Section 23 of GST – Persons not liable for registration

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Section 23 of GST – Persons not liable for registration Under GST (Goods & Service Tax)

(1) The following persons shall not be liable to registration, namely:–

  • (a) any person engaged exclusively in the business of supplying goods or services or both that are not liable to tax or wholly exempt from tax under this Act or under the Integrated Goods and Services Tax Act;
  • (b) an agriculturist, to the extent of supply of produce out of cultivation of land.

(2) The Government may, on the recommendations of the Council, by notification, specify the category of persons who may be exempted from obtaining registration under this Act.


The main criterion to remain out of the purview of registration is to exclusively engage in the supply of exempted goods or services or both. The term exclusive indicates engaging in only those supplies which are exempted. If a supplier is supplying both exempted and non exempted goods and/or services, then this provision is not applicable and he is required to take registration under Section 22.

As per Section 1(7) agriculturist means an individual or HUF who undertakes cultivation of land:

  • (a) By own labour or
  • (b) By the labour of family, or
  • (c) By servants on wages payable in cash or kind or by hired labour under personal supervision or the personal supervision of any member of the family

Thus, an agriculturist is not liable for registration only to the extent of supply of produce out of cultivation of land. If an agriculturist undertakes supplies which are not linked to the cultivation of land, he will fall within the provisions of Section 22 and may have to take registration in respect of such supplies. It is important to consider the nature of activities undertaken by the agriculturist. If the process deviates from ‘cultivation’ it will travel outside the scope of this exclusion from registration. The exclusion states – to the extent of supply of ‘produce out of cultivation’ of land – any further processing of the primary produce from cultivation will continue not avail this exclusion.

Cultivation of land does not include pisciculture on inland water body or cattle rearing that graze the produce of land. The produce from emerge from land for it is be ‘cultivation of land’. For example, harvesting paddy is cultivation but production of rice is not.

Please note that the exclusion from the requirement to be registered does not result in noncollection of tax on agricultural produce. Where the supplier is not registered (for any reason) and the recipient is registered, then tax is payable by such registered recipient as per section 9(4) of CGST Act and 5(4) of IGST Act.

Further, this section also permits any person whose ‘entire’ supply consists of ‘exempt supplies’, then such person is excluded from obtaining registration. Care should be taken to validate the premises about (a) entire supply (b) exempt. Even if small value of supplies is taxable, then even exempt supplies will be included to determine if aggregate turnover has exceeded the threshold limit under section 22 for attracting registration. Also, if inward supplies liable to reverse charge under section 9(3) of CGST Act is attracted, then notwithstanding the exclusion under section 23, registration will need to be obtained compulsorily under section 24, If a person remains outside the requirements of registration due to this section, he would not be liable to pay tax under 9(4) of CGST Act as it does not apply to an unregistered-recipient.

Any other persons, as may be notified, may also be granted this exclusion from registration by the Government. In this regard, the Government has excluded certain persons under this provision.


Central Government vide Notification No. 65/2017-Central Tax, dt. 15-11-2017 w.e.f 15th November 2017 has amended section 23(2), of CGST Act, 2017. the Central Government, on the recommendations of the Council, hereby specifies the persons making supplies of services, other than supplies specified under subsection (5) of section 9 of the said Act through an electronic commerce operator who is required to collect tax at source under section 52 of the said Act, and having an aggregate turnover, to be computed on all India basis, not exceeding an amount of twenty lakh rupees in a financial year, as the category of persons exempted from obtaining registration under the said Act, Provided that the aggregate value of such supplies, to be computed on all India basis, should not exceed an amount of ten lakh rupees in case of “special category States” as specified in sub-clause (g) of clause (4) of article 279A of the Constitution, other than the State of Jammu and Kashmir.

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