Taxable event supply of goods and services

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Activities or Transactions Neither Considered Supply of Goods nor Services

Under the GST framework in India, certain activities or transactions are specifically excluded from being classified as supply of goods or services. This is outlined in Section 7(2) of the CGST Act and Schedule III, and it prevents these activities from being taxed under GST. Below is a detailed explanation:

1. Services by an Employee to the Employer

  • Details: Services provided by an employee to the employer in the course of or in relation to his employment are not treated as a supply of services.
  • Implication: Any work performed by an employee, such as their regular duties, does not attract GST. However, if an employer provides services to an employee (e.g., professional training), those services might be taxable.

2. Services by Any Court or Tribunal

  • Details: Services provided by any court or tribunal established under any law are excluded.
  • Implication: Judicial services, such as judgments, orders, and any administrative functions performed by the courts, are not taxed.

3. Functions Performed by Government Representatives

  • Details: Functions performed by Members of Parliament, State Legislatures, Panchayats, Municipalities, and other local authorities are excluded.
  • Implication: Legislative and administrative functions carried out by elected representatives are not taxed under GST, supporting the separation of government duties from commercial transactions.

4. Duties Performed Under Constitutional Provisions

  • Details: Duties performed by any person who holds any post in accordance with the provisions of the Constitution (e.g., Chief Election Commissioner, Comptroller and Auditor General) are excluded.
  • Implication: Activities carried out in these constitutional roles are not subject to GST, emphasizing the public service nature of these positions.

5. Roles Appointed by Government Bodies

  • Details: Duties performed by persons as Chairpersons, Members, or Directors in bodies established by the Central or State Governments or local authorities are excluded if they are not deemed as employees.
  • Implication: Non-employee roles in various government bodies, such as advisory and oversight functions, are exempted from GST.

6. Funeral and Burial Services

  • Details: Services related to funerals, burials, crematoriums, and mortuaries, including the transportation of the deceased, are excluded.
  • Implication: These essential services are not taxed, reducing the financial burden on families during bereavement.

7. Sale of Land

  • Details: Sale of land is excluded from GST.
  • Implication: Since land transactions are under state jurisdiction, they are not subject to GST, maintaining the federal structure of taxation.

8. Sale of Building

  • Details: Sale of buildings is excluded except where the entire consideration has been received after the issuance of a completion certificate or after its first occupation, whichever is earlier.
  • Implication: Under-construction properties are taxed to prevent tax evasion, but completed buildings are not, simplifying the tax structure for real estate transactions.

9. Actionable Claims

  • Details: Actionable claims, other than those related to lottery, betting, and gambling, are excluded.
  • Implication: Most types of actionable claims (e.g., debt recovery) are not taxed, except for those involving lottery, betting, and gambling, which are taxable to regulate these activities.

Additional Government Activities and Public Services

  • Details: Activities and transactions that are in the nature of public service, performed by the Central or State Governments or local authorities, as recommended by the GST Council, are excluded.
  • Implication: Public services, such as infrastructure development and social services, remain untaxed to ensure they are provided efficiently and affordably.

These exclusions ensure that essential services, public duties, and certain real estate transactions are not burdened with GST, maintaining the balance between revenue generation and public welfare.