Decoding Mixed and Composite Supply In GST

• When a good or supply is supplied as a supplement as two or more individual supplies of goods or services;
• Such a combination of goods or services is sold for a single price by a taxable person;
• The combination is not bundled due to natural necessity and the goods or services may also be supplied individually

For the calculation of tax liability on a mixed supply of goods or services, the ax rate that is applicable on each good or service is taken into account. From that, the combination of goods or services attracting the highest rate of tax will be considered.

For example, the rate of tax is as follows –

(These are Indicative rates)

As the face cream attracts the highest rate of tax at 18%, the tax liability on the mixed supply will be at 18%.

• When a product comprises two or more supplies of goods or services;
• A bundle or combination of goods and services naturally bundled and supplied in the ordinary course of the business owing to natural necessity;
• Such that the goods or supplies sold together are dependent on each other and cannot be sold individually;
• The concept of principal supply refers to the predominant element in the goods or services supplied. For example, a particular good or service may overshadow the other and the other goods or services sold in the bundle become the dependent or secondary supplies.

For example, a hotel offers a package of 2 nights and 3 days along with a breakfast buffet at INR 20,000. This transaction will be regarded as a composite supply for the following reasons – the package of the hotel room and the breakfast together is a regular combination of supply of services and is naturally necessitated. The hotel room accommodation is the principal supply and the breakfast is the secondary supply.

However, if a hotel was offering a safari ride as a package this does not qualify as a composite supply because the safari may not be naturally necessitated in addition to the hotel room – it is a service that may be availed of independently, thus amounts to a mixed supply.

The tax liability on composite supply is determined by understanding the rate of tax applicable on the principal good or service being sold. So for the example provided here, the rate of tax applicable on the hotel room will be taken into account to calculate the tax on the total package of the room and the breakfast buffet. So if the hotel room attracts a tax liability of 18% and the restaurant attracts only 12%, the total tax liability of the supply of this service will be calculated at  18% tax.