Indirect Tax Laws · Supply under GST

Composite and Mixed Supply under GST

Updated 5 October 2026 · Fact-checked

A composite supply is two or more supplies naturally bundled and made together in the ordinary course of business, one of which is the principal supply. It is taxed at the principal supply's rate. A mixed supply is a bundle sold for a single price without being naturally bundled. It is taxed at the rate of the supply with the highest rate.

Understand Composite and Mixed Supply

A supplier often sells more than one item in a single transaction. GST needs one rule to decide the rate. Section 8 of the CGST Act gives that rule. It applies when a transaction bundles two or more supplies together and they are not simply separate sales.

A composite supply (defined in section 2(30)) has 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 them is the principal supply. Natural bundling is the test, not the price. Example: a garage supplies a car repair service and also the spare parts used in the repair. The parts are used up in the repair and are ancillary to it. The service is the main purpose.

The principal supply is the supply of goods or services that constitutes the predominant element of the composite supply. Any other supply in the bundle is ancillary to it. Ask: what is the customer really paying for?

A mixed supply (defined in section 2(74)) is two or more individual supplies made in conjunction with each other for a single price, where the supply is not a composite supply. What separates it from a composite supply is that the supplies are not naturally bundled. Each could be sold on its own. Example: a gift pack with chocolates, a dry fruit box and a candle, sold at one price. The supplier chose to pack them together.

The tax treatment differs. A composite supply is taxed as the principal supply. A mixed supply is taxed as the one supply, among those in the mix, that attracts the highest rate of tax. The test of whether supplies are naturally bundled is based on how the trade normally treats them, not on what the supplier prefers.

Key rules to remember

Composite supply: Tax treatment = treat the whole bundle as the principal supply; Needs: two or more taxable supplies, naturally bundled, supplied in conjunction in the ordinary course of business, one being the principal supply. Natural bundling is the test that separates it from a mixed supply.
Mixed supply: Tax treatment = treat the whole bundle as the supply that attracts the highest rate of tax; Needs: two or more individual supplies made in conjunction with each other for a single price, and not a composite supply. The distinguishing test is natural bundling: a mixed supply is not naturally bundled.
Principal supply: Principal supply = the predominant element of the composite supply; Other elements are ancillary. The rate of the principal supply applies to the whole.
Where the law sits: Section 8, CGST Act: tax liability on composite and mixed supplies; Composite supply is defined in section 2(30) and mixed supply in section 2(74); section 8 gives the tax treatment.
Value for a bundle: Taxable value = transaction value of the whole bundle under section 15; rate = rate of principal supply (composite) or highest rate (mixed); The value is not split by individual rates. One rate applies to the whole value of the bundle.

How to solve Composite and Mixed Supply questions

Use the same sequence in any case question. Decide the type first, then the rate, then compute.

1List every item supplied in the transaction and note whether each is goods or services and its GST rate.
2Check whether the items are bundled in one transaction by one supplier. If the items are billed separately and are independent, they are not a bundle; tax each one separately.
3Ask whether the items are naturally bundled in the ordinary course of business. If yes, it is a composite supply. If they could be sold separately and are bundled by choice for a single price, it is a mixed supply.
4For a composite supply, identify the principal supply, the item the customer mainly wants. Others are ancillary.
5Apply the rule: composite supply is taxed at the principal supply's rate; mixed supply at the highest rate among the items.
6Compute GST on the transaction value of the whole bundle (section 15) at that rate, then split into CGST and SGST, or IGST, based on place of supply.
7State your conclusion with the provision and the reason in one or two lines.

Quickest way: Natural bundle test in three questions

When to use it: Use when the question is short and asks only for the rate or type of supply.

Are the items supplied together as one bundle by one supplier? If they are independent supplies, tax each separately.
Would a normal customer expect these together, with one clearly the main item? Yes means composite, take the main item's rate.
If the items are not naturally bundled but are supplied together for a single price, it is mixed. Natural bundling, not price, decides the type. Pick the highest rate among the items and apply it to the total.

Common mistakes in Composite and Mixed Supply

Taking the average or a proportionate rate for a mixed supply.
Students split the price by item and apply each item's own rate, as in an itemised bill.
Fix: For a mixed supply, apply the highest rate to the whole single price. No apportionment.
Calling a bundle composite just because items are sold together.
Selling together is mistaken for being naturally bundled.
Fix: Test the natural bundle by trade practice. A hamper packed by choice is mixed, not composite.
Applying the highest rate to a composite supply.
The two rules get swapped.
Fix: Remember: composite follows the principal supply, mixed follows the highest rate. The principal supply may carry a lower rate than an ancillary item.
Failing to name the principal supply.
Students jump to the rate without stating which item is predominant.
Fix: Always write one line identifying the principal supply and why. Marks are given for it.
Treating separately invoiced independent supplies as a bundle.
The items come from the same supplier on the same day.
Fix: Section 8 applies only where two or more supplies are made in conjunction with each other: either naturally bundled (composite) or, where not naturally bundled, supplied together for a single price (mixed). Where the items are independent supplies, tax each at its own rate. For a bundle, the value is the transaction value under section 15.

Worked examples

Example 1

A dealer sells a machine to a customer under one contract for a single price of ₹1,00,000. The price includes the machine and the transport of the machine to the customer's factory by the dealer. Assume, for this question only, that the machine (goods) attracts GST at 18% and the transport service attracts 5%. Is it a composite or mixed supply? What GST is payable?

Show the solution

Items: supply of machine (goods) and transport service. One price of ₹1,00,000 and one supplier.
Are they naturally bundled? Yes. Goods sold with delivery to the buyer's premises are normally supplied together in the ordinary course of business.
So this is a composite supply. The principal supply is the machine, since the customer mainly wants it. Transport is ancillary.
Rate: a composite supply is taxed at the rate of the principal supply, that is 18% (assumed), even though the transport alone would attract 5%.
GST = 18% of ₹1,00,000 = ₹18,000.

Answer: It is a composite supply. The principal supply is the machine, so 18% applies to the whole ₹1,00,000, giving GST of ₹18,000 (rates assumed for the question).

Example 2

A trader sells a festival gift pack at a single price of ₹2,000. It has sweets (GST 5%), a decorative lamp (GST 18%) and a packet of incense (GST 12%). The items are also sold separately. Determine the nature of supply and GST payable.

Show the solution

Single price of ₹2,000 for three individual supplies.
Each item is sold on its own, so the pack is not naturally bundled. The trader chose to combine them.
So this is a mixed supply under section 8.
Rate: the highest rate among the items. The rates are 5%, 18% and 12%, so 18% applies.
GST = 18% of ₹2,000 = ₹360, to be split into CGST ₹180 and SGST ₹180 for an intra-State supply.

Answer: It is a mixed supply taxed at 18% on the entire ₹2,000. GST payable is ₹360.

Exam tips

Write the definition words that matter: naturally bundled, ordinary course of business and principal supply for composite; single price for mixed. Examiners look for them.
In MCQs, check the rate rule first. Composite means principal supply's rate; mixed means highest rate.
In case questions, state the type, the reason, the rate and the computation in that order.
Cite section 8 of the CGST Act for tax treatment. Do not quote sub-clauses you are not sure of.
Watch for facts that signal bundle by choice, such as promotional packs and combo offers. They point to mixed supply.

Practice questions from Supply under GST

Composite and Mixed Supply in other exams

The same ground in other exams, if you are preparing for more than one or want another angle on it.

Composite and Mixed Supply: frequently asked questions

What is the difference between composite supply and mixed supply?

A composite supply is naturally bundled in the ordinary course of business and has a principal supply. A mixed supply is bundled by the supplier's choice for a single price. Composite follows the principal supply's rate. Mixed follows the highest rate.

What is principal supply under GST?

It is the supply of goods or services that is the predominant element of a composite supply. The other elements are ancillary. The whole bundle is taxed at the rate of the principal supply.

How is tax rate determined on a mixed supply?

Take the rates of all individual supplies in the bundle. The supply with the highest rate decides the rate. That rate applies to the whole single price.

Which section of the CGST Act deals with composite and mixed supplies?

Section 8 deals with the tax liability on composite and mixed supplies. The definitions are in the definitions section of the Act.