Section 8
Section 8 explains how GST will be charged when multiple goods or services are supplied together.
It deals with:
- Composite Supply
- Mixed Supply
The purpose is to determine which GST rate should be applied when more than one item is sold together.
1. Composite Supply
A Composite Supply consists of two or more supplies that are naturally bundled and supplied together in the ordinary course of business, where one supply is the principal supply.
GST Treatment
The entire transaction is taxed at the rate applicable to the principal supply.
Example 1: Sale of Air Conditioner with Installation
- Air Conditioner = Goods
- Installation Service = Service
Customers normally expect installation along with the AC.
Here:
- Principal Supply = Air Conditioner
- Installation is ancillary
GST will be charged at the rate applicable to the AC.
Example 2: Goods Transport Service
Transportation charges include:
- Loading
- Unloading
- Packing
These services are naturally bundled with transportation.
The entire supply will be treated as transportation service.
2. Mixed Supply
A Mixed Supply consists of two or more individual supplies bundled together for a single price, but they are not naturally bundled.
GST Treatment
The entire package is taxed at the highest GST rate applicable to any item in the package.
Example:
A Diwali Gift Hamper contains:
- Chocolates (18%)
- Dry Fruits (5%)
- Soft Drinks (28%)
Sold for one consolidated price.
Since these items can be sold separately and are not naturally bundled:
→ It is a Mixed Supply.
→ Entire hamper will be taxed at 28% (highest rate among the items).
Difference Between Composite and Mixed Supply
|
Particulars |
Composite Supply |
Mixed Supply |
|
Nature |
Naturally bundled |
Artificially bundled |
|
Principal Supply |
Exists |
Does not exist |
|
GST Rate |
Rate of principal supply |
Highest rate among all supplies |
|
Example |
AC with installation |
Diwali gift hamper |
Practical Test
Ask yourself:
"Would the customer normally expect these supplies together?"
Yes → Composite Supply
No, only bundled for promotion/package sale → Mixed Supply
Easy One-Line Summary
Section 8 decides the GST rate when multiple goods or services are supplied together: Composite Supply is taxed at the rate of the principal supply, while Mixed Supply is taxed at the highest GST rate applicable to any item in the package.
The content provided in this article is intended solely for educational and informational purposes and should not be construed as professional accounting, taxation, legal, or financial advice. Readers are advised to consult a qualified professional before making any financial, tax, legal, or business decisions based on the information contained herein.Disclaimer