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Gst rate on composite supply

Rajiv (Senior Accounts Officer) (1548 Points)

22 July 2019

Good Evening To All Experts,

We make Sale invoice to a Party.in this Bill we add freight . just want to know that what rate will be charges on Freight. Please understand through an example

Sale material Detail to Party

1-Item A with 18 % Igst = 25000

2-Item B with 28% Igst = 40000

In This bill we also add freight 10000. Than in which percentage We will charge Igst on freight amount 10K. 18 or 28%

It will treat composite Supply ????

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12 Replies

Pankaj Rawat (GST Practitioner) (55047 Points)
Replied 23 July 2019

Dear Rajive

First of All the Example you have given is Not constitute to be a Composite Supply . As per Section 8(a) ,R/w Sec.2(30) of CGST Act , composit supply comprises two or more supplies , one which is PRINCIPAL SUPPLY , which gives such bundle essential characteristics & accordingly ., TAX RATE OF PRINCIPAL SUPPLY WILL APPLY.

Hence in above example the rate for both item will be either 18% or 28% & rate for the freight charges will also be rate of principal supply.

Now If as per above example , if it is a Mixed Supply then In terms of Section 8(b) , the Freight rate will be the Highest rate of Tax ie 28% & for both item also you need to charge 28%

So as per above it's very important to know whether it's a Composite .Supply or Mixed Supply & charge GST rate Accordingly.

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Rajiv (Senior Accounts Officer) (1548 Points)
Replied 23 July 2019

Thanks for your reply

But Sir, this will not treat as a Composite supply? Because Sir i Read a example in Section 2(30) following

llustration: 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.

So I actually charged 28% Igst in transport also. because Higher rate will be also applicable in case of Composite Supply Like the case of mixed supply.But i was want to knew that is it Composite Supply

Reply Please

Pankaj Rawat (GST Practitioner) (55047 Points)
Replied 23 July 2019

Yes Rajive ji , ,thats what I stated above .

But if you Raise a different Bill for transportation , no need to charge GST as it's exempted in terms of Notification 12/2018 CT (r)

Rajiv (Senior Accounts Officer) (1548 Points)
Replied 23 July 2019

Originally posted by : Pankaj Rawat

Yes Rajive ji , ,thats what I stated above .But if you Raise a different Bill for transportation , no need to charge GST as it's exempted in terms of Notification 12/2018 CT (r)

BUT SIR AS PER EXAMPLE GIVEN IN SECTION 2(30). MY SITUATION ARE SAME THAN WHY IT IS NOT COMPOSIT SUPPLY TRANSPOTION INCLUDE IN SALE BILL .

Rajiv (Senior Accounts Officer) (1548 Points)
Replied 23 July 2019

Originally posted by : Pankaj Rawat

Yes Rajive ji , ,thats what I stated above .But if you Raise a different Bill for transportation , no need to charge GST as it's exempted in terms of Notification 12/2018 CT (r)

AND SIR Notification No. 12/2018 – Central Tax (Rate) New Delhi, the 29th June, 2018 ABOUT RCM SUSPEND TILL 30 SEPT 2018. AND SIR GTA NOT CAME UNDER SECTION 9(4).

SO IF I WILL ISSUE SINGLE INVOICE OF GTA THAN I WILL CHARGE IGST 12% ON FORWARD CHARGE. SIR KINDLY GUIDE ME IF I AM WRONG

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Pankaj Rawat (GST Practitioner) (55047 Points)
Replied 23 July 2019

In composit supply , rate is applicable of Principal Goods Not Higher rate , kindly refer section 8 of CGST Act .
Yes if your principal Goods is of 28% then It's applies to Freight also being shown in bill .

Sorry it's Notification 12/2017 CT (r) , s.no.18 , if seperate bill is raised for transportation will be exempted.

Note : Advise not to Raise Seperate Bill.

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Rajiv (Senior Accounts Officer) (1548 Points)
Replied 24 July 2019

Originally posted by : Pankaj Rawat

In composit supply , rate is applicable of Principal Goods Not Higher rate , kindly refer section 8 of CGST Act .Yes if your principal Goods is of 28% then It's applies to Freight also being shown in bill . Sorry it's Notification 12/2017 CT (r) , s.no.18 , if seperate bill is raised for transportation will be exempted.Note : Advise not to Raise Seperate Bill.

Sir,

You tell me please what rate will be applicable for freight. As per my view it is Composite Supply.What rate will be applicable for freight ? because 2 different Igst rate item involved in single bill.So Please Reply

Pankaj Rawat (GST Practitioner) (55047 Points)
Replied 24 July 2019

Dear , In composit supply 2 rate cannot be charged in Bill , the rate of principal supply will applicable for whole bill , hence the freight also cover under same . Let's understand by example Food supplied to the Patients in Health care clinic is Exempted . But if the food supplied to other than patient is taxable , why..... Because healthcare services is exempted as principal supply supplied to patients & food supplied is part of composit supply . So as the principal supply is Exempted , the food supplied with it also become exempted.

Rajiv (Senior Accounts Officer) (1548 Points)
Replied 24 July 2019

Originally posted by : Pankaj Rawat

Dear ,
In composit supply 2 rate cannot be charged in Bill , the rate of principal supply will applicable for whole bill , hence the freight also cover under same .

Let's understand by example
Food supplied to the Patients in Health care clinic is Exempted . But if the food supplied to other than patient is taxable , why..... Because healthcare services is exempted as principal supply supplied to patients & food supplied is part of composit supply .
So as the principal supply is Exempted , the food supplied with it also become exempted.

OK SIR BUT WHICH TYPE SUPPLY IS THIS.? PLEASE SHARE YOUR VIEW. WHAT RATE WILL CHARGE ? BECAUSE I HAVE CHARGED 28% AS PER HIGHER RATE IN 2 ITEM.

Pankaj Rawat (GST Practitioner) (55047 Points)
Replied 24 July 2019

It's composit supply l Pls try to understand , the rate will be charged principal goods

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Pankaj Rawat (GST Practitioner) (55047 Points)
Replied 24 July 2019

Dear It's composit supply , & tax rate will be applicable of Principal supply, so if you principal supply item tax rate is 28 % then the same is applicable on whole bill (including freight)