Tax Liability on Composite and Mixed Supplies

In GST, multiple goods or services are often supplied together in a single transaction. To ensure the correct levy of tax, the law classifies such transactions into two categories — composite supply and mixed supply. Section 8 of the CGST Act, 2017, lays down the principles to determine the tax liability on such bundled supplies.

📘 Legal Provision
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; and
(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.

✅ Composite Supply [Section 2(30)]

A composite supply means a supply consisting of two or more taxable supplies of goods or services or both, naturally bundled and supplied in conjunction with each other in the ordinary course of business, one of which is a principal supply.

Key Features:
1. Naturally bundled
2. Supplied together
3. One principal supply governs the tax rate

✅ Mixed Supply [Section 2(74)]
Definition:
A mixed supply means two or more individual supplies of goods or services or both made in conjunction with each other for a single price, not naturally bundled.

Key Features:
1. Not naturally bundled
2. Can be sold separately
3. Supplied together for a single price

Example: A gift hamper containing chocolates (18%), scented candles (12%), and wine (28%) sold for a single price.
Tax Rate: The highest tax rate among the items, i.e., 28%, will apply on the whole bundle.

🕒 Time of Supply Rules
Time of supply depends on whether the transaction involves goods or services and follows the respective provisions:

A. For Composite Supply
1. Governed by the principal supply.
2. Time of supply will be determined as per the principal supply (Section 12 or 13 of CGST Act).

B. For Mixed Supply
1. Treated as a supply of goods or services with the highest rate.
2. Time of supply will be calculated accordingly under Section 12 (goods) or Section 13 (services), depending on the nature of the highest-rated supply.

Tax Rate Applicability