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Assessment Procedure under GST Laws

Types of Assessment under GST Laws

Assessment includes calculation of tax liability of the taxpayer under GST law. It is the process of figuring out how much tax is to be paid by an individual each month.

There are various types of assessments under GST. They are as follows:

  • Self Assessment -  Section 59 done by the taxpayer himself or herself
  • Provisional Assessment -  Section 60 done by tax authorities
  • Scrutiny Assessment -  Section 61 done by tax authorities
  • Best Judgment Assessment - Done by tax authorities
  • Assessment of non-filers of Returns -  Section 62
  • Assessment of Unregistered Persons -  Section 63
  • Summary Assessment -  Section 64 

1- Self-Assessment- Section -59

Every person who is a registered taxable person can assess his tax liability on his or her own and furnish returns for each taxation period. GST also allows self-assessment just like the other tax liability such as VAT, Excise and Service Tax under current taxation regime. Self assessment is stated under Section 59 of the GST act.

After doing self assessment , the person is required to pay tax based on this assessment.
In this regard Section 59 of the GST Act states
“Every registered person shall self-assess the taxes payable under this Act and furnish a return for each tax period as specified under section 39.”

2- Provisional Assessment - Section-60

Under section If an assessee is unable to determine his tax liability value or rate he or she can request the officer for provisional assessment. This further gives two conditions under which this assessment is done :

  • If the taxpayer is unable to determine value due to difficulty in calculation of the transaction value or confusion regarding inclusion of certain receipts or not.
  • If the taxpayer is unable to determine the rate of tax due to difficulty in classification of goods and services or whether any notification is applicable or not.

Procedure for Provisional Assessment

  • The assessee has to request the GST officer for provisional assessments in writing.
  • Within 90 days of receipt of such request the officer will pass an order after reviewing the application. This order is for allowing a payment of tax on provisional basis or at a GST rate or value specified by him.
  • The assessee who is making payment on provisional basis has to issue a bond with a security promising to pay the difference amount between provisionally assessed tax and final assessed tax.
  • The GST officer will pass the final assessment within a period of six months from the date of order of provisional payment.
  • Provisional assessment will be followed by final assessments.

Interest Payable for Provisional Assessment

If in any case the taxpayer is liable to pay more tax after final assessment than paid at the time of provisional assessment, the person is liable to pay interest at a specified rate on such tax payments.
The interest to be paid by the taxpayer is calculated from the actual due date of tax till the actual tax payment made. The interest will be charged maximum at the rate of 18%.

Refund under Provisional Assessment

If in any case the taxpayer was liable to pay less after the final assessment than paid at the time of provisional assessment, the person will be refunded back with the same amount as well as interest will be paid on such refund under section 56. The rate of interest paid will be maximum 6%.

Time Limit for Final Assessments

The final assessment will be done within 6 months of the provisional assessment. The time limit can be extended for 6 months by the Joint or Additional Commissioner. The commissioner can even extend this time period to 4 years if required.

3- Scrutiny Assessment- Section-61

  • To verify the correctness of the returns, the GST officer scrutinize it. Return is scrutinize by proper office as per the provision of section 61 of CGST Act.
  • In case any discrepancy found, he shall furnish the notice to the registered persons about the discrepancy and seeking the reply from the person.The person shall within 15 days from the date of the notice shall furnish the reply.
  • The registered person may accept the discrepancy as mentioned in the notice and pay the taxes, interest and any other amount due and inform the same to proper officer.
  • If proper office found the information is acceptable the proper office shall inform the registered person accordingly.
  • In case if discrepancy is not accepted by the person then he shall give explanation to the proper officer.
  • This is not mandatory for the officer as it is not a legal or judicial proceeding. The officer for the same can ask for explanations if any discrepancies noticed. The officer can take the following actions after receiving the explanations for the same:
    • When Explanation is Satisfactory- The officer will inform the taxpayer and no further actions will be taken in this regard.
    • When Explanation is not Satisfactory- The taxpayer has not given the explanation within 30 days or has not rectified the discrepancies the officer may
      • Conduct a tax audit under section 65.
      • Inspect and search the places of the taxpayer’s business
      • Start a special audit under section 66
      • Initiate demand and recovery provisions
      • Send notices for outstanding demand or shortfall of when there is no willful intention of doing fraud under section 73
      • Send notices for outstanding demand or shortfall when there is willful intention of fraud under section 74.

No order can be passed under scrutiny assessment as it is not a legal or judicial proceeding

4- Best Judgment Assessment

The Assessing Officer under this assessment has an obligation to make an assessment of the total income or less of a taxpayer to the best of his judgment in the following cases.

Assessment of non-filers of returns- Section-62

Under section 62, in case if a taxpayer fails to furnish the returns even after the notice under section 46, a GST officer is required to conduct an assessment. The GST officer in this case access the tax liability of the taxpayer to the best of his judgement taking into consideration all the relevant materials that are available.
The officer can issue an assessment order within a period of five years from the date of furnishing of annual return for the financial year for which the tax has not been paid. After receiving this order , if the concerned taxpayer furnished a valid return within 30 days from the issue of assessment order, the order can be withdrawn.
In this case the taxpayer will be liable to pay late fee under section 47 and/or interest under section 50(1)

Assessment of Unregistered Person - Section-63

Under section 63, if in case any taxpayer fails to obtain a GST registration or whose registration has been cancelled under section 29(2) even if he is liable to be registered and pay tax, the GST officer can process his or her tax liability to the best of his judgement. This has to be done for the relevant period for which the tax is unpaid. The officer can issue an assessment order within five years from the date specified under section 44 for furnishing annual return for the financial year for which taxes are unpaid.

5- Summary Assessment - Section -64

This type of assessment is stated under Section 64. The authorized office is required to obtain prior permission of additional commissioner or joint commissioner to take this assessment. To protect the interest of revenue, a GST officer can proceed to assess the tax liability of a person showing a tax liability with any evidence . The officer can also issue an assessment order id he has proof that the delay in assessment can adversely affect the interest of revenue.

6- Consequences and penalties of non compliance under GST

These may be the consequences and penalties under GST may be levied if there is non compliance:-

  • Penalty of 100% of the amount involved with subject to minimum penalty of 10000 is levied for tax evasion and short deduction.
  • A penalty which may extend upto rupees 25000 would be liable to pay in the given circumstances:-
    • Persons who acquires or receive any goods and services with the knowledge that it is a violation of the GST Act.
    • Help other persons to commit fraud in GST
    • Persons is not issuing the invoice in accordance with the GST rules.
    • Person fail to account the invoices in their books of accounts
    • Absent from the tax authority where the summons are issued.
  • If the taxable amount involved rupees 1 crore to 2 crore imprisonment of 1 year along with the fine is laviable.
  • If the taxable amount involved rupees 2 crore to 5 crore imprisonment of 3 years along with the fine is laviable.
  • Where the taxable amount is not paid and short paid, penalty shall be 10% of the tax amount due with a minimum penalty of rupees 10000.

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