Guides · GST
Composite and mixed supply under GST
When a sale bundles more than one thing together, GST has to decide how to tax the bundle. The answer turns on whether it is a composite supply or a mixed supply — and the two are taxed differently.
The two kinds of bundle
A composite supply is one where the items are naturally bundled and supplied together in the ordinary course of business, with one of them the principal supply. A mixed supply is a bundle of items that could each be supplied on their own and are put together for a single price without being naturally bundled.
The distinction is about whether the combination is natural to how the thing is sold, not just whether items happen to be sold together.
Why it changes the tax
A composite supply is taxed at the rate of its principal supply — the whole bundle follows the main item. A mixed supply is taxed at the highest rate among the items in it. So the same collection of goods can attract a different rate depending on which kind of bundle it is.
That makes the bundling test a real tax decision, not just a description, which is why it is worth getting right on the invoice.
How Lekha records bundled supplies
Lekha records the invoice as issued, with its tax fields, so a bundled supply is captured in the ledger the way it was billed.
Lekha records what your documents say and tracks the money on both sides — what you owe and what you are owed. It records and tracks; it does not replace your accountant.
Questions
- What is a composite supply?
- A naturally bundled supply of items sold together in the ordinary course of business, with one principal supply. It is taxed at the principal supply's rate.
- What is a mixed supply?
- A bundle of items that could each be sold separately, put together for a single price without being naturally bundled. It is taxed at the highest rate among the items.
- Why does the difference matter?
- Because it decides the rate — a composite supply follows its principal item, while a mixed supply follows the highest rate in the bundle.
This guide is general information, not legal or tax advice. Confirm the current rules and your own circumstances for any specific case.