Section 23(1)(b): The Agriculturist's Exemption From Registration

Section 23 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.

The relief is real but narrow, and it has a counter-intuitive edge: an agriculturist who exports may have to register precisely because his supplies are exempt — since a refund can only be claimed by a registered person.

Section 23(1) provides that "the following persons shall not be liable to registration — (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 IGST Act; (b) an agriculturist, to the extent of supply of produce out of cultivation of land." Section 23(2) adds a power to notify further exempt categories, and begins "notwithstanding anything to the contrary contained in sub-section (1) of section 22 or section 24".

Two independent reliefs in one sub-section

Clause (a) is about the supplies. A person supplying only non-taxable or wholly exempt goods or services need not register — whoever he is. A company selling only fresh vegetables is within clause (a) even though it can never be an agriculturist.

The word "exclusively" is the whole of clause (a). A single taxable supply takes the person out of it, and back to the section 22 threshold.

Clause (b) is about the person and the source of the goods. An agriculturist — an individual or a HUF within section 2(7) — is outside registration to the extent of produce out of cultivation of land. Who is an agriculturist →

"To the extent of" is a partial relief, not a status. The Handbook's example makes it operational: "A landowner leases agricultural land to a food-processing company that grows tomatoes for the first 6 months and later uses the same land area to construct a storage shed… For the first 6 months (agricultural cultivation) → No GST Registration as it is not taxable. From the date commercial shed construction starts → GST Registration is applicable (if turnover is above 20 lakhs)."

Why an exporting agriculturist must register anyway

This is the sharpest practical point in the whole chapter, and it follows from two provisions pulling in opposite directions.

Section 23 says he need not register, because "Supply of unprocessed agricultural produce is exempt, and there is no GST liability on such outward supplies."

But a refund needs a registration. As the Handbook puts it: "certain agricultural exporters or agricultural service providers may need GST registration only to claim refund, particularly when: 1. They export agricultural produce, and 2. They incur input GST on packing materials, fertilizers, pesticides, machinery repairs, cold-storage services, transportation, etc."

The conclusion is explicit: "under section 24 and refund rules, a person who wants to claim refund must be a registered person. Therefore, if an agriculturist wishes to claim refund of input tax credit (ITC) on exports or zero-rated supplies, GST registration becomes mandatory, even though they have no tax liability on outward supplies."

So the decision is commercial, not legal. Registration is optional; whether the input GST on packing, cold storage and freight is worth the compliance is the real question. Refunds for agricultural exporters →

Section 23(2) and Notification No. 5/2017

Section 23(2) begins with a non obstante clause overriding both section 22(1) and section 24, and empowers the Government to notify further categories exempted from registration.

The power was used at once. "the Central Government issued Notification No. 05/2017–Central Tax dated 19 June 2017, effective from 22 June 2017, whereby persons exclusively making supplies on which tax is payable by the recipient under reverse charge under section 9(3) were also exempted from registration."

This is the provision that actually protects most farmers. An agriculturist selling raw cotton or tobacco leaves makes supplies on which the registered buyer pays under section 9(3); Notification No. 5/2017 relieves him from registration in terms, without needing the section 23(1)(b) argument at all.

One carve-out since 2024. "this exemption was partially withdrawn by Notification No. 24/2024–Central Tax dated 9 October 2024, with effect from 10 October 2024, in respect of persons engaged in the supply of metal scrap falling under Chapters 72 to 81."

That withdrawal has nothing to do with agriculture, but it is worth knowing because it shows the notification is live and amendable, and because the same 10.10.2024 date brought metal scrap into the TDS net under section 51. TDS on metal scrap →

The registration thresholds, for when the relief does not apply

Once an agriculturist falls outside sections 23(1)(b) and 5/2017, the ordinary thresholds apply:

And "aggregate turnover" under section 2(6) counts exempt supplies too — "the aggregate value of all taxable supplies… exempt supplies, exports of goods or services or both and inter-State supplies of persons having the same Permanent Account Number, to be computed on all India basis."

That last point catches people out. A trader with ₹35 lakh of exempt fresh vegetables and ₹6 lakh of taxable packed goods has an aggregate turnover of ₹41 lakh, and cannot rely on clause (a) because he is not supplying exclusively exempt goods.

Key takeaways

• Section 23(1)(a) relieves anyone supplying exclusively non-taxable or wholly exempt goods or services.
• Section 23(1)(b) relieves an agriculturist, but only to the extent of produce out of cultivation of land.
• The relief is activity-wise, not person-wise — a shed, a lease for commercial use or a trading activity brings registration back.
• An agriculturist who exports must register to claim a refund, though he has no outward tax liability.
• Notification No. 5/2017-CT exempts persons making only supplies liable to section 9(3) reverse charge — partially withdrawn for metal scrap from 10.10.2024 by Notification No. 24/2024-CT.
• Aggregate turnover (s.2(6)) includes exempt supplies, so exempt sales count towards the threshold once the person is outside clause (a).

Read next

• Section 2(7): Who Is an "Agriculturist" Under GST
• Does an Agriculturist Have to Register for RCM? Section 24 Against Section 23
• Refunds for Exporters of Agricultural Produce, and the LUT

Disclaimer: Positions stated as on 5 September 2026, based on sections 2(6), 2(7), 22, 23 and 24 of the CGST Act, 2017, Notification No. 05/2017-Central Tax dated 19 June 2017 and Notification No. 24/2024-Central Tax dated 9 October 2024, as reproduced in the ICAI Handbook on Applicability of GST on Agricultural Sector (January 2026, law updated to 31 December 2025).