# Non-Supplies (Negative List) – Schedule III

Schedule III is the negative list under GST. Activities here are neither supply of goods nor supply of services, even if they otherwise satisfy Section 7(1).

## Para 1 – Employee Services

Services by an employee to employer in the course of or in relation to his employment.

### Within Employment (NOT supply)

Casual worker receiving daily wages from employer.
Director receiving remuneration as salary (subject to TDS).

### Outside Employment (IS supply)

Services provided on contract basis (principal-to-principal).
Payment to an employee for not joining a competing business (this is forbearance, not employment).
Independent director receiving sitting fees.

## Para 2 – Courts and Tribunals

Services by any court or Tribunal established under any law.

'Court' includes District Court, High Court and Supreme Court.

## Para 3 – Functions of Constitutional / Statutory Office Holders

(a) Functions of Members of Parliament, State Legislature, Panchayats, Municipalities, other local authorities.

(b) Duties of persons holding a post under the Constitution (e.g., President, VP, PM, CJI, Speaker, CEC, C&AG, UPSC Chairman, AGI).

## Para 4 – Funeral Services

Services of funeral, burial, crematorium or mortuary including transportation of the deceased.

## Para 5 – Sale of Land / Building (Post-CC)

Sale of land (whether or not developed by levelling, drainage, water lines, etc.) → Not supply.
However, development services themselves (levelling, drainage etc.) ARE taxable services.
Sale of building where entire consideration is received after issuance of completion certificate or first occupation, whichever is earlier → Not supply.

## Para 6 – Actionable Claims

Actionable claims, other than 'specified actionable claims', are NOT supply.

### Specified Actionable Claims [Section 2(102A)] — These ARE supply

Betting
Casinos
Gambling
Horse racing
Lottery
Online money gaming

### Online Money Gaming

Online gaming where players pay/deposit money or money's worth (including virtual digital assets - VDA) in expectation of winning money/VDA in any event, game, scheme, competition, etc. — irrespective of whether outcome depends on skill or chance.

Worked example

### Example 1

Director's Salary vs. Sitting Fee: Whole-time director earning monthly salary with TDS deduction → Not supply (employee). Independent director earning sitting fees → Supply, liable to GST under RCM.

### Example 2

Sale of Developed Plot: A developer levels a plot, lays drainage and water lines and sells the developed land. The sale of land itself → Not supply. But if he charges separately for development services (e.g., to an existing landowner), that service component is taxable.

### Example 3

Building Sale Post-CC: Mr. X books an apartment after issuance of CC and pays full consideration thereafter → Not supply (Schedule III). No GST.

### Example 4

Building Sale Pre-CC: Mr. Y books the apartment before CC and pays even ₹1 of advance before CC → Whole transaction taxable as supply of services (construction service).

### Example 5

Online Money Gaming: A platform where users deposit ₹100 to play a fantasy sports contest with cash prizes → Specified actionable claim. Liable to GST (28% on full bet value).

⚠️ Common exam mistakes

Treating sitting fees of independent directors as exempt — they are taxable services (no employment relationship).
Assuming sale of land after development is taxable — land sale itself is never taxable; only separately-charged development services are.
Treating all actionable claims as outside GST — six specified ones (betting, casinos, gambling, horse racing, lottery, online money gaming) ARE taxable.
Forgetting the receive-entire-consideration-after-CC test for building sales — even ₹1 received before CC makes the entire amount taxable.
Treating non-compete payments to employees as 'in the course of employment' — they are payments for forbearance and are taxable.

Bare-Act text Section 7(2) read with Schedule III and Section 2(102A) · CGST Act, 2017 · click to expand

Section 7(2) – Notwithstanding anything contained in sub-section (1), (a) activities or transactions specified in Schedule III; or (b) such activities or transactions undertaken by the Central Government, a State Government or any local authority in which they are engaged as public authorities, as may be notified by the Government on the recommendations of the Council, shall be treated neither as a supply of goods nor a supply of services.

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Non-Supplies under GST [Schedule III / Section 7(2)]

Worked example

⚠️ Common exam mistakes