Budget 2023 : Exemption from Compulsory Registration u/s 23 of the CGST Act

GST has three important sections that deal with the GST Registration requirement, namely Section 22, Section 23, and Section 24 of the CGST Act, 2017.

Section 22 deals with the turnover-based registration requirement, Section 24 deals with the compulsory registration requirement, and Section 23 deals with the persons who are exempt from the registration requirement.

Previously, there was ambiguity between the applicability of Section 23 and Section 24 in certain cases, leading to disputes. However, with the proposal of amendment to Section 23, it has been made clear that persons exempt under Section 23 need not take registration under Section 22 or 24.

The amendment has proposed to give an overriding effect to Section 23 over Section 22 (1) and Section 24 of the CGST Act, 2017 and is to be made applicable with retrospective effect from 1st July 2017.

For section 23 of the Central Goods and Services Tax Act, the following section shall be substituted and shall be deemed to have been substituted with effect from the 1st day of July, 2017, namely:- 

“23. Notwithstanding anything to the contrary contained in sub-section (1) of section 22 or section 24,–

(a) the following persons shall not be liable to registration, namely:– 

(i) 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, 2017;

(ii) an agriculturist, to the extent of supply of produce out of cultivation of land;

(b) the Government may, on the recommendations of the Council, by notification, subject to such conditions and restrictions as may be specified therein, specify the category of persons who may be exempted from obtaining registration under this Act.”.

Section 23 has been made a non-obstante clause, meaning that if a person is required to get registered under either Section 22 or 24 but is specifically exempt under Section 23, then such person is not required to take registration under GST laws.

Section 23(1) and (2) of the CGST Act has been proposed to be amended retroactively, from 01st July, 2017, to provide that persons required for compulsory registration in terms of Section 22(1) and 24 of the CGST Act do not need to register if exempt under Section 23(1), such as those engaged exclusively in the business of exempt supply of goods or services or agriculturists to the extent of supply of produce out of cultivation of land.

  Report