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Provisional Assessment

Reviewed by Anjaneyulu | Updated on Sep 30, 2020

Catalogue

Introduction

Assessment refers to the process of determining tax liability. The process can take different forms, such as self-assessment, re-assessment, provisional assessment, summary assessment, and best judgment assessment.

Generally, the tax liability will be determined based on the applicable tax rate and value. There might be situations where a taxpayer can not decide the applicable tax rate or value of the goods or services. Hence the GST law provides for provisional assessment.

Procedure

In the case where a taxpayer is unable to determine the value of goods, services, or both, or the rate of tax applicable, he can send a written request to the authorities (Assistant Commissioner/Deputy Commissioner of Central Tax) giving reasons for the payment of tax on a provisional basis.

  • The taxpayer has to furnish an application for provisional assessment along with the supporting documents electronically in the form GST ASMT-01.

  • The authorities will scrutinise the application in the form GST ASMT-01 and may issue form GST ASMT-02 in the case of additional requirement.

  • The taxpayer has to file a reply to the notice in form GST ASMT-03, and he can also appear in person.

  • The authorities will issue an order in form GST ASMT-04 to pay tax on provisional basis within ninety days from the date of receipt of the request.

  • The order will indicate the value, the rate, or both on a provisional basis and the tax amount.

  • A bond is to be executed for the tax amount along with the security. The security should not exceed twenty-five per cent of the bond amount.

  • The provisional assessment will be finalised, within a period not exceeding six months from the date of issuance of the form GST ASMT-04.

  • The authorities will issue a notice in form GST ASMT-06, calling for information and records required for the finalisation of assessment.

  • A final assessment order will be issued in form GST ASMT-07 specifying the tax amount payable or the amount refundable if any.

Conclusion

The provisional assessment is a method of determining the tax liability when the actual tax liability cannot be determined at the time of supply. The payment of provisional tax is allowed only against a bond and security. The provisional assessment has to be finalised within six months unless extended.

Once the tax liability is finalised, it can be more or less when compared to the provisionally paid tax. - If the tax liability is more, the difference is payable along with interest. - If the tax liability is less, the amount will be refunded with interest.

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