Summary: GST registration in India is generally required for suppliers exceeding the ₹20/40 lakh turnover threshold (Section 22, CGST Act). However, Section 23(1) exempts persons engaged in supplying goods or services that are not taxable or wholly exempt. Section 24 mandates compulsory registration for those making inter-state taxable supplies. As per Section 2(6) of the IGST Act, export of services qualifies as inter-state supply, but Section 16 classifies it as a zero-rated supply, meaning it is treated as exempt. Since Section 16(2) states that input tax credit can be availed even if the supply is exempt, and Section 24 applies only to taxable supplies, export of services alone does not require GST registration. Thus, a person exclusively engaged in exporting services is not mandated to register under GST, regardless of turnover.
RELEVENT PROVISIONS OF GST LAW
Section 22. Persons liable for registration
(1) Every supplier shall be liable to be registered under this Act in the State or Union territory, other than special category States, from where he makes a taxable supply of goods or services or both, if his aggregate turnover in a financial year exceeds twenty lakh rupees.
Provided also that the Government may, at the request of a State and on the recommendations of the Council, enhance the aggregate turnover from twenty lakh rupees to such amount not exceeding forty lakh rupees in case of supplier who is engaged exclusively in the supply of goods, subject to such conditions and limitations, as may be notified.
Section 23. Persons not liable for registration
(1) The following persons shall not be liable to registration, namely:
(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 Integrated Goods and Services Tax Act;
(b) an agriculturist, to the extent of supply of produce out of cultivation of land.
(2) Notwithstanding anything to the contrary contained in sub-section (1) of section 22 or section 24, 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 24. Compulsory registration in certain cases
Notwithstanding anything contained in sub-section (1) of section 22, the following categories of persons shall be required to be registered under this Act-
(i) persons making any inter-State taxable supply
Section 2(6) of IGST Act ― export of services means the supply of any service when:
(i) the supplier of service is located in India;
(ii) the recipient of service is located outside India;
(iii) the place of supply of service is outside India;
(iv) the payment for such service has been received by the supplier of service in convertible foreign exchange [or in Indian rupees wherever permitted by the Reserve Bank of India]2; and
(v) the supplier of service and the recipient of service are not merely establishments of a distinct person in accordance with Explanation 1 in section 8;
Section 16 of IGST Act – Zero rated supply
(1) ― zero rated supply means any of the following supplies of goods or services or both, namely:
(a) export of goods or services or both or
(b) supply of goods or services or both to a Special Economic Zone developer or a Special Economic Zone unit.
(2) Subject to the provisions of sub-section (5) of section 17 of the Central Goods and Services Tax Act, credit of input tax may be availed for making zero-rated supplies, notwithstanding that such supply may be an exempt supply.
Section 7 of IGST Act – Inter-State supply
(5) Supply of goods or services or both
(a) when the supplier is located in India and the place of supply is outside India;
ANALYSIS
Section 22 of the CGST Act talks about registration by a person, in general, whose turnover, computed on all India basis, has crossed the threshold of Rupees Twenty/ Forty Lakhs.
Section 24 of the CGST Act mandates compulsory registration for certain categories of persons in specific situations. Section 24 overrides section 22(1) of the CGST Act in view of the non-obstante clause being used in section 24.
Section 23 of the CGST Act deals with situations where no registration is required.
Section 23(1) says that 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 shall not be liable to registration.
This article attempts to answer specifically on the question as to whether a person making export of service need to take registration under GST law in India. So only relevant provisions of the GST law are extracted here for the benefits of the readers.
Section 23(1) has employed the phrase ‘’that are not liable to tax’’ after the words ‘’any person engaged exclusively in the business of supplying goods or services or both’’. Meaning thereby if the underlying supply is not liable to tax under CGST Act, the person making such supply exclusively or along with exempt supply, shall not be liable to take registration.
Section 24 (i) specifically mandates compulsory registration by a person making inter- state taxable supply. The term or phrase ‘’inter- state taxable supply’’ makes it ample clear that if the underlying inter-state supply is taxable under the GST law, then only registration shall be compulsory.
Section 16(2) of the IGST Act refers ‘zero rated supply’ as an ‘exempt supply’.
CONCLUSION
In the light of the above discussion, by conjoint reading of provisions of section 16(2) of the IGST Act, section 23(1) and 24(1) of the CGST Act, it appears that no registration is required for the person exclusively making export of service irrespective monetary quantum.
*****
Disclaimer: The contents of this document are solely for informational and knowledge purpose. Neither have I accepted any liability for any loss or damage of any kind arising out of any inaccurate or incomplete information in this document nor for any action taken in reliance thereon.
Author Bio
