Registration, Documents and E-Way Bills for Exempt Supplies

Registration explained: this guide covers what it means, who it applies to, the step-by-step process, documents required, fees, due dates and penalties in India — so you can stay compliant with confidence and avoid costly mistakes.

Making only exempt supplies removes the tax, not the paperwork. Registration can still be required, a document must still be issued, records must still be kept — and there is a ₹10,000 penalty for not keeping them even where no tax was ever payable.

Section 23 relieves a person "engaged exclusively in the business of supplying goods or services or both that are not liable to tax or wholly exempt" — but exempt turnover counts in aggregate turnover, so "even if a person has ₹19.5 lakhs of exempt supplies but ₹1 lakh of taxable supplies, he is required to take registration." Section 31(3)(c) requires a bill of supply instead of a tax invoice. Rule 138 excludes exempt value from the consignment value, so pure exempt movements need no e-way bill — but rule 55A still requires the bill of supply to travel with the goods.

Registration

The exclusion. Section 23 covers a person engaged exclusively in supplying goods or services not liable to tax or wholly exempt, and an agriculturist to the extent of supply of produce out of cultivation of land.

And a further exclusion by notification. Notification No. 05/2017-Central Tax dated 19.06.2017, w.e.f. 22.06.2017, exempts persons "who are only engaged in making supplies of taxable goods or services or both, the total tax on which is liable to be paid on reverse charge basis by the recipient" under section 9(3).

With one carve-out since October 2024. "the Central Government vide Notification No. 24/2024-Central Tax, dt. 09-Oct-2024, has specified that with effect from 10-Oct-2024, nothing contained in Notification 05/2017-Central Tax shall apply to any person engaged in the supply of metal scrap, falling under Chapters 72 to 81."

The word that decides everything is "exclusively". "a person who is making exclusive supply of exempt goods or services or both is not required to obtain registration; however, if he is engaged in the supply of any taxable goods or services, he shall be required to take registration."

And the threshold is computed on the total. "the above ₹20 lakhs limit as specified in section 22 shall be arrived at after adding both taxable as well as exempt supplies."

The document: a bill of supply

Section 31(3)(c) — a registered person supplying exempt goods or services, or paying tax under section 10, shall issue a bill of supply instead of a tax invoice.

The ₹200 relaxation. A registered person may choose not to issue a bill of supply where the value per invoice is less than ₹200, provided (i) the recipient is not registered and (ii) the recipient does not require such invoice — in which case "the registered person shall issue a consolidated bill of supply for such supplies at the close of each day."

The eight particulars:

(a) name, address and GSTIN of the supplier; (b) a consecutive serial number not exceeding 16 characters; (c) date of issue; (d) name, address and GSTIN of the registered recipient; (e) HSN code for goods or SAC for services; (f) description; (g) value, taking into account discount or abatement; (h) signature or digital signature.

HSN digits follow turnover — under the first proviso to rule 46 and Notification No. 78/2020-Central Tax dated 15.10.2020: 4 digits up to ₹5 crore turnover (optional for B2C), 6 digits above ₹5 crore. "If the aggregate turnover during the preceding financial year is up to ₹5 crores then, there is no requirement of mentioning HSN in respect of supplies made to unregistered persons."

On export of exempt goods, the bill of supply carries the endorsement "supply meant for exports / supply to SEZ developer / unit for authorised operations under bond or LUT without payment of IGST" with the recipient's name and address, address of delivery and country of destination. But note the Handbook's refinement: per Circular No. 45/19/2018-GST dated 30.05.2018, "in case of export of exempted or non-GST goods without payment of IGST, LUT / bond is not required" — so "a view can be taken that… the bill of supply may carry endorsement as 'supply meant for exports / supply to SEZ developer / unit for authorised operations'", without the bond or LUT words.

And a document under another Act can serve. Rule 49 clarifies that "any invoice issued under any other Act in respect of non-taxable supply shall be treated as bill of supply under GST. For example, invoice issued under State VAT Act for supply of alcoholic liquor meant for human consumption."

The invoice-cum-bill of supply

Rule 46A overrides rules 46, 49 and 54 to allow a registered person supplying taxable as well as exempted goods or services to an unregistered person to issue a single "invoice-cum-bill of supply".

The Handbook's summary table:

Note the asymmetry in the last two rows. The combined document is available only for unregistered recipients.

E-way bills

Explanation 2 to rule 138(1) provides that consignment value is the section 15 value declared in the invoice, bill of supply or delivery challan, includes CGST, SGST/UTGST, IGST and cess charged, and "shall exclude the value of exempt supply of goods where the invoice is issued in respect of both exempt and taxable supply of goods."

Two consequences:

• "in case of pure supply of exempted goods, other than de-oiled cake as specified in rule 138(14), no e-way bill is required."
• On a mixed consignment, only the taxable value is tested against ₹50,000.

The Handbook's two examples:

• A consignment of ₹70,000 including exempt supply of ₹30,000 — "the e-way bill is not required to be generated because the consignment value is calculated as ₹40,000".
• A consignment of exempt goods worth ₹70,000 — "not required to generate e-way bill but the person-in-charge of the conveyance must carry the bill of supply".

That last requirement is rule 55A, which requires the person in charge to carry a copy of the tax invoice or bill of supply issued under rule 46, 46A or 49 where no e-way bill is required.

Records, retention and the penalty

Section 35(1) requires accounts of production or manufacture, inward and outward supply (with names and complete addresses of suppliers and recipients of taxable goods or services), stock (opening balance, receipt, supply, goods lost, stolen, destroyed, written off or disposed of by gift or free sample, and closing balance including raw materials, finished goods, scrap and wastage), ITC availed, and output tax payable and paid.

The Handbook's conclusion: "every supplier of exempted goods also needs to maintain proper sale purchase register, stock register and manufacturing records."

Rule 56 adds accounts of imports and exports, reverse charge supplies, advances received, paid and adjusted, and a register of delivery challans.

Retention: section 36 — 72 months from the due date of furnishing the annual return, and where the person is party to an appeal, revision or other proceedings, or under investigation under Chapter XIX, one year after final disposal or the 72-month period, whichever is later.

And the penalty. Section 122 — "A registered person supplying exclusively exempted goods or services or both shall have to pay a penalty of ₹10,000 if he fails to keep, maintain or retain books of account and other documents" in accordance with the Act or rules.

A ₹10,000 exposure on a business with no tax liability at all is the reason this chapter matters.

Key takeaways

• Section 23 relieves only a person supplying exclusively exempt or non-taxable items; any taxable supply brings registration back.
• Exempt turnover counts in the section 22 threshold.
• Notification No. 05/2017-CT relieves wholly-RCM suppliers — withdrawn for metal scrap from 10.10.2024.
• Bill of supply under section 31(3)(c), eight particulars, HSN by turnover, and a ₹200 per-invoice relaxation with a daily consolidated document.
• No LUT or bond is needed for export of exempt or non-GST goods — Circular No. 45/19/2018.
• An invoice under another Act serves as a bill of supply for non-taxable supply — rule 49.
• Invoice-cum-bill of supply under rule 46A, only for unregistered recipients.
• Exempt value is excluded from the e-way bill consignment value; pure exempt movement needs none, except de-oiled cake; but rule 55A requires the bill of supply to travel.
• Section 35 and rule 56 records apply, retention 72 months under section 36, and ₹10,000 penalty under section 122 for failure.

Read next

• An Exempt Supply Inside a Composite or Mixed Supply
• Exemption, Nil-Rated, Zero-Rated and Non-Taxable, Distinguished
• Strict Construction, and the Burden of Proving an Exemption

Disclaimer: Positions stated as on 5 September 2026, based on sections 22, 23, 31(3)(c), 35, 36 and 122 of the CGST Act, 2017, rules 46, 46A, 49, 55A, 56 and 138 of the CGST Rules, 2017, Notification Nos. 05/2017, 78/2020 and 24/2024-Central Tax and Circular No. 45/19/2018-GST, as reproduced in the ICAI Handbook on Exempted Supplies under GST (April 2025).