GST registration for NIL, exempt category

Hello Experts,

I came across following postings about section 23 of GST Act. which says: not liable for registration if involved in 100% NIL or Expemted services. Wondering if person providing software services to foriegn clients (only foreign clients) and receiving money as remittance in foreign curreny should register and file GST? Many forums I saw CA are suggesting GST registration and file LUT. Section 23 is not applicable on Export of Software services which is NIL rated? Please clarify.

Section 23 - Person who is not liable for registration under GST | GST Gyaan

Goods & Service Tax, CBIC, Government of India :: Frequently Asked Questions (cbic-gst.gov.in)

Is it correct that person dealing exclusively in NIL rated or exempt goods/ services liable to register if turnover > 20/10 Lakh?			There is no liability of registration if the person is dealing with 100% exempt supplies.
	Is registration necessary if only interstate supply of Nil rated goods is being made?			If exclusively making supplies of Nil rated supplies, registration is not compulsory. Kindly refer section 23 of CGST Act.

Hey Yash! Great question — GST registration and compliance for export of software services (which are zero-rated) can be a bit confusing. Let me break it down:

1. Section 23 - Not Liable for Registration

Section 23 of the CGST Act says that a person exclusively engaged in making exempt supplies (100% exempt supplies) is not liable to register, regardless of turnover.
Exempt supplies = services or goods on which GST rate is NIL or specifically exempted by law.

2. Export of Services — Zero Rated

Export of software services to foreign clients is treated as zero-rated supply under GST.
Zero-rated supplies are taxable supplies but with 0% GST rate.
Important: Zero-rated supplies are not the same as exempt supplies.

3. Is Registration Required for Export of Software Services?

YES, registration is required if you are making zero-rated supplies like export of software services.
The reason: Even though GST rate is 0%, these are still considered taxable supplies.
Hence, Section 23 (which applies to exempt supplies) does not apply here.

4. What CA Forums Suggest — Register and File LUT

Exporters of services usually register under GST to avail:
- The benefit of claiming refund of Input Tax Credit (ITC) on inputs and input services.
- To file LUT (Letter of Undertaking) or bond for export without payment of IGST.

5. Summary

Scenario	Registration Required?	Remarks
100% Exempt supplies only	NO	As per Section 23 of CGST Act
100% Zero-rated supplies only	YES	Exports are zero-rated, considered taxable
Export of software to foreign client	YES	Must register and can file LUT for export

In short:

If you only provide export of software services (zero-rated supply), you must register under GST.
You cannot avoid GST registration just because the supply is zero-rated.
Section 23 exemption applies only if you deal exclusively in exempt supplies, not zero-rated supplies.