TaxTMI 
TaxTMI 
On one sales invoice, in different material both 5% and 18% are charged. We are also claiming transportation charge on the same invoice, what will the rate of transportation charge?
Composite or mixed supply
30 Jun 2023 
29 Replies 
5795 Views Asked by
Composite supply: transportation bundled with goods is taxed as the principal supply, apply highest applicable rate to avoid disputes.
Transportation charges bundled with the supply of goods are normally a composite supply and, being ancillary, are taxed as the principal supply of goods even if shown separately. If an invoice contains goods taxed at different rates plus transport, taxpayers may either apportion transport to each principal goods supply or, for conservative compliance and to reduce disputes where the recipient claims input tax credit, apply the highest rate among the goods to the transport charges. Separate invoicing does not alter this tax characterisation. (AI Summary)
Transportation charges bundled with the supply of goods are normally a composite supply and, being ancillary, are taxed as the principal supply of goods even if shown separately. If an invoice contains goods taxed at different rates plus transport, taxpayers may either apportion transport to each principal goods supply or, for conservative compliance and to reduce disputes where the recipient claims input tax credit, apply the highest rate among the goods to the transport charges. Separate invoicing does not alter this tax characterisation. (AI Summary)