## Section 23(2) — Notified Categories Exempt from GST Registration

Section 23(2) empowers the Government, on the Council's recommendation, to notify categories of persons exempt from GST registration, subject to conditions and restrictions.

### A. Persons making only Reverse Charge supplies

Persons exclusively supplying goods/services where tax is payable by the recipient under RCM u/s 9(3) are exempt from registration.

Exception: Suppliers of metal scrap (Chapter 72–81) are NOT exempt — they must register.

### B. Inter-State supply of taxable services up to ₹20 lakh

Persons making inter-State supplies of taxable services are exempt from registration if aggregate turnover ≤ ₹20 lakh (₹10 lakh in Mizoram, Tripura, Manipur, Nagaland) in a financial year.

### C. Inter-State supply of notified handicraft goods up to ₹20 lakh

Applies to:

Notified handicraft goods, and
Notified products made by craftsmen predominantly by hand (even if some machinery is used).

Conditions:

Aggregate value on all-India basis ≤ ₹20 lakh (₹10 lakh for special category states).
Such person must obtain a PAN and generate an e-way bill.

(Notification No. 3/2018 IT dated 22.10.2018)

### D. Casual Taxable Persons (CTPs) supplying handicraft goods inter-State up to ₹20 lakh

Same goods coverage as (C). Conditions:

CTP must avail benefit of Notification 03/2018-IT.
Aggregate value ≤ ₹20 lakh (₹10 lakh for special category states).
PAN obtained and e-way bill generated.

(Notification No. 56/2018 CT dated 23.10.2018)

### E. Services through E-Commerce Operator (ECO) up to ₹20 lakh

Persons supplying services (other than those specified u/s 9(5)) through an ECO liable to collect TCS u/s 52 are exempt from compulsory registration if aggregate turnover ≤ ₹20 lakh (₹10 lakh for special category states).

All service providers — intra-State, inter-State, or through ECO — enjoy this ₹20 lakh / ₹10 lakh exemption.

### F. Intra-State supply of goods through ECO up to threshold

Persons supplying goods through ECO (required to collect TCS u/s 52) with aggregate turnover ≤ threshold u/s 22(1) are exempt, subject to:

1. No inter-State supply of goods.

2. Supply in only one State/UT through ECO.

3. Must have PAN.

4. Must declare on common portal — PAN, address of place of business, State/UT of supply — for validation.

5. Granted enrolment number upon successful PAN validation.

6. Only one enrolment number per State/UT.

7. No supply through ECO without enrolment number.

8. Enrolment number ceases on grant of registration u/s 25.

Worked example

### Example 1

Example (Deshbandhu, Punjab): Earlier exempt as agriculturist supplying only wheat. Started trading in pre-packaged & labelled puffed rice — no longer exempt under section 23. Aggregate turnover ₹41 lakh > ₹40 lakh threshold in Punjab → liable for GST registration.

### Example 2

Example (Service via ECO): Mr. X provides consultancy services through Urban Company (an ECO) in Karnataka. Turnover ₹18 lakh. Even though supply is through ECO requiring TCS u/s 52, X is exempt from registration since turnover ≤ ₹20 lakh.

### Example 3

Example (Metal scrap RCM): Mr. Y exclusively supplies metal scrap (Chapter 74) on which recipient pays tax under RCM. Despite exclusively making RCM supplies, Y must register since metal scrap is carved out of the exemption.

⚠️ Common exam mistakes

Assuming exemption for RCM-only suppliers also covers metal scrap (Chapter 72–81) suppliers — they must register.
Applying the ₹20 lakh exemption to inter-State supply of GOODS — exemption is only for services (and notified handicraft goods).
Forgetting that handicraft goods exemption requires BOTH PAN and e-way bill generation as cumulative conditions.
Confusing the special category state list — for these notifications it's only Mizoram, Tripura, Manipur, Nagaland (₹10 lakh).
Missing that exemption for services via ECO does not cover supplies specified u/s 9(5).

Bare-Act text Section 23(2) of CGST Act, 2017 · CGST Act, 2017 · click to expand

Section 23(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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Section 23(2) — Notified Categories Exempt from Registration

Worked example

⚠️ Common exam mistakes