The Diwali Hamper That Got Taxed at 18%: A Mixed Supply Lesson

Every Diwali, Rakesh runs a small gifting business out of his shop in Indore. This year he had a bright idea: sell ready-made festive hampers — a tin of cookies, a packet of dry fruits, a scented candle, and a brass diya — all wrapped together for one neat price of ₹2,000.

His accountant asked one question that changed the whole calculation: "Are you charging GST item-by-item, or one rate for the hamper?"

Rakesh hadn't thought about it. That question is exactly where composite supply and mixed supply come in.

The two types of bundles under GST

Section 8 of the CGST Act, read with the definitions in Section 2, splits bundled supplies into two:

• Composite supply — items naturally bundled and supplied together in the ordinary course of business, where one is the principal supply. The whole bundle is taxed at the rate of the principal supply. (Classic example: goods sold with packing and transport.)
• Mixed supply — two or more individual supplies sold together for a single price, that are not naturally bundled and could each be sold on their own. Here the law says: tax the entire bundle at the highest GST rate among the items.

Rakesh's hamper is the textbook mixed supply. Cookies, dry fruits, a candle and a diya have nothing to do with each other. He's only bundling them because it sells well at Diwali, and he's charging one price for the lot.

Working out the numbers

Say the components and their GST rates are roughly:

• Cookies — 18%
• Dry fruits — 12%
• Scented candle — 18%
• Brass diya — 12%

Rakesh's plan was to split ₹2,000 across the items and charge each at its own rate. He estimated his GST liability at around ₹300 — a blended figure somewhere between 12% and 18%.

But because this is a mixed supply, the highest rate in the basket (18%) applies to the whole ₹2,000.

• GST = 18% of ₹2,000 = ₹360
• If sold within Madhya Pradesh: CGST ₹180 + SGST ₹180

That's roughly ₹60 more per hamper than he'd assumed. On 1,000 hampers, the difference he nearly under-charged — and would have had to pay out of his own pocket on assessment — is around ₹60,000.

Could he have structured it better?

This is the useful part. Two honest options exist:

1. Sell the items separately, each on its own line with its own rate, even if displayed near each other. If the customer buys them as distinct items at distinct prices, they aren't a single mixed supply. The cookies get 18%, the dry fruits get 12%, and so on.
2. Build hampers around a single dominant item so the bundle could qualify as composite — though this is harder to argue for unrelated gift items and shouldn't be forced.

Rakesh chose option 1 for his bulk corporate orders, where buyers wanted an itemised invoice anyway. For his walk-in single-price hampers, he simply priced them knowing 18% applied — and stopped under-quoting GST.

Why this matters beyond Diwali

Mixed supply traps catch more businesses than you'd think:

• A combo of a printer (18%) bundled with a year of free paper at one price
• A gift box mixing food (5%/12%) with non-food items (18%)
• A "festive pack" of differently-rated goods

The moment you sell unrelated, separately-saleable items for one single price, the highest rate governs the whole thing. Get it wrong and the shortfall, plus interest, lands on you — not the customer who's already paid and left.

The takeaway

Before you bundle, ask Rakesh's accountant's question: one price or itemised? If it's one price and the items are unrelated, charge GST at the highest applicable rate on the full value. If you'd rather not, invoice the items separately at their own rates.

A few minutes deciding how to structure the sale can save you a five-figure surprise at year-end.