Concept of Composite and Mixed Supply under GST
Taxability of “Composite Supply “and “Mixed Supply” shall be dealt with as per section 8 of CGST Act, 2017. In order to understand the statutory provisions, we have to first understand the meaning of following terms along with examples for better understanding :-
Bundle of Goods and Services :- Bundle of Goods and Services means Mixture of Goods and Services i.e. supply of Goods and Services simultaneously.
Bundle is classified into two categories:-
i) Naturally Bundled: – Means Goods and / or Services which does not change the essential character of Goods and / or Services being provided. For example, supply of Machinery (Goods) along with installation (Service) thereof at the customer site. This service is clearly said to be naturally bundled. In the said example, essential character of provision of Goods / or Services shall be Supply of Goods (Machinery) and not the installation service, which is regarded as only an ancillary service.
ii) Not Naturally Bundled: – Means Provision of Goods and / or Services which are not naturally bundled. For example, a company has launched a scheme in which it sells a bottle of Iron Table along with a Iron Box which is given as free to promote their sales and a single price is being charged. In the said example, Supply of Iron Table along with Iron Box is not said to be naturally bundled because the company has the option to sell Iron Table and Iron Box separately, however, in order to promote sales, both are being supplied together.
After gaining an understanding of above said terms, let us understand the concept of Composite Supply and Mixed Supply along with statutory provisions :-
i) Composite Supply: – It means supply of more than one Goods and / or Services which are naturally bundled together. Taxability: – Under Composite Supply, It shall be deemed to be a supply of those Goods and /or Services, which constitutes the principle supply therein. As per the above example given in meaning of “Naturally Bundled”, Supply of Machinery along with installation services shall be taxed at the rate being levied on Supply of Machinery under GST.
ii) Mixed Supply: – It means supply of more than one Goods and / or Services which are not naturally bundled together. Taxability: – Under Mixed Supply, it shall be deemed to be a supply of that Goods and /or Services therein, which are liable to tax at the highest rate of GST. As per the above example given in meaning of “Not Naturally Bundled”, Say, Price of Iron Table along with Iron Box (being supply with Iron Table) is Rs 100 and rate of GST on Iron Table is 5% and on Iron Box is 18%, therefore, higher rate of Iron Box @ 18% is being charged supply of Iron Table along with Iron Box i.e. Rs 18 (18% of Rs 100).