In normal course in the business, when a supply is made by one person to another person then he has to charges or collect the GST from the recipient as per the rate prescribed in the Act.
However, where a combined supply is made by one person to another consisting the components of goods or services or both, then in such a case confusion arises as to whether a particular supply is a composite supply or a mixed supply. Now, it becomes very important to determine the nature of supply made because tax rates on these two supplies are different for both.
In this article, we will discuss the difference between these two supplies. Als o discuss when it is deemed as composite supply and when it is called mixed supply.
Section 8 of the CGST Act 2017
As per the provisions of section 8 of the CGST Act.
The tax liability in the case of composite or mixed supply will be determined in the following manner.
(a) Composite supply is a supply which comprises two or more supplies, and one of which is a principal supply, And the whole supply shall be treated as a supply of the principal supply.
(b) Mixed supply is a supply which comprises two or more supplies, and shall be considered as supply of that particular goods/service which attracts the highest rate of tax.
The definition of the composite supply is given under section 2(30) of the CGST Act, 2017. According to the definition composite supply is supply which
- Supply of Two or more Taxable Supplies,
- And are naturally bundled and supplied in conjunction with each other,
- in the ordinary course of business,
- One of which is a Principal supply.
- Booking of the Air ticket in which it includes insurance and meal. In This supply principal supply is Air ticket.
- Selling of goods with packing, transportation and their insurance. Here sale of goods is the principal supply and transportation and Insurance are dependent on sale of goods.
The definition of the mixed supply is given under section 2(74) of the CGST Act, 2017. According to the definition mixed supply is supply which
- Two or more supplies (Individual supplies) of goods and services,
- Any combination of two or more supplies
- And are made in conjunction with each other
- By one Taxable person to other people
- And most important does not constitute composite supply.
*Individual supplies means supplies which are not naturally bundled and are independent of each other.
For example, a gift box in which many items are packed like sweets, dry fruits, cold drinks, and fruit, etc. when supplied for one price of all items is considered as mixed supply. Because these items are not naturally bundled and can be supplied separately.
Note:- If in the above example these items are supplied separately then it shall not be regarded as mixed supply.
The Information contained in this article is based on the author’s own opinion. This is only for the informative purpose of the readers. We do not authenticate the accuracy. We will not be responsible for any damage caused to any person on the basis of this information. We advise to reader please check the original source of the information.
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