Schedule I – Activities to be treated as supply even if made without consideration
Section Schedule I, CGST Act
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Schedule I lists four things that are taxable as a ‘supply’ even when no money changes hands: (1) permanent disposal of business assets on which ITC was taken; (2) supplies between related or distinct persons (same PAN, different registrations) in the course of business – but a gift up to Rs 50,000 a year from employer to employee is not a supply; (3) principal-agent supplies; and (4) import of services from a related person or own overseas branch for business.
What this means in practice
The parts that actually decide cases — the things a practitioner checks first.
Entry 2 is the one that bites in practice: a supply between DISTINCT persons (two registrations of the same PAN) in the course of business is taxable without consideration – branch transfers, and services rendered by head office to branches.
Gifts by an employer to an employee up to Rs 50,000 in a financial year are outside; beyond that the excess is a supply.
Import of services from a related person or from your own establishment outside India is a supply even without consideration – the standard exposure on group services from an overseas parent.
Questions people actually ask
Real questions we get on this provision, answered straight.
Our overseas parent provides management support at no charge. Is anything payable?+
Yes. Import of services from a related person in the course of business is a supply under Schedule I even without consideration, so tax is payable under reverse charge on the open market value determined under Rule 28. Where you can take full credit, the value you declare is generally accepted.
How this provision is built
The skeleton, clause by clause — useful when a notice cites a specific sub-clause.
The exact words of the law
958 characters, uneditedReproduced from the CBIC text. We explain it above — but you should always be able to read it yourself.
Read the full provision+
(1) Permanent transfer or disposal of business assets where input tax credit has been availed on such assets.
(2) Supply of goods or services or both between related persons or between distinct persons as specified in section 25 , when made in the course or furtherance of business: Provided that gifts not exceeding fifty thousand rupees in value in a financial year by an employer to an employee shall not be treated as supply of goods or services or both.
(3) Supply of goods-
(a) by a principal to his agent where the agent undertakes to supply such goods on behalf of the principal; or
(b) by an agent to his principal where the agent undertakes to receive such goods on behalf of the principal.
(4) Import of services by a 1 [person] from a related person or from any of his other establishments outside India, in the course or furtherance of business.
What changed, and when
The amendment trail, newest first — because the version that applies to your case depends on the period.
2019-02-01 · Substitutedfo
Substituted for " taxable person " by s.30 of The Central Goods and Services Tax (Amendment) Act, 2018 (No. 31 of 2018) – Brought into force w.e.f. 01st February, 2019
Where this comes from
Text reproduced from the Central Board of Indirect Taxes and Customs, as available on 2026-09-05. The explanation and practice notes above are GSTZone’s own, written for this hub. If you spot anything out of date, tell us and we’ll fix it — this hub is checked daily against CBIC.
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