# Section 23 — Persons Not Liable to Register

The following persons are exempt from the requirement to register under GST:

## The 6 Categories

### (i) Persons making ONLY non-taxable / exempt supplies

A person engaged exclusively in supply of non-taxable goods/services or exempt goods/services is not liable to register.

> Watch out: Even a small taxable supply (like ₹2 lacs of taxable supply alongside ₹39 lacs of exempt supply) destroys this exemption — total AT becomes ₹41 lacs and registration is required.

### (ii) Agriculturist

An agriculturist (individual or HUF), to the extent of supply of produce out of cultivation of land, is not liable to register.

### (iii) Persons making only RCM outward supplies

If a person's entire outward supply is taxable under RCM (i.e., the recipient pays tax), he need not register.

> Exception: Supplier of metal scrap — this exception was added because metal scrap outward supplies are notified under RCM.

### (iv) Inter-state suppliers of SERVICES below ₹10/20 lacs

A person making inter-state supplies of taxable services upto ₹10 lacs or ₹20 lacs (as applicable) is exempt. This is critical because Section 24(i) only covers inter-state supply of goods, leaving room for this services-friendly exemption.

### (v) Inter-state suppliers of notified handicraft / handmade goods

Persons (including CTPs) making inter-state supplies of notified handicraft or handmade (>50% by hand) goods, with turnover upto ₹10/20 lacs, provided:

PAN obtained
E-way bill generated

### (vi) Goods suppliers through ECO (specific conditions)

A person supplying goods through an ECO (who is liable to collect TCS) is exempt from registration up to the Section 22 limit, provided ALL of the following:

❶ Supplier makes no inter-state supply of goods.
❷ Supplier does not supply through ECO in more than one State/UT.
❸ Supplier has PAN and an enrolment number based on PAN.
❹ Before supplying through ECO, supplier declares PAN and address in the State/UT from where supply is made.

## Quick Summary — Supply through ECO

Nature of Supply through ECO	Turnover-limit Available?
Services notified u/s 9(5)	✅ Yes
Other services — TCS collected by ECO	✅ Yes
Goods — TCS collected by ECO	✅ Yes (only if all 4 conditions above met)

Worked example

### Example 1

Example 1 — Loss of exemption due to small taxable mix

Mr. Hari makes exempt supplies of ₹39 lacs and taxable supplies of ₹2 lacs in a year.

Is he exclusively making exempt supplies? No (because of ₹2 lacs taxable).

Total AT = ₹41 lacs, which exceeds the ₹20/40 lac threshold.

→ Registration required.

### Example 2

Example 2 — Pure agriculturist

Farmer Ramesh sells his harvested wheat for ₹30 lacs. He is an individual/HUF agriculturist supplying produce from cultivation of land → Not liable to register.

### Example 3

Example 3 — Goods supplier through ECO

Ms. Priya sells handcrafted candles only in Karnataka through Amazon (which collects TCS). Turnover ₹8 lacs. She has PAN and obtained an enrolment number. She declares PAN and Karnataka address before supply.

All 4 conditions met → Not liable to register under Section 23(vi), even though she's supplying through an ECO that collects TCS.

### Example 4

Example 4 — Multi-state ECO supplier loses exemption

Same as Example 3, but Priya also supplies through Amazon to customers in Tamil Nadu (i.e., supplies in more than one State).

Condition (b) fails → Exemption lost → Registration required (compulsory under Section 24).

⚠️ Common exam mistakes

Thinking Section 23 'exclusively exempt' covers a person who has even a small fraction of taxable supplies — it must be 100% exempt.
Treating all agriculturists' supplies as exempt — the exemption is only for produce of cultivation of land. A farmer selling processed packaged products is not covered.
Forgetting the metal scrap exception — even if all his outward supplies are under RCM, a metal scrap supplier must register.
Confusing Section 23(iv) (inter-state SERVICES exempt) with Section 24(i) (inter-state GOODS compulsory).
Allowing the 4-condition ECO goods exemption when the supplier makes any inter-state supply — even a single such supply ends the exemption.
Missing the PAN + enrolment number requirement for handicrafts/ECO-goods carve-outs.

Bare-Act text Section 23 · CGST Act, 2017 · click to expand

Section 23 of the CGST Act, 2017 — Persons not liable for registration. (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.

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Persons Not Liable for Registration [Section 23]

Worked example

⚠️ Common exam mistakes