Composite Supply and Mixed Supply under GST
As we already know every goods or/and service supplied under GST has a defined GST Rate. However, there are certain cases when the supply of goods or/and services are inter-related or inter-dependent on each other. For instance, a water purifier is purchased and installation of the same is provided along with it. So, to help a taxpayer to determine the correct GST rate for such supplies, the concept of composite supply and mixed supply was introduced under GST.
Composite Supply under GST
A composite supply under GST would mean a supply made by a supplier to a recipient consisting of two or more taxable supplies of goods or/and services that are naturally bundled. Moreover, they are supplied in conjunction with each other in the ordinary course of business, one of which is a principal supply.
Determining Applicability of Composite Supply
No straight jacket formula can be used to determine whether a supply is a composite supply or not. Each case needs to be individually scrutinized based on the below factors to know whether it is a composite supply:
- There is a single price for all the customers for the items in the package irrespective of how many items in the package they utilize.
- They are normally advertised as a package and are not available separately.
Example of Composite Supply
- Booking a ticket for Rajdhani Express includes travel, meals, and insurance.
- Goods packed, loaded, transported with insurance
GST Rate on Composite Supply
In the case of composite supply, the GST rate of principal supply would apply to the whole supply.
For instance, if an air conditioner is supplied with installation service then, in this case, the GST rate of the air conditioner will be considered as principal supply. Hence, the GST rate of AC will apply to the entire supply.
Determining Time of Supply in the Case of Composite Supply
If the composite supply includes the supply of services as principal supply, then the provision related to the time of supply of services will apply. On the contrary, if composite supply includes the supply of goods as principal supply, then the provisions relating to the time of supply of goods would be applicable.
Mixed supply under GST
A mixed supply under GST is a supply of two or more individual supplies of goods or/and services, made in conjunction with each other by a taxable person for a single price. It shall be noted that such supply does not fulfill any condition of a composite supply.
Determining Applicability of Mixed Supply
One can easily determine whether a supply is a mixed supply or not. Following factors can be used to determine if a supply is a mixed supply:
- Two or more goods or/and services are supplied to the recipient.
- A single item can also be purchased by the customer.
Example of Mixed Supply
Grofers package consisting of aerated drinks, branded wheat flour, chocolates, sponge cakes, and dry fruits. So, here we can see that the customer can purchase any of the products individually.
GST Rate on Mixed Supply
In the case of mixed supply, the product that has the highest tax rate will be considered as the GST rate for the whole supply.
Let us understand this with the above example, the aerated drink has the highest GST rate of 28% when compared with other products in the Grofers package. Therefore, the GST rate of aerated drinks i.e., 28% will apply to the whole supply.
Determining Time of Supply in the Case of Mixed Supply
Time of supply in case of mixed depends on the highest GST rate applicable on the product. If the supply of service attracts a higher GST rate than any other supplied product, then the provision time of supply of services would be applicable. On the other hand, if a good attracts a higher GST rate than any other products supplied, then the provisions relating to the time of supply of goods would be applicable.
