Before we talk about who must register under GST, it helps to know who never has to — and that's exactly what Section 23 covers. Think of it as the GST registration exemption list. If you fall here, you're off the hook entirely, even if your turnover crosses the threshold limit under Section 22.
Two categories get a free pass under Section 23(1):
First, persons dealing exclusively in exempt or non-taxable supplies. If Mr. Sharma runs a business where every single thing he sells is either exempt from GST or not taxable at all, he has zero GST liability — so there's no point registering him. Classic examples: a trader dealing only in fresh vegetables (exempt), or someone supplying only alcohol for human consumption (outside GST altogether). The keyword here is exclusively — the moment he adds even one taxable product to his portfolio, he loses this protection and must check his threshold.
Second, agriculturists, but only to the extent of selling produce from their own land. So if Ramaiah grows sugarcane on his farm and sells it directly, he's out of the GST net under Section 23. But if Ramaiah also runs a small trading business buying and reselling goods, that trading activity is separate and subject to normal GST rules.
Section 23(2) gives the Government a residual power — on the GST Council's recommendation, the government can notify additional categories of persons who are exempt from registration. This is how practical exemptions (like threshold-based exemptions for certain service providers) get brought in without amending the Act.
Why does this matter for your exam? Section 23 is a favourite paired question — examiners love asking you to distinguish between Section 22 (who must register), Section 23 (who need not register), and Section 24 (who must compulsorily register regardless of turnover). Get the interplay right and you'll ace any 4–6 mark registration question.
Example 1 — Exclusive Exempt Supplier
Setup: Ms. Iyer runs a shop in Chennai selling only fresh fruits and vegetables. Her annual turnover is ₹28,00,000 (₹28 lakhs). Her friend tells her she must register since she crossed ₹20 lakhs. Is her friend right?
Working:
- Fresh fruits and vegetables → exempt from GST under Schedule I of Notification 2/2017-CT(R)
- Ms. Iyer deals exclusively in exempt goods
- Section 23(1)(a) applies → she is not liable for registration
- The ₹20 lakh / ₹40 lakh threshold under Section 22 is irrelevant here, because Section 23 overrides it for exclusive exempt suppliers
Answer: Ms. Iyer is NOT required to register under GST, regardless of her turnover.
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Example 2 — Agriculturist with Mixed Activity
Setup: Rajesh owns a farm in Punjab and sells wheat grown on his land worth ₹15,00,000 (₹15 lakhs) annually. He also runs a small hardware store with sales of ₹22,00,000 (₹22 lakhs). Does Section 23 protect him?
Working:
- Wheat from own cultivation → Section 23(1)(b) applies → exempt from registration for this activity
- Hardware store sales → taxable supply, not covered by Section 23
- Hardware turnover = ₹22,00,000 → exceeds ₹20 lakh threshold → Section 22 kicks in for this activity
- Agriculturist exemption applies only to the extent of cultivation produce, not to his other business
Answer: Rajesh must register under GST on account of his hardware business (₹22 lakhs > ₹20 lakh threshold). His farm income remains outside GST.
📖 Bare Act text — Section 23, CGST Act 2017
(click to expand)
(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.