# Schedule I, Para 1: Permanent Transfer/Disposal of Business Assets
## Statutory Provision
Under Section 7(1)(c), activities specified in Schedule I are deemed supply even without consideration.
Para 1 of Schedule I:
> Permanent transfer or disposal of business assets where input tax credit (ITC) has been availed on such assets.
## The Three Cumulative Conditions
All three must be satisfied:
1. Disposal/transfer of a BUSINESS ASSET
2. Transfer/disposal is PERMANENT
3. ITC was AVAILED on the asset
If any one is absent → Para 1 does NOT apply.
## What is NOT Deemed Supply under Para 1?
| Scenario | Result | Reason |
|---|---|---|
| Business asset on which ITC is blocked (e.g., motor vehicle for personal use) | NOT supply | No ITC availed |
| Business asset eligible for ITC but ITC not availed | NOT supply | ITC not availed |
| Temporary transfer of business asset | NOT supply | Not permanent |
| Personal asset of the proprietor | NOT supply | Not a business asset |
## Holding-Subsidiary Transfer
Transfer from holding to subsidiary for nil consideration also falls within Para 1 (if all three conditions are met).
## Why the ITC Condition?
Logic of revenue neutrality: If ITC was claimed when the asset was bought, allowing free permanent disposal without GST would mean the government loses tax. Para 1 plugs this. Conversely, if ITC was never availed, deeming a supply at disposal would double-tax.
## Examples
| Scenario | Para 1 Applies? |
|---|---|
| Dhruv gives old business laptop (ITC availed) to friend | YES |
| AC dealer freely transfers a motor vehicle to staff | NO (ITC blocked) |
| Company donates printer (ITC availed) to NGO permanently | YES |
| Factory lends crane to sister concern for 1 month | NO (not permanent) |
| Personal car of proprietor gifted to son | NO (not business asset) |