Section 8 of CGST Act 2017: Tax Liability on Composite and Mixed Supplies

Provisions under Section 8 of the Central Goods and Services Tax (CGST) Act, 2017 relating to “Tax Liability on Composite and Mixed Supplies”:

Section 8 of CGST Act 2017: Tax Liability on Composite and Mixed Supplies (CHAPTER III LEVY AND COLLECTION OF TAX)

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

(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; and

(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.

Amendments History:

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Commentary on Section 8 of the CGST Act

Section 8 of the Central Goods and Services Tax (CGST) Act, 2017 deals with the tax liability on composite and mixed supplies. In this commentary, we will break down the provisions of Section 8 and provide relevant examples for better understanding.

Section 8(a) of the CGST Act: Composite Supply

A composite supply refers to a bundle of two or more supplies where one of them is a principal supply. According to Section 8(a), the tax liability on a composite supply will be treated as a supply of the principal supply.

A popular example of composite supply is the supply of a laptop with pre-installed software. In this case, the laptop is the principal supply and the software is the secondary supply. As per Section 8(a), the tax liability on this composite supply will be determined based on the tax rate applicable to the laptop (principal supply), regardless of the tax rate on the software.

Section 8(b) of the CGST Act: Mixed Supply

Mixed supply, on the other hand, refers to a bundle of two or more supplies that are not necessarily dependent on each other or bundled due to a natural necessity. Section 8(b) states that the tax liability on a mixed supply will be determined based on the supply which attracts the highest rate of tax.

For example, let’s consider the case of a gift hamper that contains chocolates, a soft toy and a perfume. These items are not naturally bundled or dependent on each other. In this case, the tax liability will be determined by the item with the highest tax rate. Suppose the tax rates are 12% for chocolates, 18% for the soft toy and 28% for the perfume. The tax rate for the entire gift hamper will be considered as 28% (the highest rate), as per Section 8(b).

In conclusion, Section 8 of the CGST Act, 2017 provides guidelines for determining tax liability on composite and mixed supplies. The tax liability on composite supplies is determined based on the principal supply, while the tax liability on mixed supplies is determined based on the supply with the highest tax rate.

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Note: The CGST Act 2017 has been notified vide GOI Notification dt. 12/04/2017, which has subsequently been amended through CGST (Extension to J&K) Act 2017, Finance Act 2018, CGST Amendment Act 2018, Finance Act 2019, Finance Act 2020, Taxation and Other Laws (Relaxation of Certain Provisions) Ordinance 2020, Finance Act 2021, Finance Act 2022 including various Notifications issued by the Govt./ CBIC from time to time, relating to the commencement dates of various Sections/ Provisions in the respective CGST/ Amendment Acts, wherever required. Information on this page is a Section-wise compilation of the Amendments made by various Notifications issued by CBIC from time to time, with best possible efforts for accuracy. In any case, E&OE. For official/ updated information, please visit CBIC website.