what is composit supply
Manish Monga (55 Points)
31 December 2017
explain compsit supply with section
5 Replies
SUSHIL SINHA
(68 Points)
Replied 31 December 2017
Composite supply means a supply is comprising two or more goods/services, which are naturally bundled and supplied in with each other in the ordinary course of business, one of which is a principal supply.
It means that the items are generally sold as a combination.
The items cannot be supplied separately.
How to determine if it is a composite supply?
A supply of goods and/or services will be treated as composite supply if it fulfills the following criteria:
Supply of 2 or more goods or services together AND
It is a natural bundle, i.e., goods or services are usually provided together in the normal course of business.
They cannot be separated.
What tax rate will apply?
The tax rate of the principal supply will apply on the entire supply.
Example:
Goods are packed and transported with insurance. The supply of goods, packing materials, transport and insurance is a composite supply. Insurance, transport cannot be done separately if there are no goods to supply. Thus, the supply of goods is the principal supply.
Tax liability will be the tax on the principal supply i.e., GST rate on the goods.
If the second condition is not fulfilled it becomes a mixed supply.
What is mixed supply under GST?
Mixed supply under GST means a combination of two or more goods or services made together for a single price.
Each of these items can be supplied separately and is not dependent on any other.
Under GST, a mixed supply will have the tax rate of the item which has the highest rate of tax.
For example-
A Diwali gift box consisting of canned foods, sweets, chocolates, cakes, dry fruits, aerated drink and fruit juices supplied for a single price is a mixed supply. All are also sold separately. Since aerated drinks have the highest GST rate of 28%, aerated drinks will be treated as principal supply and 28% will apply on the entire gift box
It means that the items are generally sold as a combination.
The items cannot be supplied separately.
How to determine if it is a composite supply?
A supply of goods and/or services will be treated as composite supply if it fulfills the following criteria:
Supply of 2 or more goods or services together AND
It is a natural bundle, i.e., goods or services are usually provided together in the normal course of business.
They cannot be separated.
What tax rate will apply?
The tax rate of the principal supply will apply on the entire supply.
Example:
Goods are packed and transported with insurance. The supply of goods, packing materials, transport and insurance is a composite supply. Insurance, transport cannot be done separately if there are no goods to supply. Thus, the supply of goods is the principal supply.
Tax liability will be the tax on the principal supply i.e., GST rate on the goods.
If the second condition is not fulfilled it becomes a mixed supply.
What is mixed supply under GST?
Mixed supply under GST means a combination of two or more goods or services made together for a single price.
Each of these items can be supplied separately and is not dependent on any other.
Under GST, a mixed supply will have the tax rate of the item which has the highest rate of tax.
For example-
A Diwali gift box consisting of canned foods, sweets, chocolates, cakes, dry fruits, aerated drink and fruit juices supplied for a single price is a mixed supply. All are also sold separately. Since aerated drinks have the highest GST rate of 28%, aerated drinks will be treated as principal supply and 28% will apply on the entire gift box
Manish Monga
(55 Points)
Replied 31 December 2017
we purchase rikshaw at 12 % and its battery separately at28% now at which rate of gst rikshaw can b sold with installed battery
Shankar Sharma
(510 Points)
Replied 31 December 2017
Mr. Sinha, very lucid and clear explanation. Thanks
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