Section 158A of GST Act: Consent based Sharing of Information

Explanation of CGST Section 158A(1)

1. Overriding Effect:
   • This provision overrides Sections 133, 152, and 158 of the CGST Act.
   • These sections primarily deal with confidentiality, disclosure, and restrictions on the use of information provided by taxpayers.
2. Types of Information That May Be Shared:
   The following details, submitted by a registered taxpayer, can be shared: (a) Registration and Return Details:
   • Information provided in the application for GST registration (Section 25).
   • Details mentioned in GST returns, including periodic tax filings under Section 39 and annual returns under Section 44.
   (b) Invoice and Outward Supply Details:
   • Details uploaded on the common portal for invoice preparation.
   • Information related to outward supplies reported under Section 37 (GSTR-1).
   • Data submitted for e-way bill generation under Section 68 (related to the movement of goods).
   (c) Other Prescribed Details:
   • Any other information as may be specified by rules.
3. Conditions for Sharing:
   • The sharing of this information is not automatic; it is subject to subsection (2) of Section 158A.
   • The GST Council’s recommendations are required before any data is shared.
   • The Government will notify the specific systems with which the data can be shared.
   • The sharing will take place in a prescribed manner and under specific conditions set by the rules.

Purpose and Implications:

• This section is introduced to enhance data interoperability among government systems.
• The data can be used for purposes like tax compliance, fraud prevention, and better coordination between various tax and financial authorities.
• It ensures that information submitted by businesses is utilized effectively for governance while maintaining necessary safeguards.

Explanation of CGST Section 158A(2)

Purpose of This Subsection:

Subsection (2) of Section 158A ensures that any sharing of taxpayer details under subsection (1) happens only with proper consent. This provision emphasizes data privacy and taxpayer control over their information.

Key Points of Section 158A(2):

1. Consent Requirement for Suppliers and Recipients
   • Before sharing data under Section 158A(1), explicit consent must be obtained from the relevant party.
   • This consent process will be carried out in a form and manner prescribed by rules (yet to be detailed by the Government).
2. Whose Consent is Required?(a) Consent from the Supplier:
   • The supplier must give consent for sharing all the details mentioned in:
     • Clause (a): Registration and return details (e.g., GST registration, GSTR-1, GSTR-3B, GSTR-9).
     • Clause (b): Invoice and outward supply details (e.g., e-invoicing, e-way bills).
     • Clause (c): Any other prescribed details.
   (b) Consent from the Recipient:
   • The recipient’s consent is required for sharing:
     • Clause (b): Outward supply details uploaded by the supplier (e.g., invoices, e-way bills related to goods/services received by the recipient).
     • Clause (c): Any other prescribed details only if they contain the recipient’s identity information (e.g., PAN, GSTIN, business name).
3. Implications of This Provision:
   • Ensures that sensitive business data, including supplier and recipient details, is not shared without authorization.
   • Protects businesses from unauthorized data access by external systems.
   • Aligns with global best practices in data privacy and consent-based information sharing.

Conclusion:

• Section 158A(2) introduces a structured consent mechanism for sharing taxpayer data with notified government systems.
• It prevents automatic data sharing and requires taxpayers’ approval, adding an important layer of privacy and control.
• The exact procedure and format for obtaining consent will be prescribed by rules in the future.

Explanation of CGST Section 158A(3)

Purpose of This Subsection:

Section 158A(3) provides legal immunity to the Government and the GST common portal for any consequences arising from sharing taxpayer information under Section 158A. This ensures that neither the Government nor the GST portal can be held legally responsible for how the shared data is used or interpreted.

Key Points of Section 158A(3):

1. Overriding Effect:
   • This subsection starts with “Notwithstanding anything contained in any law for the time being in force,” meaning it overrides all other laws that may otherwise allow legal action against the Government or GST portal.
   • It ensures that no taxpayer can file a lawsuit or claim damages due to information sharing under this section.
2. Protection from Liability:
   • No legal action (e.g., a lawsuit, compensation claim) can be taken against:
     • The Government (Central or State).
     • The GST common portal (the digital platform handling tax filings and compliance).
   • This protection applies to any liability that may arise due to data sharing under Section 158A.
3. No Impact on Tax Liability:
   • This provision clarifies that data sharing does not change or affect a taxpayer’s obligation to:
     • Pay taxes on their supplies.
     • File correct returns and comply with GST rules.
   • In other words, even if the shared data contains errors, the taxpayer is still responsible for paying the correct tax and correcting discrepancies in returns.

Implications of This Provision:

• Government and GSTN Protection: Ensures that tax authorities and the GST network cannot be held accountable for errors, misinterpretations, or misuse of shared data.
• No Relief for Taxpayers: Businesses cannot avoid tax liability by claiming that incorrect information was shared. The responsibility always remains on the taxpayer to comply with GST laws.

Conclusion:

• Section 158A(3) shields the Government and the GST common portal from lawsuits or liabilities related to shared taxpayer information.
• Taxpayers remain responsible for accurate tax payments and filings, regardless of how their data is shared or used.

Explanation of Notification No. 06/2024-Central Tax, S.O. 818(E), dated 22.02.2024

Purpose of the Notification:

This notification, issued under Section 158A of the CGST Act, 2017, specifies the “Public Tech Platform for Frictionless Credit” as the authorized system with which taxpayer information from the GST common portal may be shared, subject to consent under Section 158A(2).

Key Highlights:

1. Legal Authority:
   • Issued under Section 158A of the CGST Act, 2017 and Section 20 of the IGST Act, 2017.
   • The Central Government has issued this notification based on the recommendations of the GST Council.
2. What Information May Be Shared?
   • As per Section 158A(1), information such as GST registration details, return filings, outward supplies, and invoices may be shared with the notified system.
   • However, sharing will happen only with the taxpayer’s consent, as per Section 158A(2).
3. What is the Public Tech Platform for Frictionless Credit?
   • It is a digital infrastructure conceptualized by the Reserve Bank of India (RBI) in its Statement on Developmental and Regulatory Policies dated 10th August 2023.
   • Developed by Reserve Bank Innovation Hub (RBIH), a wholly owned subsidiary of RBI.
   • The platform is designed as an open architecture information technology system to facilitate:
     • Seamless access to financial data for credit assessment.
     • Integration of financial service providers and data providers through a standard API-driven framework.
4. Objective of the Public Tech Platform:
   • Enable frictionless credit flow by allowing lenders to access GST and other financial data in a structured and consent-based manner.
   • Enhance financial inclusion by making credit assessments more efficient, especially for small businesses and MSMEs.
   • Improve digital lending by integrating multiple data sources for better risk assessment.

Implications for Businesses and Financial Institutions:

• Businesses (Taxpayers):
  • May choose to share GST-related data with financial institutions via this platform to facilitate credit approvals.
  • This could streamline loan applications, as lenders will have direct access to verified tax data.
• Financial Institutions & Lenders:
  • Can use this platform to evaluate creditworthiness based on GST returns, invoices, and sales data.
  • Helps in reducing documentation requirements and faster loan processing.

Conclusion:

• The notification designates the Public Tech Platform for Frictionless Credit as a system authorized to receive GST data from the common portal.
• Data sharing remains voluntary, requiring explicit consent from taxpayers under Section 158A(2).
• This initiative is expected to streamline credit access, particularly for small businesses and MSMEs, by making GST data directly usable for financial decision-making.

Explanation of Notification No. 33/2023-Central Tax, G.S.R. 576(E), dated 31.07.2023

Purpose of the Notification:

This notification, issued under Section 158A of the CGST Act, 2017, designates “Account Aggregator” (AA) as an authorized system that can receive taxpayer information from the GST common portal, subject to the taxpayer’s consent under Section 158A(2).

Key Highlights:

1. Legal Authority:
   • Issued under Section 158A of the CGST Act, 2017 and Section 20 of the IGST Act, 2017.
   • The Central Government has notified this system based on the recommendations of the GST Council.
   • The notification became effective from October 1, 2023.
2. What is an Account Aggregator (AA)?
   • An Account Aggregator (AA) is a Non-Banking Financial Company (NBFC) that operates under the RBI’s policy framework.
   • Defined under the Non-Banking Financial Company – Account Aggregator (Reserve Bank) Directions, 2016.
   • Regulated by the RBI under Section 45JA of the RBI Act, 1934.
   • Acts as a consent-based financial data intermediary, facilitating the secure sharing of financial information between financial institutions.
3. What Information Can Be Shared?
   • As per Section 158A(1), the following GST-related data may be shared with Account Aggregators:
     • Registration details (GSTIN, business name, etc.).
     • Return filings (e.g., GSTR-1, GSTR-3B, GSTR-9).
     • Outward supply details (invoices, e-way bills).
     • Any other prescribed information.
   • However, sharing will happen only with explicit taxpayer consent, as mandated under Section 158A(2).
4. Objective of the Account Aggregator System:
   • Simplifies financial data sharing for businesses and individuals.
   • Enables seamless access to GST data for financial institutions, which can use it for credit assessment, loan approvals, and financial services.
   • Reduces the need for manual document submission by allowing direct, consent-based data sharing.
5. Implications for Businesses and Financial Institutions:
   • For Businesses (Taxpayers):
     • Easier access to loans and credit facilities as lenders can directly verify GST data through Account Aggregators.
     • Faster loan approvals since financial institutions can instantly retrieve tax filings and financial details.
     • No need to upload or submit GST returns manually for loan applications.
   • For Financial Institutions:
     • Better credit assessment using real-time GST data.
     • Streamlined KYC and risk evaluation.
     • Secure and regulated data access under RBI’s framework.

Conclusion:

• The notification designates Account Aggregators as authorized systems to receive GST data.
• Data sharing remains voluntary, requiring explicit taxpayer consent under Section 158A(2).
• This initiative is expected to enhance digital lending, financial inclusion, and ease of doing business by making GST data readily available for credit evaluation.