Composite Supply vs Mixed Supply Under GST: Key Differences

Admin

April 12, 2025

Goods and Services Tax (GST) classifies supplies into different categories, including Composite Supply and Mixed Supply. Understanding these concepts is crucial for businesses to determine the correct GST rate and ensure compliance.

1. What is a Composite Supply?

A Composite Supply consists of two or more goods or services that are naturally bundled and supplied together, where one is the principal supply.

Key Features:

The goods/services are inseparable and dependent on each other.
One component is the dominant (principal) supply, and others are ancillary.
GST is charged at the rate applicable to the principal supply.

Examples:

Laptop + Warranty (warranty is ancillary to the laptop).
Hotel accommodation + Breakfast (breakfast is secondary to the room).
Car + Insurance (insurance is bundled with the car purchase).

2. What is a Mixed Supply?

A Mixed Supply involves two or more individual goods/services sold together but can be supplied independently. Unlike composite supply, there is no natural bundling.

Key Features:

The items can be sold separately.
GST is charged at the highest rate among the individual items.

Examples:

Gift Hamper (Chocolates + Books + Perfume) – Each item can be sold separately.
Diwali Package (Sweets + Crackers + Decorations) – No natural bundling.
Electronics Combo (Headphones + Power Bank + Charger) – Each has a standalone use.

Key Differences Between Composite & Mixed Supply

Aspect	Composite Supply	Mixed Supply
Nature of Supply	Naturally bundled, inseparable	Not naturally bundled, independent items
Main Supply	One primary supply with ancillary items	No primary supply; all items are equal
Tax Treatment	Taxed at the rate of the main supply	Taxed at the highest rate among the items
Purpose	To provide a single experience or service	To offer a combined sale of unrelated goods/services
Example	Restaurant services (food + service)	Birthday package (cake + balloons + decorations)

Why Is It Important to Know the Difference?

Understanding the difference between composite and mixed supply is essential for businesses because:

Tax Liability: The GST rate applied depends on whether it’s a composite or mixed supply.
Input Tax Credit (ITC): ITC eligibility varies based on the nature of the supply.
Accounting and Invoicing: Accurate classification helps in proper invoicing and accounting practices.

Conclusion

While both Composite Supply and Mixed Supply involve multiple goods or services, the key difference lies in their nature and tax treatment. Composite supply is inseparable and taxed based on the main supply, whereas mixed supply consists of independent items, taxed at the highest rate among them.

For businesses, understanding these concepts ensures compliance with GST regulations and helps in better tax planning.

Category :

GOOD AND SERVICE,SERVICE TAX