Table of Contents
1. Why should we classify a supply as composite or mixed supply?
- In certain cases, supplies are a combination of goods or combination of services or combination of both goods and services and each component of such supply may be taxed at different rates.
- the supply in such cases is classified into composite or mixed supply in order to determine the rate of GST.
2. How to determine if the supply is a composite or mixed supply?
- Section 8 of the CGST Act, 2017 defines composite and mixed supply.
- Basically, a supply can be differentiated into composite & mixed supply based on whether they are naturally bundled or not in the ordinary course of business.
3. What do you mean by composite supply under section 8 of CGST Act, 2017?
Composite supply means a supply
- Consisting of two or more goods/services that are naturally bundled in the ordinary course of business and one of which is a principal supply.
- For e.g. transportation charges in an invoice for supply of goods. (principal supply being supply of goods)
4. What is a principal supply under section 8 of the CGST Act, 2017?
- Principal supply is the predominant element of the composite supply and other supplies are ancillary to such principal supply.
- You can say that the existence of all other supplies depend on such principal supply.
5. What are the characteristics of a composite supply?
- The elements are normally advertised as a package.
- It means that the items are generally sold as a combination. The items cannot be supplied separately.
- The different elements are integral to one overall supply. If one or more supply is removed, the nature of the supply would be affected.