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composite and mixed suppliesTax liability on composite and mixed supplies – GST Regime.

As per section 2(30) of the CGST Act “composite supply” means a supply made by a taxable person to a recipient consisting of two or more taxable supplies of goods or services or both, or any combination thereof, which are naturally bundled and supplied in conjunction with each other in the ordinary course of business, one of which is a principal supply;

Illustration: Where goods are packed and transported with insurance, the supply of goods, packing materials, transport and insurance is a composite supply and supply of goods is a principal supply.

As per section 2(74) of the CGST Act “mixed supply” means two or more individual supplies of goods or services, or any combination thereof, made in conjunction with each other by a taxable person for a single price where such supply does not constitute a composite supply;

Illustration: A supply of a package consisting of canned foods, sweets, chocolates, cakes, dry fruits, aerated drinks and fruit juices when supplied for a single price is a mixed supply. Each of these items can be supplied separately and is not dependent on any other. It shall not be a mixed supply if these items are supplied separately.

It is essential to understand the difference between the two terms composite supply and mixed supply because the tax treatment is different for each of them under GST. The most defining difference between composite supply and mixed supply is that under the former one of the supplies is a principal supply i.e. the other supplies are dependent on the principal supply whereas in case of the latter each supply is capable of being made separately and is not dependent on any other supply.

Section 8 of the CGST Act deals with tax liability in case composite and mixed supplies. If a supply is a composite supply it will be regarded as supply of principal goods or services as the case maybe. If the supply constitutes a mixed supply it shall be treated as supply of goods or services which falls under highest tax rate.
The purpose of this article is to spread awareness about the soon to be implemented Goods and Service Tax in India.

(The author practices as a Chartered Accountant under the name and style of Rishabh Kumar Barmecha and Associates and is an expert in auditing, financial investigation, direct and indirect taxation. The author can be reached at rishabhkumarbarmecha@gmail.com Mobile No.  91 9007909221 or Twitter @CARKBarmecha.)

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