Somnath and the GST composite-supply trap worth ₹6.8 lakh
Somnath, 38, runs Pratham Design (Kolkata) — four-person book-design studio. Clients: major publishers (Rupa, Penguin), regional houses. He invoices at 18% GST. Every publisher deducts the full amount, claiming design is "composite with book" and books are 0%. He loses ₹18,000 per ₹1 lakh project. Over 3 years: ₹6.5 lakh margin gone quietly.
🚨 The problem
Publishers say: design is a component of the book supply, books are 0%, so design GST is absorbed. The logic sounded plausible. His CA never flagged it. Publishers handle 0% books correctly — why would they be wrong on design? Somnath carried the loss for 3 years.
🚀 How GabFORGE helped
Somnath's mother brought home a GabFORGE article on composite supplies. Somnath read it and uploaded his GSTR filings:
🔍 Verified the rule: IGST Rules Schedule III: separate and identifiable services are taxed at their own rate, even if used as components of composite supply.
💬 Translated the principle: Design is separate from printing. Printer is different supplier. Design supply is 18% rated. Period.
📞 Connected the letter: Draft template explaining composite supply rule to each publisher, citing the regulation.
Somnath sent letters. Rupa and Penguin accepted. Seagull processed credits. Regional publishers issued memos. By July 2024: ₹6.8 lakh in credit memos received. Amended GSTR filed. ITC recovered.
🇮🇳 Why this matters
Thousands of freelancers and small studios are silent victims of composite-supply claims. Large clients can afford to absorb errors. Small vendors cannot. Reading the actual rule first prevents ₹6+ lakh losses.
Composite supply is real. But a separate, identifiable service is separate. The publisher's arithmetic is not yours to absorb.