There are certain activities which are items not covered under GST. They are beyond the scope of GST, i.e., GST will not apply on them. These are classified under Schedule III of the GST Act as “Neither goods nor services”.
1.Services by an employee to the employer in relation to his employment
Related parties include employer-employee which raised many concerns whether employment now attracted GST. This clarification has been brought in to clarify whether GST is not applicable on employment. An employee will still pay income tax on salary earned .
2. Court/Tribunal Services including District Court, High Court and Supreme Court
Courts will not charge GST to pass judgement.
3. Duties performed by:
- The Members of Parliament, State Legislature, Panchayats, Municipalities and other local authorities
- Any person who holds a post under the provisions of the Constitution
- Chairperson/Member/Director in a body established by the government or a local body and who is not an employee of the same
4. Services of a funeral, burial, crematorium or mortuary including transportation of the deceased
There are no taxes on funeral services for any religion.
5. Sale of land and sale of building
Construction of a new building is subject to GST (being works contract).
6. Actionable claims (other than lottery, betting and gambling)
Actionable Claims’ means claims which can be enforced only by a legal action or a suit, example a book debt, bill of exchange, promissory note. A book debt (debtor) is not goods because it can be transferred as per Transfer of Property Act but cannot be sold. Bill of exchange, promissory note can be transferred under Negotiable Instruments Act by delivery or endorsement but cannot be sold.
Actionable claims are neither products nor services. They can be considered as something in lieu of money. So GST will not apply on these.
Lottery, betting and gambling attract 28% GST.
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*.
8. Supply in Customs port before Home consumption*:
(a) Supply of warehoused goods to any person before clearance for home consumption;
(b) Supply of goods by the consignee to any other person, by an 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.
As per point No.-1 mentioned above Services by an employee to the employer in relation to his employment is out of GST. But consideration paid to the Director for his employment can be analysed in two different situation:-
1. If the company pays remuneration to the director in relation to his employment & deduct Income Tax TDS U/S 192B then there is no question of GST applicability.
2. If the company pays sitting fees to the Director for his service & deduct Income Tax TDS U/S 194 J then the company has to pay GST @ 18% on Reverse Charge Mechanism as per Section 9(3) of CGST Act 2017.
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