GST on Mixed Supply

GST on Mixed Supply
09 August 2020

GST on Mixed Supply

On certain occasions, two or more goods, or a combination of goods and services, are supplied together. This generally happens, due to either of the following reasons:

  1. Sales strategy to attract more customers
  2. Similar nature or type of goods or services, which requires them to be bundled or supplied together

Under the Service Tax regime, this mechanism was called as a Bundled Good or Service – which implied the rendering of goods or services with another element of goods or services or both.

Under GST, all supplies which are bundled with two or more supplies of goods or services or combination of goods and services are classified, with distinct characteristics as:

  1. Mixed Supply
  2. Composite Supply

It is important thus to understand the implications of composite supply vs. mixed supply, especially in the GST era.

Mixed Supply under GST

Under GST, a mixed supply means two or more individual supplies of goods or services, or any combination thereof, made in conjunction with each other by a taxable person for a single price where such supply does not constitute a composite supply;

Time of supply in case of mixed supplies

The mixed supply, if involves the supply of service liable to tax at higher rates than any other constituent supplies, such mixed supply would qualify as supply of services, and accordingly, the provisions relating to the time of supply of services would be applicable. Alternatively, the mixed supply, if involves the supply of goods liable to tax at higher rates than any other constituent supplies, such mixed supply would qualify as supply of goods and accordingly, the provisions relating to the time of supply of services would be applicable

How to distinguish between composite supply and mixed supply

 At first glance, composite supplies and mixed supplies may look very similar to each other. In both cases, we talk about supplying goods and/or services as a bundle for a single price. But then, why have our tax authorities gone to great lengths to differentiate them? Well, let’s see why:

  1. Difference No.1 - Principal supplies — In a composite supply, one item or service is clearly the main part of the supply. In a mixed supply, no one part is necessarily the principal supply (though the part with the highest GST rate is treated as principal).
  2. Difference No.2 - Individually available supplies — In a composite supply, it wouldn’t make sense to sell the secondary parts separately from the principal supply (for instance, the towels provided along with a hotel room). In a mixed supply, each piece could be sold separately (for instance, a grocery bundle containing an assortment of snacks and drinks).
Time of supply in case of mixed supplies

The mixed supply, if involves the supply of service liable to tax at higher rates than any other constituent supplies, such mixed supply would qualify as supply of services, and accordingly, the provisions relating to the time of supply of services would be applicable. Alternatively, the mixed supply, if involves the supply of goods liable to tax at higher rates than any other constituent supplies, such mixed supply would qualify as supply of goods, and accordingly, the provisions relating to the time of supply of services would be applicable.