Is a gap year bad at IIM?

No, a gap year hardly affects your admission to IIMs or any B schools. The only thing to consider is that you should have a valid reason for the same and make your panelists understand it well. If you are able to convince them, then your gap does not affect your future endeavors. 

In case of health issues, you should provide proof. Reasons such as job hunting or preparation for CAT might sound illogical to the one listed and thus might work in your favor. So it’s very important to prepare well in advance for this question.

It’s advisable to prepare for CAT and work alongside to gain experience rather than just taking a gap year for CAT preparation. B schools give great importance to work experience and a fresher's resume might not seem lucrative enough.

The gap year has zero effect on your MBA placements as these are based on parameters such as skills, quality of previous work experience, academic profile, etc.

Make the most out of your gap year to prove that it wasn’t a bad idea. Here are a few things you can do to utilize it to the maximum.

• Professional Courses & Certifications
• Online courses
• Research papers
• Live projects
• Pursuing your interests 

It’s safe to conclude that the gap year has no or very little impact on your MBA admission and all you need is a valid reason to justify it.