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Composite Supply – Sec 2(30)

Composite Supply – Sec 2(30)

Composite supply means a supply made by a taxable person to a recipient comprising two or more taxable supplies of goods or services, 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.

Principal Supply is defined in Sec 2(90) to mean the supply of goods or services which constitutes the predominant element of a composite supply and to which any other supply forming part of that composite supply is ancillary.

E.g: A Hotel provides a 4-D / 3-N package with the facility of breakfast. This is natural bundling of services in the ordinary course of business and thus is a composite supply. The service of hotel accommodation gives the bundle the essential character and therefore the rate of tax applicable on providing hotel accommodation would be applicable on the entire supply.


  • The way the supplies are naturally bundled must be examined. Merely by conjointly , supplying two or more goods or services does not constitute composite supply.

Eg: Supply of laptop and carry case – In this case the customer did not purchase the laptop to get the carry case. In fact, a carry case with the same brand as the laptop is normally not available for independent purchase. Here the predominant supply is laptop and ancillary supply is carry case. In case of carry bag is capable of being used to carry several brands of laptops this would be case of mixed supply (Sec 2(74)).

  • If the ancillary supply were offered on a stand-alone basis, the same would not be accepted by the recipient. Even separate prices were assigned to each of the supplies involved, the one that is ancillary would not become predominant. The end use test could be important for determination of composite supply.

Eg: Supply of equipment and installation / commissioning of the same. In this case principal / predominant supply is supply of equipment and the   ancillary supply is its installation. Here the customer has just the amount of understanding about the equipment   to contract for its supply and measures its satisfactory performance based on commissioning tests.


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