Direct and Indirect Taxation · Computation of GST Liability

Tax Liability on Composite and Mixed Supplies under Section 8 CGST

Updated 10 October 2026 · Fact-checked

Section 8 of the CGST Act fixes the tax rate when several items are supplied together. A composite supply is taxed at the rate of its principal supply. A mixed supply, made together for a single price, is taxed at the rate of the item that attracts the highest rate of tax.

Understand Tax Liability on Composite and Mixed Supplies

Businesses often sell more than one item together. A hotel sells a room with breakfast. A shop sells a gift hamper of chocolates, a mug and dry fruits. GST rates differ by item, so the law needs one rule to decide which rate applies to the whole bundle. That rule is Section 8 of the CGST Act.

A composite supply has two or more supplies of goods or services (or both) that are naturally bundled in the ordinary course of business, and one of them is the principal supply. The principal supply is the main supply of goods or services in the bundle. It is the supply the customer really wants. The other items are only incidental to it. Example: a laptop sold with a carry bag. The laptop is the principal supply.

A mixed supply has two or more individual supplies of goods or services (or both), made together for a single price. They are not naturally bundled. Each could be bought separately. The package is not a composite supply. Example: a gift pack of sweets, chocolates, dry fruits and a toy sold for one price.

So the test is simple. Ask: are these items naturally bundled, so that one is the main item? If yes, it is composite and the principal supply decides the rate. If no, and they are just packed together for a single price, it is mixed and the highest rate applies to the whole value.

Naturally bundled is judged by how the trade normally works, not by the supplier's wish. Packing items together or giving one price does not make a supply composite. A composite supply depends on natural bundling, whether or not a single price is charged. A single price is a requirement for a mixed supply. Look at the nature of the transaction and what the customer expects.

Key rules to remember

Composite supply (Section 8(a)): Tax rate on whole bundle = rate applicable to the principal supply; Applies only when the items are naturally bundled in the ordinary course of business and one is the principal supply.
Mixed supply (Section 8(b)): Tax rate on whole bundle = highest rate among the individual items; Applies when items are supplied together for a single price but are not naturally bundled.
Tax liability: GST = value of the whole supply × applicable rate; Use one rate on the full bundle value. Do not split the price item by item.
Definition test: Naturally bundled + one main item = composite; otherwise single price package = mixed; Decide the classification first, then apply the rate rule.

How to solve Tax Liability on Composite and Mixed Supplies questions

Use this method for any question on composite or mixed supply.

1List every item in the bundle and note the GST rate of each, as given in the question.
2Ask if the items are naturally bundled in the ordinary course of business. Decide whether one item is the main one the customer wants. A single price is not needed for a composite supply, and separate invoices do not by themselves rule it out.
3If naturally bundled, call it a composite supply and identify the principal supply.
4If not naturally bundled, check whether the items are supplied together for a single price. If yes, call it a mixed supply. If they are really independent sales, each is taxed on its own.
5Apply the rate: principal supply's rate for composite, highest rate among the items for mixed.
6Compute GST as total value of the bundle × that single rate, then split into CGST and SGST (or IGST) as required.
7State the conclusion in a line, with the reason.

Quickest way: Two-question shortcut

When to use it: Use in MCQs and in short parts of long questions where time is tight.

Question 1: Is there a main item and are the others naturally part of it? If yes, take the main item's rate.
Question 2: If not, and the items are supplied together for a single price, scan all rates and pick the highest.
Apply that rate on the total price. Do not average or split.
Check the answer is one of the item rates given in the question.

Common mistakes in Tax Liability on Composite and Mixed Supplies

Treating a single-price bundle as composite just because items are sold together.
Students think bundling by itself means composite.
Fix: Check natural bundling in the ordinary course of business. If none, it is mixed.
Taking the highest rate for a composite supply.
Students mix up the two rules of Section 8.
Fix: Composite means principal supply rate. Highest rate is only for mixed.
Averaging the rates of the items.
It feels fair to weight the rates by value.
Fix: Section 8 gives one rate for the whole bundle. Never average or split.
Wrongly choosing the principal supply as the item with the highest value or rate.
Students assume the biggest item is the main one.
Fix: The principal supply is the one that is the main purpose of the transaction for the customer, which is usually, but not always, the costliest.
Calling a supply mixed when there is no single price, or ruling out a composite supply just because items are billed separately.
Students treat single price as a condition for both composite and mixed supply.
Fix: A mixed supply needs items supplied together for a single price. A composite supply depends on natural bundling, whether or not a single price is charged. Separate invoicing alone does not stop it being composite.

Worked examples

Example 1

Rohit Electronics, Pune, sells a laptop for ₹60,000 together with a carry bag for ₹1,000 as one package. The laptop attracts GST at 18% and the carry bag at 12%. Classify the supply and compute the GST on the package.

Show the solution

Items: laptop (18%) and carry bag (12%), sold together for ₹61,000.
A carry bag is naturally supplied with a laptop in the ordinary course of business and is incidental to it. So the supply is composite, and the laptop is the principal supply.
Rate to apply on the whole package is the laptop's rate, 18%.
GST = ₹61,000 × 18% = ₹10,980.

Answer: The supply is composite. GST at 18% on ₹61,000 is ₹10,980.

Example 2

Sharma Sweets, Delhi, sells a Diwali gift pack for a single price of ₹2,000 (exclusive of tax). It contains sweets (5% GST), chocolates (18% GST) and a decorative item (12% GST). The items are not naturally bundled. Find the GST payable and the CGST and SGST split (supply is intra-state).

Show the solution

Items are supplied together for a single price and are not naturally bundled, so it is a mixed supply.
Rates are 5%, 18% and 12%. The highest is 18%.
GST = ₹2,000 × 18% = ₹360.
Intra-state, so CGST = ₹180 and SGST = ₹180.

Answer: Mixed supply taxed at 18%. Total GST is ₹360 (CGST ₹180 + SGST ₹180).

Exam tips

Always write the classification (composite or mixed) and the reason before the rate. Step marks sit there.
Quote Section 8 of the CGST Act in your answer, but cite sub-clauses only if you are sure of them.
In MCQs, look for the words naturally bundled or single price to decide the class quickly.
Remember that principal supply is decided by the nature of the transaction, not simply by value.
Show the final split into CGST and SGST or IGST if the place of supply is given.

Practice questions from Computation of GST Liability

Tax Liability on 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.

Tax Liability on 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 it takes the principal supply's rate. A mixed supply is a package of items sold together for a single price that are not naturally bundled, so it takes the highest rate among them.

What is principal supply in GST?

It is the main supply of goods or services in a composite supply. It is the one that forms the predominant element of the bundle and the one the customer mainly wants. Other items are ancillary to it.

Which rate applies to a mixed supply?

The rate of the item that attracts the highest rate of tax applies to the whole mixed supply. You apply it on the total value of the package.

Does Section 8 apply if items are invoiced separately?

It depends on the type of supply. A mixed supply needs items supplied together for a single price. A composite supply depends on natural bundling in the ordinary course of business, whether or not a single price is charged, so separate invoices alone do not rule it out. Items that are truly independent sales are taxed at their own rates.