Mixed Supply

Mixed Supply is a GST term for a combination of two or more individual supplies (goods or services) that are not naturally bundled and are supplied together for a single price.

Unlike a composite supply, the items in a mixed supply are distinct products sold together, possibly for convenience or as a promotional bundle, but each could be sold independently. The GST rate of the item with the highest rate applies to the entire mixed supply. What is a Mixed Supply? A classic example is a gift box containing a watch, a pen, and a bottle of wine sold for ₹5,000 as a single package. Each of these items could be sold separately in the normal course of business. The watch attracts 18% GST, the pen 18%, and the wine 18% or 28% depending on the type. Since these are not naturally bundled and are supplied together as a mixed supply, the highest rate of 28% applies to the entire bundle of ₹5,000. The distinction between composite supply and mixed supply is critical because it determines the applicable GST rate. A composite supply (naturally bundled, principal supply determines rate) is taxed at the rate of the principal supply. A mixed supply (independently supplied together, artificially bundled) is taxed at the rate of the highest-rated item in the bundle. For instance, a cosmetics kit containing a face cream (12% GST), a lipstick (18% GST), and nail polish (18% GST) sold together as one product is a mixed supply because these items are not naturally bundled — a customer could buy just the lipstick or just the face cream. The entire kit would be taxed at 18%, the highest GST rate in the bundle. For businesses, the Mixed Supply rules prevent taxpayers from artificially bundling high-tax items with low-tax items to reduce the overall tax burden. For example, a restaurant could not avoid the 18% GST on a bottled aerated drink by bundling it with a meal (food at 5% GST) as a "combo meal" — the aerated drink would be taxed at 18% as a mixed supply (since a drink is not naturally bundled with a meal in the way that a room and breakfast are bundled in a hotel stay). GST authorities examine mixed supply classification during audits. If a business incorrectly classifies a mixed supply as a composite supply and applies a lower rate, they can face GST demand notices, interest, and penalties. Businesses must maintain proper documentation of their product bundles and the rationale for classifying them as composite or mixed supply. The burden of proof lies with the taxpayer to justify the classification.