Schedule III — Negative List (Activities not treated as Supply)
# Schedule III — Negative List
These activities/transactions are neither supply of goods nor supply of services — completely outside GST.
## 1. Services by Employee to Employer
Services rendered in the course of employment are not supply.
### Sub-rules — Who is/is not an "Employee"?
Director sitting fees → NOT in course of employment → Taxable (under reverse charge).
Independent / Non-Executive / Nominee Director → Not an employee → Taxable.
Whole-time Executive Director on contract basis (employee) → In course of employment → Not taxable.
Non-compete fees received after leaving employment → Taxable (not in course of employment).
## 2. Services by Court or Tribunal
Services by any court or tribunal established under any law for the time being in force.
## 3. Functions/Duties of Constitutional Authorities
Functions or duties performed by:
Members of Parliament, State Legislature, Municipalities, Panchayats
Persons holding constitutional posts
Chairperson/Member/Director of body established by Central/State Government or local authority (not deemed an employee)
## 4. Funeral, Burial, Crematorium or Mortuary Services
Including transportation of the deceased.
## 5. Sale of Land and Sale of Building (after completion)
Sale of land → Always Schedule III (not supply).
Sale of building AFTER completion certificate / first occupation → Schedule III.
Sale of under-construction building (before completion) → Covered under Schedule II → Taxable as service.
## 6. Actionable Claims (other than specified)
Actionable claims other than specified actionable claims are Schedule III.
### Specified Actionable Claims = TAXABLE
Lottery
Betting
Gambling
Casino
Horse racing
Online money gaming
All the above are specified actionable claims → Taxable supplies.
General debts, unsecured loans claims etc. → Schedule III → Not supply.
Worked example
### Example 1
Example 1: A salaried employee receives ₹10 lakh salary. → Not supply (Schedule III).
### Example 2
Example 2: Same person attends one board meeting as independent director and receives ₹50,000 sitting fee. → Taxable (not employment; reverse charge on company).
### Example 3
Example 3: Sale of a flat with Occupancy Certificate dated 1 Jan 2026, sold on 1 March 2026. → Schedule III, not taxable.
### Example 4
Example 4: Sale of under-construction flat with booking before OC. → Taxable as supply of service (Schedule II).
### Example 5
Example 5: A lottery distributor sells lottery tickets. → Specified actionable claim → Taxable.
### Example 6
Example 6: Online gaming on a money-staked platform. → Specified actionable claim → Taxable.
⚠️ Common exam mistakes
Treating director sitting fees as employment service — they are taxable.
Forgetting that sale of land is ALWAYS Schedule III regardless of timing.
Confusing sale of completed building (Schedule III) with sale of under-construction property (taxable service).
Treating all actionable claims as non-supply — six specified claims (lottery/betting/gambling/casino/horse racing/online money gaming) are taxable.
Bare-Act text Schedule III · CGST Act, 2017 · click to expand
Schedule III — Activities or transactions which shall be treated neither as a supply of goods nor a supply of services: 1. Services by an employee to the employer in the course of or in relation to his employment. 2. Services by any court or Tribunal established under any law for the time being in force. 3. (a) The functions performed by the Members of Parliament, Members of State Legislature, Members of Panchayats, Members of Municipalities and Members of other local authorities; (b) the duties performed by any person who holds any post in pursuance of the provisions of the Constitution in that capacity; or (c) the duties performed by any person as a Chairperson or a Member or a Director in a body established by the Central Government or a State Government or local authority and who is not deemed as an employee before the commencement of this clause. 4. Services of funeral, burial, crematorium or mortuary including transportation of the deceased. 5. Sale of land and, subject to clause (b) of paragraph 5 of Schedule II, sale of building. 6. Actionable claims, other than specified actionable claims.