Central Goods and Services Tax Act, 2017

Schedule III of CGST Act: Activities or Transactions Treated Neither as Supply of Goods Nor Supply of Services

Schedule III, read with Section 7(2) of the Central Goods and Services Tax Act, 2017, identifies activities and transactions that are outside the statutory classification of a "supply of goods" and a "supply of services" for GST purposes.

Section 7 and the legal effect of Schedule III

Section 7 of the CGST Act defines the scope of "supply". Section 7(2) begins with a non-obstante rule and provides that activities or transactions specified in Schedule III, and specified activities or transactions undertaken by the Central Government, a State Government or a local authority as public authorities when notified on the recommendation of the GST Council, shall be treated neither as a supply of goods nor as a supply of services.

Accordingly, an entry falling within Schedule III is not merely an exempt supply under a rate notification. It is treated by Section 7(2) as neither a supply of goods nor a supply of services, subject to the precise wording, conditions and explanations applicable to the relevant entry.

Current Schedule III - entry-wise explanation

1. Services by an employee to the employer.
   Services provided by an employee to the employer in the course of, or in relation to, employment are covered. The entry concerns the employer-employee relationship and the services rendered in that capacity.
2. Services by a court or Tribunal.
   Services by any court or Tribunal established under any law for the time being in force are covered. For this paragraph, the statutory explanation states that "court" includes a District Court, High Court and the Supreme Court.
3. Specified constitutional and public functions or duties.
   1. Functions performed by Members of Parliament, Members of State Legislatures, Members of Panchayats, Members of Municipalities and Members of other local authorities;
   2. duties performed by a person holding a post under the Constitution in that capacity; and
   3. duties performed by a Chairperson, Member or Director in a body established by the Central Government, State Government or local authority, where that person is not deemed to be an employee before commencement of the clause.
4. Funeral and related services.
   Services of funeral, burial, crematorium or mortuary, including transportation of the deceased, are covered by Schedule III.
5. Sale of land and specified sale of building.
   Sale of land and, subject to clause (b) of paragraph 5 of Schedule II, sale of building are covered. The Schedule II qualification is important because certain transactions involving construction intended for sale may be treated as a supply of services where the statutory conditions are met.
6. Actionable claims other than specified actionable claims.
   Schedule III now covers actionable claims other than "specified actionable claims". Section 2(102A) defines specified actionable claim to mean an actionable claim involved in or by way of betting, casinos, gambling, horse racing, lottery or online money gaming. The earlier wording referring to "lottery, betting and gambling" was replaced with effect from 1 October 2023.
7. Merchant trade transactions outside India.
   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, is covered by Schedule III.
8. Specified supplies before customs or other prescribed clearance.
   1. Warehoused goods: supply of warehoused goods to any person before clearance for home consumption.
   2. SEZ or FTWZ warehoused goods: 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.
   3. High-sea sale type transactions: supply of goods by the consignee to another person, by endorsement of documents of title to the goods, after dispatch from the port of origin outside India but before clearance for home consumption.

Important definitions and explanations

Major amendments affecting Schedule III

Practical distinction: Schedule III versus GST exemption

A Schedule III transaction is statutorily treated as neither a supply of goods nor a supply of services under Section 7(2). This is conceptually different from a transaction that is a "supply" but is exempt from GST by the Act or a notification. The distinction can matter when applying provisions that use concepts such as supply, exempt supply, turnover or input tax credit. Each consequence should therefore be checked under the particular provision involved rather than assumed from the Schedule III classification alone.

Related CGST Act pages

Continue with the Central Goods and Services Tax Act, 2017, Schedule I - activities treated as supply even without consideration, and Schedule II - activities or transactions treated as supply of goods or supply of services. You may also refer to the GST e-way bill requirements, validity and documents.

Last reviewed: 15 September 2026. This page is an informational summary of the statutory provisions and should be read with the current official text.