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Taxation · Supply under GST

Composite and Mixed Supplies under GST (Section 8 CGST)

Updated 4 October 2026 · Fact-checked

A composite supply (Section 2(30)) has two or more taxable supplies naturally bundled together, one being the principal supply; Section 8 taxes the whole at the principal supply's rate. A mixed supply (Section 2(74)) is made together for a single price without natural bundling; Section 8 taxes it at the highest rate.

Understand Composite and Mixed Supplies

A business often sells more than one item or service in a single deal. GST needs one rule to decide the rate on such a deal. The CGST Act, 2017 defines the two types of deal in Section 2: composite supply in Section 2(30), mixed supply in Section 2(74) and principal supply in Section 2(90). Section 8 then gives the tax treatment of each.

A composite supply (Section 2(30)) is a supply made by a taxable person to a recipient. It has two or more taxable supplies of goods or services, or both, or any combination of them. They are naturally bundled and supplied together in the ordinary course of business. One of them is the principal supply. Example: goods are packed, insured and transported for a single price. These services are naturally bundled, and transport of goods is the principal supply. The test is: would a normal buyer expect these together?

The principal supply (Section 2(90)) is the supply of goods or services that forms the predominant element of the composite supply. Every other element in the bundle is only ancillary to it. That is, the other elements are there to help you enjoy or use the main supply. Under Section 8(a), the whole composite supply is taxed as the principal supply. So if the principal supply is taxed at 18%, the entire bundle is taxed at 18%, even if an ancillary item alone would have a different rate.

A mixed supply (Section 2(74)) is two or more individual supplies of goods or services, or any combination, made in conjunction with each other by a taxable person for a single price. By definition, it does not constitute a composite supply. Example: a gift pack with chocolates, a cake, dry fruits and a soft drink sold at one price. Here, no item is the principal one. Under Section 8(b), the whole pack is taxed at the rate of the supply that attracts the highest rate of tax.

The key difference is natural bundling. Composite means natural bundling plus a principal supply. Mixed means a combination at one price without natural bundling, and the highest rate applies. Both are decided on facts, so always read the question for the words that show how the items are normally sold.

Key rules to remember

Composite supply (defined in Section 2(30); taxed under Section 8(a) CGST)
Tax on whole bundle = Rate applicable to the principal supply
Needs two or more taxable supplies that are naturally bundled and supplied together in the ordinary course of business, with one principal supply.
Mixed supply (defined in Section 2(74); taxed under Section 8(b) CGST)
Tax on whole bundle = Rate of 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, not forming a composite supply. By definition, a composite supply is not a mixed supply.
Principal supply (Section 2(90) CGST)
Principal supply = the supply of goods or services that constitutes the predominant element of a composite supply and to which other supplies are ancillary
This is the definition test in the Act. Identify it by the main purpose of the buyer.
Tax on the bundle
Tax = Total taxable value of the bundle × Rate of principal supply (composite) or highest rate (mixed)
The single rate is applied to the total taxable value of the bundle.

How to solve Composite and Mixed Supplies questions

Use this method for any question that asks for the tax rate or liability on a bundle of supplies.

  1. 1List every individual supply in the bundle and note the GST rate of each item if it were supplied alone.
  2. 2Check whether the supplier makes the supplies together to one recipient and whether the items are sold for a single price.
  3. 3Ask whether the items are naturally bundled in the ordinary course of business. Look for words like usual practice, necessarily, or as part of the service.
  4. 4If naturally bundled, it is a composite supply. Identify the principal supply, which is the item the buyer mainly wants. All others are ancillary.
  5. 5Apply the rate of the principal supply to the whole value of the bundle.
  6. 6If not naturally bundled and sold at a single price, it is a mixed supply. Pick the highest rate among the items and apply it to the whole value.
  7. 7Compute the tax on the total value and split it into CGST and SGST, or IGST, based on the place of supply.
  8. 8Write one line stating the section (Section 2(30) or 2(74) for the type, Section 8 for the tax treatment) and the reason for your classification.

Quickest way: Natural bundle test and rate pick

When to use it: Use this for MCQs and for short written parts where you must classify a bundle fast.

  1. Ask one question: would these items usually be sold together? If yes, think composite. If it is just a combination pack, think mixed.
  2. For composite, find the main item. The answer rate is its rate. Ignore the rate of the add-ons.
  3. For mixed, scan the rates and pick the highest. The answer rate is that one.
  4. In MCQs, eliminate options that use an average or a split rate. Section 8 never allows these.
  5. In written answers, use this format: provision (Section 8, with the definition in Section 2(30) or 2(74)), facts (items, bundling, price), conclusion (type and rate). This earns step marks even if the rate is wrong.

Common mistakes in Composite and Mixed Supplies

  • Taxing each item in the bundle at its own rate.

    Students are used to item-wise rates and forget that Section 8 treats the bundle as one supply.

    Fix: Once you classify the bundle as composite or mixed, apply a single rate to the whole value.

  • Using the highest rate for a composite supply.

    Students mix up the two rules because both give one rate for the bundle.

    Fix: Remember: composite means principal supply rate. Mixed means highest rate.

  • Treating any combination pack as a composite supply.

    A bundle sold at one price looks like one supply, so students ignore the natural bundling test.

    Fix: Check whether the items are normally supplied together. A festival gift hamper is mixed, not composite.

  • Picking the principal supply by value rather than by purpose.

    The costlier item seems like the main one.

    Fix: Identify the principal supply by what the recipient mainly wants. Value can be a clue but it is not the legal test.

  • Calling a mixed supply a composite supply because the supplier calls it a package.

    Students go by the label in the question rather than the facts.

    Fix: Decide on the facts of the supply and the ordinary course of business, not on the name the supplier gives.

Worked examples

Example 1

A transporter packs, insures and transports goods for a single price of ₹50,000. Assume transport of goods is taxable at 18% and that packing and insurance, if supplied alone, are taxable at 12%. Determine the type of supply, the rate of tax and the GST on the invoice (intra-State supply).

Show the solution
  1. Items: packing (12% if supplied alone), insurance (12% if supplied alone) and transport of goods (18%). Total price: ₹50,000.
  2. The goods are packed, insured and transported for a single price, so the services are naturally bundled. This is a composite supply (Section 2(30)) taxed under Section 8(a).
  3. The principal supply is transport of goods. Packing and insurance are ancillary to it.
  4. Rate on the whole bundle = rate of transport = 18%. The assumed 12% rate of packing and insurance is ignored.
  5. GST = ₹50,000 × 18% = ₹9,000.
  6. As the supply is intra-State, CGST = ₹4,500 and SGST = ₹4,500.

Answer: Composite supply; taxed at 18% (principal supply rate). GST = ₹9,000 (CGST ₹4,500 + SGST ₹4,500).

Example 2

A shop sells a Diwali gift hamper at ₹5,000 containing sweets (5% GST rate), dry fruits (12%), a ceramic idol (18%) and a scented candle (18%). The items are packed together only for the festival offer. Find the type of supply, the applicable rate and the GST payable if the supply is intra-State, and state the rate if the hamper had neither the idol nor the candle.

Show the solution
  1. Items and rates: sweets 5%, dry fruits 12%, idol 18%, candle 18%. Price: ₹5,000 for the pack.
  2. These items are not naturally bundled. They are put together only as a festive offer for a single price. So this is a mixed supply (Section 2(74)) taxed under Section 8(b).
  3. Rate on the whole supply = the highest rate among the items = 18%.
  4. GST = ₹5,000 × 18% = ₹900.
  5. Intra-State: CGST = ₹450 and SGST = ₹450.
  6. Without both the idol and the candle, the items left are sweets (5%) and dry fruits (12%). The highest rate is now 12%, so the whole hamper is taxed at 12%. On the same price of ₹5,000, GST would be ₹600.

Answer: Mixed supply; taxed at the highest rate of 18%. GST = ₹900 (CGST ₹450 + SGST ₹450). Without the idol and the candle, the highest rate falls to 12% and GST on ₹5,000 would be ₹600.

Exam tips

  • Always start your written answer with the words composite supply or mixed supply and cite the definition (Section 2(30) or 2(74)) and Section 8. Examiners give marks for the correct provision.
  • In MCQs, the key words are naturally bundled, ordinary course of business and single price. Match them to the correct type before looking at the rates.
  • If a question gives rates for each item, expect a trap: the average or the sum of rates is never correct.
  • Check the place of supply to decide between CGST plus SGST and IGST after you finish the rate work.
  • Practise the principal supply test with service examples such as transport with packing and insurance or a works contract with materials, since questions often frame these as facts.

Practice questions from Supply under GST

Composite and Mixed Supplies 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 Supplies: frequently asked questions

What is the difference between composite supply and mixed supply?

A composite supply is naturally bundled and has a principal supply, so the whole bundle takes the principal supply's rate. A mixed supply is a combination at one price that is not naturally bundled, so the highest rate applies. Natural bundling is the key test.

How do I identify the principal supply under GST?

The principal supply is the main element of the bundle, the one the recipient mainly wants. The other items are ancillary and help in the use or enjoyment of the main supply. Read the facts and ask what the buyer is really paying for.

Can a mixed supply also be a composite supply?

No. The definition of mixed supply in Section 2(74) excludes a composite supply. If the items are naturally bundled, it is composite. If they are not naturally bundled but sold together at a single price, it is mixed.

Is the tax charged on each item separately in a composite supply?

No. The whole bundle is treated as a supply of the principal supply. The single rate of the principal supply applies to the total value.