Pre-Budget Expectations

Mixed Supply

A key challenge that has emerged post GST 2.0, is the distinction between 'composite supply' and 'mixed supply' and their tax treatment, due to widening of the GST rate gap to 13%. While as a concept, mixed supply has emerged way back in matured legislation like Australia, Malaysia and the EU, approach adopted by India differs completely. In India, even a minor ancillary item in a bundled price can tip the entire bundle as a mixed supply and attract the highest tax rate. Other countries have safeguards to prevent such anomalies. Given the importance of promotional schemes to business, we expect appropriate clarifications or amendments in the upcoming Budget addressing minor promotional items bundled with main product.