Under GST, Supply means the sale of goods or services. Supply also includes sale, transfer, disposal, barter, exchange, license, etc of goods or services. GST is applicable when there is a supply. To determine the GST Rate, it is important to classify the good or service. In normal cases, the good or service is clearly identifiable and thus it is simple to determine the GST rate on the same. However, sometimes the supply would include a combination of more than one type of good or service or both. In that case, it would become difficult to determine the applicable GST rate. Therefore, it is important to understand the concept of Mixed Supply and Composite Supply.
What is Composite Supply under GST?
Composite Supply means a supply of two or more taxable goods or taxable services or both, naturally bundled together and supplied as a combination in the normal course of business. The good or service which describes the essential character of the supply is the Principal Supply. The individual goods or services in a Composite Supply cannot be supplied separately.
What is GST Rate for Composite Supply?
As explained, one of the items from Composite Supply is the Principal Supply. The GST rate applicable to the principal supply would be the rate applicable to the entire supply.
Note: Works Contracts and Restaurant Services are also composite supplies. To avoid any confusion, the GST Act mentions that these would be considered as a supply of service and a specific tax rate for that service would apply.
Example
- Hotel Services – accommodation services and breakfast. These services are generally provided as a combination and thus is considered a Composite Supply. Accommodation service is the principal supply.
- Booking a train ticket – transport services including meals. These services are generally provided as a combination and thus is considered a Composite Supply. Transport service is the principal supply.
What is Mixed Supply under GST?
Mixed Supply is the supply of two or more goods or services or both for a single price. Each of these are not naturally bundled in the normal course of business and can be separately supplied.
What is GST Rate for Mixed Supply?
Mixed supply is taxable at the GST rate of the item which attracts the highest tax rate.
Example
- Gift Package comprises chocolates, fruit juice, fruits, sweets, dry fruits, aerated drink, etc sold at a single price. Since the items are not naturally bundled together and can be sold separately, this is a mixed supply. The aerated drinks attract the highest GST rate of 28% and thus the tax rate for the entire gift package would be 28%.
- Buy 1 Get 1 Free Sale – On buying one item, the other item is free. Since the items are not naturally bundled together and can be sold separately, this is a mixed supply. The GST rate applicable to this sale is the higher GST rate.
Composite Supply v/s Mixed Supply
| Composite Supply | Mixed Supply | |
| Nature of items | Items are naturally bundled together and cannot be sold separately | Items are not naturally bundled together and can be sold separately |
| Tax Rate | GST Rate of principal supply | GST Rate of the item with the highest tax rate |
| Example | Hotel services, restaurant services, works contract service, booking a train ticket, etc | Beauty parlor services, coffee mug free with coffee, Cadbury celebrations gift pack, etc |
FAQs
If the principal supply is of service then the supply of services will be applicable to the composite supply. However, in the case of purchasing and transporting the goods, then the supply of goods will be applicable to the composite supply.
If the highest tax rate is of service then principal of service will be applicable. And, if the highest rate is of goods then principal of supply of goods will be applicable.
Hey @HarshitShah
Goods/sectors that are out of the GST ambit include alcohol and specified petroleum products like petroleum crude, high-speed diesel, motor spirit, aviation turbine fuel and natural gas. Alcohol for human consumption continues to attract state excise duty and VAT. Tobacco and tobacco-based products attract both excise duty and GST. Taxes such as stamp duty, toll tax, road tax, electricity duty etc. are not part of GST.
Hope this helps!
Hey @HarishMehta
Customs duty and cess as applicable along with IGST+ GST compensation cess. IGST and GST compensation cess shall be paid after adding all customs duty and customs cess to the value of imports.
Hope this helps!