Mixed Supply & Composite Supply under GST

GST (Goods and Services Tax) is an indirect tax that is levied on the supply of goods and services in India. It is a comprehensive tax that subsumes various indirect taxes, such as VAT (Value Added Tax), Excise Duty, and Service Tax. GST is a destination-based tax, which means that the tax is levied on the consumption of goods and services within the jurisdiction of a particular state. Under GST, there are different tax rates applicable to different goods and services, which are specified under the GST rate schedule.

One of the important concepts under GST is the concept of supply. Supply under GST refers to the sale, transfer, barter, exchange, license, rental, lease or disposal made or agreed to be made for a consideration by a person in the course or furtherance of business. It is a crucial concept in GST as the taxability of a transaction depends on whether it constitutes a supply or not.

In some cases, a transaction may involve both goods and services, and it becomes difficult to classify such transactions as either supply of goods or supply of services. In such cases, the concept of mixed supply and composite supply comes into play.

Mixed Supply

A mixed supply refers to a supply of two or more goods or services, where one of the goods or services is a principal supply, and the other is an ancillary supply. A mixed supply is treated as a supply of the principal item. The tax rate applicable to a mixed supply is the tax rate applicable to the principal item.

For example, consider a case where a company supplies a computer along with a printer. In this case, the computer is the principal supply, and the printer is the ancillary supply. The tax rate applicable to this transaction is the tax rate applicable to computers, and not the tax rate applicable to printers.

Composite Supply

A composite supply refers to a supply of two or more goods or services that are naturally bundled and supplied in conjunction with each other in the ordinary course of business, and the goods or services are supplied in such a manner that they cannot be supplied separately. A composite supply is treated as a single supply, and the tax rate applicable to a composite supply is the tax rate applicable to the supply that constitutes the predominant element of the bundle.

For example, consider a case where a company supplies a package tour, which includes travel, accommodation, and food. In this case, the package tour is a composite supply, and the tax rate applicable to this transaction is the tax rate applicable to travel, as it constitutes the predominant element of the bundle.

Difference between Mixed Supply and Composite Supply

The main difference between mixed supply and composite supply lies in the fact that mixed supply refers to two or more supplies that are made in conjunction with each other, where one of the supplies is a principal supply, and the other is an ancillary supply. On the other hand, composite supply refers to two or more supplies that are naturally bundled and supplied in conjunction with each other, and the supplies cannot be supplied separately.

Another difference between mixed supply and composite supply lies in the tax rate applicable to the supplies. In the case of mixed supply, the tax rate applicable is the tax rate applicable to the principal item. In the case of composite supply, the tax rate applicable is the tax rate applicable to the supply that constitutes the predominant element of the bundle.

Conclusion

In conclusion, the concept of mixed supply and composite supply is crucial in GST as it helps in determining the taxability of a transaction. A proper understanding of these concepts is essential for businesses to ensure that they are compliant with the GST laws and are able to correctly