The expression “supply” includes––

all forms of supply of goods or services or both. Such as

  • Sale,
  • Transfer,
  • Barter,
  • Exchange,
  • Licence,
  • Rental,
  • Lease
  • Disposal
  • Import of services for a consideration

whether or not in the course or furtherance of business;

The classification of an item determines what rate it receives. Specific rates for goods and services have been defined by the GST Council. GST Rate for each type of goods and services have been defined in the GST Law. If we supply a particular good or a service in any transaction, then rates are easy to identify. However, classifying items is often open to interpretation. Sometimes supply of a good and service may be connected or may be done together even though not connect. A bundled supply is a combination of goods and/or services.  Say for example,

  • An AC is supplied and AC installation services are also supplied along with it. The GST Act defines how such supply must be rated.
  • A pack of festival sweets may have candies as well as chocolates, which would attract different GST rates.
  • A manufacturer may sell a car to a dealer and arrange its transport. Should the car and the transport be taxed separately?

Therefore, the concept of composite supply and mixed supply becomes important. It helps to determine the correct GST rate.

How to determine if it is naturally bundled!

The question of bundled supply in the ordinary course of business depends on the normal practices followed in the industry.

  1. If buyers mostly expect such services to be provided as a package, then the package will be treated as naturally bundled.

For example, most business conventions look for combination of hotel accommodation, auditorium and food.

  1. If most of the service providers in the industry provide a package of services then it can be considered as naturally bundled. For example, air transport and food on board is a bundle offered by most airlines.
  2. The nature of the various services in a bundle of services will also help to identify whether the services are bundled.

If there is a main service and the others are ancillary service then it becomes a bundled service.

Other indicators of bundling of services in the ordinary course of business (but they are not a fool proof identification):

  • There is a single price for the package even if the customers opt for less
  • The components are normally advertised as a package
  • The different components are not available separately


Composite supply

Composite supply, on the other hand, is a supply consisting of two or more taxable supplies of goods or services, or both, that are naturally bundled and supplied in conjunction 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.

The tax rate of the principal supply will apply on the entire supply.

Mixed supply

If it involves supply of more than one goods and / or services which are not naturally bundled together: These are referred to as mixed supply of goods and / or services. It shall be deemed to be a supply of that goods or services therein, which are liable to tax at the highest rate of 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.

A Brief-Composite Supply Vs Mixed Supply


Description Composite Supply Mixed Supply
Naturally bundled Yes No
Supplied together Yes Yes
Each supply available for supply individually No Yes
One is predominant supply for recipient Yes No
Other supply(ies) are ancillary or they are

received because of predominant supply

Yes No
Each supply priced separately Yes/No Yes
All supplies can be goods or Services or both Yes Yes



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