Goods and service tax is a tax that is levied on the supply of goods or services or both. When there is any person who is registered under GST will charge the amount of GST when he will supply goods or services or both. But as per the provision of the GST Act 2017, there are certain supplies that are neither considered as supply of goods nor are supply of services and these supplies mention in schedule III under GST. Schedule III of the GST contains those supplies which are out of the scope of the GST and which are neither treated as supply of goods nor as to the supply of services. So the transactions which are specified under this schedule can be considered as Non-Supplies under the GST.

The activities which are specified in schedule III have been notified by the central government by the way of notifications, and clarifications.

In simple words, the list that contains the supply of goods and supply of services, which are not liable for the GST then it will be known as Negative List.

List of the supplies which are neither considered as supply of goods nor supply of services

1- When there are services which are given by the employee to his employer in the course of or in the relation to his employment. As per CGST Circular No: 140/10/2020 the amount of remuneration which is paid by the organization to independent directors, or other non-executive directors who are not the employees of that company then it will be taxable under the GST under the reverse charge mechanism, in the hands of the company.

As per the provision of GST, if there is any service that is provided by the employer to the employees, it shall be considered as a taxable service and liable for GST. This supply will be covered by Schedule I, under Entry 2 and we will read it with the GST Valuation Rules, but we will not include if there is any gift which is given by the employer to the employee and the value of the gift is up to 50000. If the amount of gift is more than 50000 then it will be taxable under GST. For example, the services of recreation, sports facilities, and cafeteria, which are given to employees, will be chargeable to GST.

2- When there are services which are given by any court or Tribunal which are established under any law for the time being in force but if there is any service which is given by the arbitral tribunal to any business entity then it will be taxable under the GST under the reverse charge mechanism, in the hands of the company.

3- When there is any sale of land and, subject to paragraph 5(b) of Schedule II,sale of the building.  In simple words, if there is any sale agreement that is executed before the issuance of the completion certificate then the total amount of the sale consideration will be taxable under GST as the supply of service as per Schedule II of GST.

4- When there is any service of funeral, burial, crematorium, or mortuary including transportation of the deceased.

5- (a) Functions which are performed by the Members of Panchayats,Members of Municipalities, and the Members of other local authorities.

(b) Duties which are performed by any person, holds any post in pursuance of the provisions of the Constitution.

(c) Duties which are performed by any person as a Member, as a Chairperson or as a Director in a body which is established by the Central Government or a State Government or local authority and such person is not deemed as an employee before the commencement of this clause.

6- Actionable claims, other than lottery, betting, and gambling.

There is also the requirement to understand that there are certain supplies that are not taxable but not out of the scope of GST. It means the rate of the GST is not yet been announced or notified by the government till yet for these supplies-

 

(i) Natural gas,

(ii) High Speed diesel

(iii) Aviation turbine oil

(iv)Petroleum crude oil

(v) Motor sprit

 

FAQS ON NEGATIVE LIST UNDER GST

1- What is the meaning of a Negative List?

Answer- As per the provision of the GST Act 2017, there are certain supplies that are neither considered as supply of goods nor supply of services, and their supplies are mention in schedule III under GST so the list of supply of goods and supply of services which is mention in schedule III or which are not liable for the GST will be known as Negative List.

2- What are the supplies under the Negative List?

Answer- There is the following list of supply of goods and supply of services which are mentioned in the negative list-

(i) Actionable claims, other than lottery, betting, and gambling.

(ii) Services by the employee to the employer in the course employment.

(iii) Service of funeral, burial, crematorium, or mortuary including transportation of the deceased.

(iv)Services that are provided by any Tribunal or court.

(v) Duties performed by the MPs, MLAs, etc.

(vi) Functions which are performed by any person who holds any post in pursuance of the provisions of the Constitution.