Section 8 of the Central Goods and Services Tax (CGST) Act, 2017, is the key provision for classi…

Section 8 of the Central Goods and Services Tax (CGST) Act, 2017, is the key provision for classifying and taxing transactions that involve a bundle of two or more distinct goods or services supplied together for a single price. The law differentiates between two types of bundles: Composite Supply and Mixed Supply, and assigns a specific tax treatment to each. A Composite Supply is defined where two or more supplies are naturally bundled and provided in conjunction with each other in the ordinary course of business, with one supply clearly being the principal supply. In this case, as per Section 8(a), the entire transaction is treated as a supply of the principal item, and the GST rate applicable to that principal supply will be charged on the total value of the bundle. For example, a flight ticket that includes a meal is a Composite Supply, and the entire amount is taxed at the rate of the principal service, which is air transport. Conversely, a Mixed Supply occurs when the bundle of items is not naturally bundled and could easily be sold separately. If the bundle fails the 'naturally bundled' test, Section 8(b) mandates that the entire supply must be treated as the supply of that specific item within the bundle which attracts the highest rate of tax. This rule is a deterrent against tax avoidance, as it ensures that high-tax items cannot be bundled with low-tax items to lower the overall tax liability. A common example is a festive gift hamper containing unrelated items lik