Mixed and Composite Supply

Mixed and Composite Supply under GST


Some of the supplies will consist of a combination of goods, services, or goods and services. Each component of a given supply may be subject to a different tax rate. Regarding the classification of these supplies, the rate of tax to be imposed on them may pose a problem. For this reason, the GST Law identifies composite and mixed supplies and provides certainty regarding the tax treatment of such supplies under GST. The taxable event under the GST is the provision of goods, services, or both. Unless otherwise exempted, GST is payable on every supply of goods or services or both.

Composite Supply:

A composite supply is one that is made to a recipient by a taxable person that consists of more than one taxable supply of goods, services, both, or any combination of these that are naturally combined and provided alongside one another in the regular course of business, one of which is a principal supply.

When goods are packed and transported with insurance the supply of goods, transport, packing materials, and insurance constitute a composite supply, whereas the supply of goods is the principal supply. A construction contract and restaurant services are classic examples of composite supplies; however, the GST Act classifies both as services subject to the tax rate specified for such services.

Mixed Supply

A mixed supply is a container that is offered for a single price and includes canned food, candies, cakes, chocolates, dry fruits, fizzy drinks, and fruit juices. Each of these things is independent of the others and can be offered on its own. If these components are delivered individually, the supply is not deemed mixed.

To determine whether a particular supply is Mixed Supply, it is first necessary to rule out the possibility that it is a composite supply. Only if a supply is not a composite supply can it be a mixed supply.

Taxability of Composite and Mixed Supplies:

The tax liability associated with a composite or mixed supply shall be determined as follows:

Time of supply for Composite supply:

If the composite supply includes the supply of services as the principal supply, the composite supply will qualify as a supply of services, and the provisions pertaining to the time of supply for services would apply. Alternatively, if the principal component of a composite supply is the supply of goods, the composite supply would qualify as a supply of goods, and the provisions governing the time of supply of goods would apply.

Time of supply in the case of mixed supplies:

If the mixed supply includes the supply of a service subject to tax at a higher rate than any of the other constituent supplies, the mixed supply will qualify as a supply of services, and the provisions governing the time of supply of services would apply. Alternatively, if the mixed supply includes the supply of goods subject to tax at higher rates than the other constituent supplies, the mixed supply would qualify as a supply of goods, and the provisions governing the timing of the supply of services would apply.

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