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Composite supply and mixed supply under GST rule & Invoice format

Composite supply and mixed supply under GST rule & Invoice format
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Composite supply and mixed supply is the essential part of the modern sale process.Business sells goods and services as bundle. Mixed supply makes bundle s mostly for sale promotion where as Composite supply sells goods and services which are inter-related each other. Let’s learn this in detail.

What is Composite supply or composite sale ?

Composite Supply or composite sale is the items sold together in the normal course of business. Some times these are the combination of sale of goods or combination of supply of services or combination of goods and services.  GST rules proposes different tax rates for different products and services.  For composite supply you may either generate a separate bill for each and every goods and services or you can follow the composite supply scheme under GST.

Under GST, a composite supply would mean a supply made by a taxable person to a recipient consisting of two or more taxable supplies of goods or services or both, or any combination thereof, which are naturally bundled and supplied in conjunction with each other in the ordinary course of business, one of which is a principal supply.

  1. The composite supply should have two or more taxable goods or services or it’s combination.
  2. The composite supply must be a bundled sale in the ordinary course of business
  3. The composite supply consist of principal supply and ancillary supply.

The composite supply consists of two elements that are principal supply and ancillary supply, The section 2(90) of CGST act defines Principal supply as the supply which constitutes predominant of a composite supply and to which any other supply forming a part of that composite supply is ancillary.

Which GST tax rate applies to Composite supply ?

As the composite supply is the sale of more than one goods or services or its combinations and may have different tax rates for each,The Tax payers will have a confusion of which tax rate applies to this bundled sale .  As per GST rules For Composite supply the tax rate of the principal supply  applies to the entire sale or bundle.

Section 8 (a) CGST Act state the Rate of composite supply as

a composite supply comprising two or more supplies, one of which is a principal supply, shall be treated as a supply of such principal supply

Examples of Composite supply?

  1. An electronics goods dealer sells Air conditioner along with fixation service. This is the combination of goods and service bundled together. This is a normal business course done by almost all electronics goods  dealer to provide additional services to customers. In this case Air conditioner is the Principal supply and fixation service is ancillary.
  2. A hotel providing catering service along with room renting, here room renting is the principal supply and catering is the ancillary supply.
  3. A floor tile whole seller supply tiles to a building material dealer along with transporting service. Here Tile is the primary supply and transporting service is the ancillary.

Invoice of the Composite Supply & format

There is no specific format for a composite supply invoice. You can raise Invoice in normal GST format.In composite supply each items shall be mentioned Separately  and the tax rate shall be the rate of principal supply. Here is a typical composite supply invoice.

Composite sale invoice format

What is Mixed Supply?

Mixed Supply is defined by CGST Act 1917. Under section 2(74) Defines Mixed supply as “Two or more individual supplies of goods or services,made in conjunction with each other for a single price where such supply does not constitute a composite supply“.

Illustration Provided in the Act

Illustration—A supply of a package consisting of canned foods, sweets, chocolates, cakes, dry fruits, aerated drinks and fruit juices when supplied for a single price is a mixed supply. Each of these items can be supplied separately and is not dependent on any other. It shall not be a mixed supply if these items are supplied separately.

In mixed supply each item in the bundle does not necessitate the supply of another goods or service. Every products are service in the mixed supply bundle has its own existence or usage without the help of one another. mixed supply billed as a single product with single tax rate. For example Sweet boxes with chocolates ,candies, burfi & Laddu will be charge as Sweet box in the invoice and taxed as one with the rate of item which attract highest tax.

Tax rate of mixed supply.

In a mixed supply the rate of item which shall attract maximum rate of tax is applicable to the mixed supply. The Section 8 (b) of CGST Act 2017 states the rate as ” a mixed supply comprising two or more supplies shall be treated as a supply
of that particular supply which attracts the highest rate of tax.

Example of a Mixed supply.

  1. A bakery supplies a package of food for a tea party which contains many food items with different tax rates.Here the seller or taxable person sells each packets for a single price. Here the total nature of the products changes and sells like a new products.

Invoice of mixed supply and format

As composite supply, there is no specific format for mixed supply invoice also. In mixed supply you have to create a new product of your own. Don’t enter each and every product in the invoice. You can describe the content of the bundle in the invoice. Here is a typical format of mixed supply invoice.

Mixed supply invoice format

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