GST Section 23 Explained — Who Doesn't Need to Register (and Why Turnover Isn't the Whole Story)

Provision: Section 23, CGST Act 2017
Covers: Persons not liable to register
Works with: Sections 22 & 24
Key amendment: Finance Act 2023, w.e.f. 1 Jul 2017

The short version

Section 23 lists who is not required to register under GST — mainly those dealing exclusively in exempt or non-taxable supplies, and agriculturists (for their own produce).
The word "exclusively" is everything: add even one taxable item and the exemption falls away — you must re-check from scratch.
Section 23(2) lets the Government exempt specified persons by notification, and after the Finance Act 2023 these notifications can override even the compulsory-registration rule in Section 24 — but only on the exact conditions stated.
Registration exemption is not tax exemption. They are separate questions, and notifications change — the metal-scrap turnaround in 2024 is the cautionary tale.

Most people assume GST registration is a simple turnover test — cross ₹20 or ₹40 lakh and you register, stay below and you don't. Section 23 is where that assumption quietly breaks. It carves out people who need not register at all, regardless of turnover, and it interacts with the compulsory-registration rules in ways that trip up even careful businesses.

Section 23 of the CGST Act, 2017 is best understood not as a standalone exemption list but as one leg of a three-part framework. Section 22 sets the general rule (register once turnover crosses the threshold), Section 24 forces registration on certain categories regardless of turnover, and Section 23 pulls specific persons out of the net entirely. You can't read any one of them in isolation.

Who is not liable to register

Section 23(1) identifies two main categories of persons who need not register:

1. Those dealing exclusively in exempt or non-taxable supplies

A person who supplies only goods or services that are not liable to tax, or are wholly exempt from tax under the CGST Act or the IGST Act need not register. The operative word is "exclusively." A business that is mostly exempt does not qualify — the moment a single taxable product or service enters the mix, the entire registration analysis has to be revisited.

It also helps to keep two phrases apart. "Not liable to tax" means the supply sits outside the scope of GST altogether. "Wholly exempt" means the supply is within GST but has been specifically exempted by notification. Both support exclusion under Section 23 — but they are different legal routes to the same door.

2. Agriculturists — to the extent of produce from cultivation

An agriculturist is not liable to register to the extent of the supply of produce out of cultivation of land. The qualifier "to the extent" matters: the exclusion attaches to the agricultural produce, not to the person as a whole. If the same individual starts trading in purchased goods, that trading activity is treated separately and the agricultural exclusion does not shield it.

Section 23(2): exemption by notification

Beyond the two built-in categories, Section 23(2) empowers the Government to exempt specified categories of persons from registration by notification. This is the flexible, policy-driven part of the provision — and the part most likely to decide a real-world case.

The Finance Act 2023 clarification

The Finance Act, 2023 amended Section 23 with retrospective effect from 1 July 2017, settling a long-running debate: can a Section 23(2) notification override the compulsory-registration mandate in Section 24? The answer is yes — a notification under 23(2) can exempt specified persons even from Section 24 — but only through specific, conditions-based exemptions, never a blanket override. Read the conditions; they are the exemption.

Key notifications issued under this power

Notification	Date	Who it covers
5/2017 – Central Tax	19 Jun 2017	Persons supplying only goods on which tax is fully payable by the recipient under reverse charge
10/2017 – Integrated Tax	13 Oct 2017	Specified inter-State suppliers of taxable services (conditional relief)
65/2017 – Central Tax	15 Nov 2017	Specified service suppliers through e-commerce platforms
3/2018 – Integrated Tax	22 Oct 2018	Inter-State suppliers of handicraft / handmade goods, within conditions
34/2023 – Central Tax	31 Jul 2023	Suppliers of goods through e-commerce operators — conditional relief from Section 24(ix)
24/2024 – Central Tax	10 Oct 2024	Excludes metal-scrap suppliers (Chapters 72–81) from the benefit of Notification 5/2017

Why the metal-scrap example matters

Metal-scrap suppliers once relied on Notification 5/2017 — their supplies were under reverse charge, so no registration. Then Notification 24/2024 (10 October 2024) specifically carved them out of that benefit. A reading that was correct for years became wrong overnight. The lesson is simple: a notification is only as good as its latest amendment, and relying on an outdated version is a live compliance risk.

Registration exemption is not tax exemption

This is the most common confusion, so it's worth stating plainly: being exempt from registration and being exempt from tax are two different questions. A person outside the registration net under Section 23 may still be making supplies that are, in character, taxable. And conversely, a supply can be tax-exempt while other conditions still pull the person into mandatory registration. Decide registration and taxability separately, every time.

A clean way to work through it

When registration is genuinely in doubt, a structured check beats a turnover glance:

Identify the actual supply — what, exactly, is being supplied.
Determine its GST character — taxable, exempt, nil-rated, or outside scope.
Review the whole business — the "exclusively" test fails if any part is taxable.
Compute aggregate turnover against the applicable threshold under Section 22.
Check Section 24 — does any compulsory-registration category apply.
Look for a Section 23(2) notification that might exempt the person even from Section 24.
Read the full notification — every condition, restriction and amendment.
Confirm the law as it stood on the relevant date — notifications change retrospectively.

Mistakes that cost businesses

Treating turnover as the only test. Section 24 can compel registration well below any threshold.
Reading "mostly exempt" as "exclusively exempt." One taxable line item ends the exclusion.
Assuming agriculturist status is a blanket shield. It covers produce from cultivation, not trading.
Ignoring Section 23(2) when Section 24 seems to apply. A notification may still exempt you.
Using an original notification without checking amendments. See: metal scrap, 2024.
Confusing registration exemption with tax exemption. They are decided separately.

Not sure whether you need to register?

efiletax can run the full Section 22–23–24 check for your business, read the notifications that actually apply, and tell you clearly where you stand — before a mistake becomes a demand notice.

Talk to our GST team

Disclaimer: This article explains Section 23 of the CGST Act, 2017 and related notifications for general understanding and is current as at the date of publication. Registration liability turns on the specific facts of each case and on the law and notifications in force on the relevant date — verify the current position before acting. This is not legal or tax advice; please consult a qualified professional. Talk to efiletax if you need help.