There's a pair of GST concepts that decides how a bundled interior deal gets taxed, and almost no designer I meet has heard of either until a CA or a notice introduces them. They're called composite supply and mixed supply, and the difference between the two can move the tax on an entire package from the rate of your cheapest item to the rate of your most expensive one. Since interior studios sell bundles for a living, room packages, turnkey deals, "design plus furniture plus styling" offers, this is worth fifteen minutes of your attention, and I'll keep it in plain English throughout.
The two definitions, without the legalese
Composite supply is when you supply two or more things that are naturally bundled, they belong together in the ordinary course of business, and one of them is clearly the principal supply, the main thing the client is really buying. The whole bundle is then taxed at the principal supply's rate. The classic example: you sell a wardrobe and deliver and install it. Nobody buys installation separately from the wardrobe, the wardrobe is the principal supply, so the delivery and installation charges ride along at the wardrobe's rate.
Mixed supply is when you supply two or more independent things for a single price, and they are not naturally bundled, the client could have sensibly bought each one alone. The punishment for this convenience: the entire bundle is taxed at the highest rate among the items. Bundle a sofa, a rug, some decor and a consultation into one "living room package, one price", and if any single item in there carries a higher rate than the rest, the whole package gets dragged up to it.
Notice the trigger. It's not what you supplied, it's how you priced it. Separate prices for separate items means each is taxed on its own merits. One price for an unnatural bundle means mixed supply and the highest rate wins. That single sentence is most of what you need to remember.
Where interior deals actually land
| Your deal | Classification | Tax outcome |
|---|---|---|
| Design + execution, one contract, fixed to the property | Works contract (its own category) | 18% as a service |
| Wardrobe supplied with delivery + installation | Composite supply | Whole bundle at the wardrobe's rate |
| Modular kitchen with fitting, one quote | Composite supply | Principal supply's rate on the lot |
| Sofa + rug + lamps + consultation, one package price | Mixed supply | Highest rate item sets the rate for all |
| Same items, each priced on its own line | Neither, independent supplies | Each line at its own rate |
One clarification before someone's CA objects: full turnkey work on immovable property doesn't even get to this test, because the law carves it out as a works contract and deems it a service at 18%. Composite versus mixed is the question for everything outside that carve-out, your furniture packages, styling add-ons, accessory bundles, soft furnishing deals, and for freelancers who mostly sell services with the odd product attached, a situation I've covered separately in GST for freelance interior designers.
If you want to read the definitions at the source, they sit in the CGST Act, and CBIC-GST publishes the Act and clarifying circulars, including the flyers that walk through the naturally-bundled test with examples.
The pricing decision that saves you money
So here's the operator's takeaway, and it's genuinely simple: price your lines separately unless the bundle is natural. The one-price package feels good in a client meeting, it hides your item margins and sounds premium, but it hands the tax department the argument that you made a mixed supply, and the highest-rate item then taxes the entire package. On a ₹6 lakh living room package, a rate jump on the whole value instead of one item is real money, either out of your margin or as an ugly surprise on the client's bill.
You can keep the psychology of a package without the tax problem: present the package total in the proposal, then invoice it as itemised lines, each with its own HSN or SAC and rate. The client experiences one number, the return sees clean classification, everyone sleeps.
And decide this at quote time, not at filing time. Your CA cannot rescue a signed one-price contract in the week your GSTR-1 and GSTR-3B are due, the classification was baked in the day the client signed.
Common studio mistakes with bundles
Key takeaways
- One price on an unnatural bundle = mixed supply = highest rate on everything, that's the trap
- Naturally bundled extras (delivery, installation) ride at the principal item's rate, don't overthink those
- Turnkey on immovable property skips this test entirely, it's a works contract at 18%
- Present package totals to clients, invoice itemised lines to the department
- Classify when you quote, because nobody can reclassify after signing
Three more real-world stumbles worth naming. First, studios write "lump sum" in the contract and then itemise on the invoice, and the mismatch between contract and invoice is its own red flag, keep them consistent. Second, discounts: knock the discount off line by line rather than as one lump against the package, so each line's taxable value stays defensible. Third, freebies, the "complimentary" console you threw in, aren't invisible to GST, and how you paper them affects both your credit and your declared value, so paper them deliberately. All of this cross-checks eventually, remember that GST data and the Income Tax portal increasingly compare turnover pictures, and your registration profile is public on the official GST portal for any client's accountant to inspect.
The tooling angle, because classification is a data problem
Here's what I've noticed after watching many studios wrestle with this: the ones who get bundles wrong are almost never being sneaky, they're being rushed. The quote was a hurried Excel with one bottom-line number, the invoice got rebuilt from memory, and the classification question was never consciously asked. Structure fixes what discipline can't.
When your quoting tool forces every item onto its own line with its own code and rate from the start, the composite-versus-mixed question mostly answers itself, and that's how Designa is built: room-by-room specs where each item carries its price, HSN or SAC, and rate, quotes the client approves online, and a one-click GST invoice that inherits those clean lines and syncs to Tally or Zoho Books. If you're evaluating tools, my buyer's guide for choosing studio software in India covers what else to test, the wider monthly discipline is in bookkeeping basics for an interior studio, and if you're wondering what this costs, I've explained Designa's flat rupee pricing openly, one flat founding price for the whole studio, billed in rupees, with unlimited free client logins.
Frequently asked questions
What is a composite supply in an interior project?
Two or more things naturally bundled with one clear principal supply, like a wardrobe with delivery and installation. The whole bundle is taxed at the principal supply's rate.
What makes a bundle a mixed supply?
Independent items sold for one single price when they aren't naturally bundled, like a sofa, rug and consultation as one package. The entire package is then taxed at the highest rate among the items.
How do I avoid the mixed supply trap on packages?
Present the package total in your proposal but invoice itemised lines, each with its own HSN/SAC and rate. Separate prices mean each item is taxed on its own.
Does a turnkey interior contract count as composite or mixed supply?
Neither. Turnkey work on immovable property is a works contract, which GST deems a supply of services taxed at 18%.
When should I decide the classification?
At quote time. The contract's pricing structure fixes the classification, and it can't be changed at filing time.
Bundles are good business, and they stay good business when the paperwork underneath them is itemised and honest. If you'd like to see line-level quoting flow straight into a compliant GST invoice, the live demo is at demo.designa.work, and the founding offer for the whole studio is at go.designa.work.