Composite supply Means

Posted on 22 April 2023 Category : Indian Tax Terms

what is composite supply

composite supply

The details about composite supply are explained here.

“composite supply” means a supply made by a taxable person to a recipient consisting of two or more taxable supplies of goods or services or both, or any combination thereof, which are naturally bundled and supplied in conjunction with each other in the ordinary course of business, one of which is a principal supply;

Illustration: Where goods are packed and transported with insurance, the supply of goods, packing materials, transport and insurance is a composite supply and supply of goods is a principal supply.

Composite supply

The following composite supplies shall be treated as a supply of services, namely:—

i. Works contract as defined in clause (119) of section 2; and

ii. Supply, by way of or as part of any service or in any other manner whatsoever, of goods, being food or any other article for human consumption or any drink (other than alcoholic liquor for human consumption), where such supply or service is for cash, deferred payment or other valuable consideration.

Tax liability on composite and mixed supplies

The tax liability on a composite or a mixed supply shall be determined in the following manner, namely: —

i. a composite supply comprising two or more supplies, one of which is a principal supply, shall be treated as a supply of such principal supply; and

ii. a mixed supply comprising two or more supplies shall be treated as a supply of that particular supply which attracts the highest rate of

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