a composite supply would mean a supply made by a taxable person consisting of two or more taxable supplies of goods or services or both, which are naturally bundled and supplied in conjunction with each other in the ordinary course of business, one of which is a principal supply and others comes along naturally due to the nature of principal supply.
Eg: Where Jewellery has been sold along with a box, the supply of Jewellery, packing materials, is a composite supply and GST would be charged on the rate structure of Jewellery only i.e., principal supply in this case.
Mixed Supply: A mixed supply means two or more individual supplies of goods or services or both made in conjunction with each other by a taxable person for a single price where such supply does not constitute a composite supply i.e., not bundled together by nature.
Eg: A Garment and a Jewellery sold for a fixed price together than it would be treated as Mixed Supply since not bundled by nature and highest tax slab would be charged on both the items.
By CA Prasenjit Paul
Author can be reached at Paul_prasenjit@yahoo.co.in