Activities or Transaction Excluded from Supply - Para 1 of Schedule III [Read with Section 7(2)]

Employee services exclusion: remuneration, perquisites and ESOP transfers under employment terms are not treated as taxable supplies.

Para 1 of Schedule III excludes services by an employee to the employer in the course of employment from supply under GST. This exclusion covers wages, stipends, premature termination payments and contractual perquisites; director salaries subject to income tax withholding and partner share of profits are not supplies, while professional fees to directors can be taxable. ESOP/ESPP/RSU transfers to employees under employment terms and related reimbursements are not treated as import of services. Mere holding of shares by a holding company in its subsidiary is not a supply of goods or services.