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CS Professional · Goods and Services Tax (GST) and Corporate Tax Planning · Supply under GST

Sunrise Gifts Pvt Ltd sells a festive hamper of chocolates, a scented candle and dry fruits for a single price. These items are not naturally bundled and can each be sold separately. The rates applicable are 18% for chocolates, 12% for the candle and 5% for dry fruits. At what rate is the hamper taxed under Section 8?

The hamper is a mixed supply because the items are not naturally bundled and are sold for one price. Under Section 8(b) it is taxed as the supply attracting the highest rate, which is 18%, not the lowest rate or an average.

  1. A5%
  2. B12%
  3. C18%Correct
  4. D11.67%, the simple average of the three rates

Explanation

The items are not naturally bundled and are sold together for a single price, so the hamper is a mixed supply. Under Section 8(b) it takes the highest rate among its components, which is 18%. Taking 5% or an average ignores the rule.

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