When two or more taxable supplies are bundled together in a single transaction, GST law treats them in one of two ways depending on whether the bundling is natural or artificial.
## Composite Supply
Two or more supplies are naturally bundled and supplied in conjunction in the ordinary course of business.
One of them is the principal supply (the predominant element).
Tax treatment: The entire supply is taxed at the rate of the principal supply.
## Mixed Supply
Two or more individual supplies are made together for a single price.
The supplies are not naturally bundled — they could ordinarily be sold separately.
Tax treatment: The entire supply is taxed at the highest rate applicable to any one of the items in the bundle.
## Quick Decision Tree
1. Are the items being supplied together?
2. Is the bundling natural / done in the ordinary course of business?
Yes → Composite supply → rate of principal supply.
No (sold for a single price only) → Mixed supply → highest rate among the items.
Worked example
### Example 1
Composite supply example: Sale of a laptop along with a charger, carry case, and 1-year warranty for ₹60,000. These are naturally bundled with the laptop as principal supply → tax the entire ₹60,000 at the laptop's GST rate.
### Example 2
Mixed supply example: A Diwali gift hamper sold for a single price of ₹2,500 containing chocolates (18%), dry fruits (12%) and aerated drinks (28%). Items can be sold separately and are bundled only for the festive offer → treated as mixed supply → entire ₹2,500 taxed at 28% (highest rate).
⚠️ Common exam mistakes
Applying the highest rate in every bundled transaction without testing whether the items are naturally bundled.
Identifying the higher-value item as the 'principal supply' in a composite supply — principal supply is decided by the predominant element/intention, not by value.
Treating a discounted combo offer as composite supply when the items are not naturally sold together — these are mixed supplies.
Bare-Act text Sections 2(30), 2(74) and 8 · CGST Act, 2017 · click to expand
Section 2(30): '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. Section 2(74): 'Mixed supply' means two or more individual supplies of goods or services, or any combination thereof, made in conjunction with each other by a taxable person for a single price where such supply does not constitute a composite supply. Section 8 — Tax liability on composite and mixed supplies: (a) 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; (b) a mixed supply comprising two or more supplies shall be treated as a supply of that particular supply which attracts the highest rate of tax.