Third Schedule (III) to CGST Act 2017: Activities/ Transactions which shall not be treated as Supply of Goods or Services

Provisions under the ‘Third Schedule (III)’ to the CGST Act 2017 regarding “Activities/ Transactions which shall not be treated as Supply of Goods or Services”:

Schedule III: Activities or Transactions which shall be treated neither as a Supply of Goods nor a Supply of Services (See Section 7) [*1]

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 [*5].

7. Supply of goods from a place in the non-taxable territory to another place in the non-taxable territory without such goods entering into India. [*2&4]

8. (a) Supply of warehoused goods to any person before clearance for home consumption; [*2&4]

(aa) Supply of goods warehoused in a Special Economic Zone or in a Free Trade Warehousing Zone to any person before clearance for exports or to the Domestic Tariff Area; [*7(a)&(d)]

(b) Supply of goods by the consignee to any other person, by endorsement of documents of title to the goods, after the goods have been dispatched from the port of origin located outside India but before clearance for home consumption. [*2&4]

9. Activity of apportionment of co-insurance premium by the lead insurer to the co-insurer for the insurance services jointly supplied by the lead insurer and the co-insurer to the insured in co-insurance agreements, subject to the condition that the lead insurer pays the central tax, the State tax, the Union territory tax and the integrated tax on the entire amount of premium paid by the insured. [*6]

10. Services by insurer to the reinsurer for which ceding commission or the reinsurance commission is deducted from reinsurance premium paid by the insurer to the reinsurer, subject to the condition that the central tax, the State tax, the Union territory tax and the integrated tax is paid by the reinsurer on the gross reinsurance premium payable by the insurer to the reinsurer, inclusive of the said ceding commission or the reinsurance commission. [*6]

Explanation 1: [*3] For the purposes of paragraph 2, the term “court” includes District Court, High Court and Supreme Court.

Explanation 2: For the purposes of clause (a) of [*7(b)&(d)] paragraph 8, the expression “warehoused goods” shall have the same meaning as assigned to it in the Customs Act, 1962. [*3&4]

Explanation 3: For the purposes of clause (aa) of paragraph 8, the expressions “Special Economic Zone”, “Free Trade Warehousing Zone” and “Domestic Tariff Area” shall have the same meanings respectively as assigned to them in section 2 of the Special Economic Zones Act, 2005. [*7(c)&(d)]

Notes (History of Amendments in Bare Text):

1. Schedule III to the CGST Act, 2017 introduced vide GOI Notification dated 12/04/2017.

2. Paragraphs 7 & 8 inserted vide the CGST (Amendment) Act, 2018, followed with Notification 2/2019 on commencement date of 01/02/2019.

3. Explanation renumbered as Explanation 1. Further, Explanation 2 inserted vide the CGST (Amendment) Act, 2018, followed with Notification 2/2019 on commencement date of 01/02/2019.

4. Retrospective amendment for exemption to certain activities and transactions in Schedule III of the CGST Act, vide Section 159 of the Finance Act, 2023, followed with Notification 28/2023 on commencement date of 01/10/2023:

(i) Paragraphs 7 and 8 and the Explanation 2 thereof (as inserted vide section 32 of the Finance Act, 2018) shall be deemed to have been inserted therein with retrospective effect from July 1, 2017.

(ii) Accordingly, no refund shall be made of all the tax which has been collected, but which would not have been so collected, had this retrospective amendment or exemption been in force at all material times.

5. In paragraph 6, the text “lottery, betting and gambling” substituted with the text “specified actionable claims” vide the CGST (Amendment) Act, 2023, followed with Notification 48/2023 on commencement date of 01/10/2023.

6. Paragraph (9) & (10) inserted vide Section 149 of the Finance Act (No. 2) 2024, followed with Notification 17/2024 on commencement date of 01/11/2024.

7. Amendments vide Section 133 of the Finance Act 2025, commenced from 01/10/2025 vide Central Tax Notification 16/2025:

(a) in paragraph 8, clause (aa) inserted and shall be deemed to have been inserted w.e.f. 1st July 2017.

(b) in Explanation 2, the text “clause (a) of” inserted after the text “For the purposes of” and shall be deemed to have been inserted w.e.f. 1st July 2017.

(c) Explanation 3 inserted and shall be deemed to have been inserted w.e.f. 1st July 2017.

(d) No refund shall be made of all such tax which has been collected, but which would not have been so collected, had section 133 of the Finance Act 2025 been in force at all material times.