Assessment under GST

Goods and Service Tax or GST will consolidate all indirect taxes under one umbrella and help Indian businesses become globally competitive. To facilitate easy calculation and payment of taxes, GST has provisions for assessments such as self-assessment.

Latest update on RFD-01

21st December 2021
From 1st January 2022, CBIC made the aadhaar authentication mandatory to apply for a refund under the CGST Rules 89 (Excess tax, interest, penalty, fees paid) and 96 (IGST paid on goods or services exported out of India) in RFD-01.

1st May 2021
Where the time limit to pass orders for rejecting any refund claim fully or partly falls between 15th April 2021 and 30th May 2021, it is extended. The extended time limit shall be later of two dates:
(1) 15 days after reply to the notice OR
(2) 31st May 2021

What does Assessment under GST mean

Assessment means determination of tax liability under GST law. Below are the various types of assessment under GST.

Types of Assessment under GST

• Self-assessment
• Provisional assessment
• Scrutiny assessment
• Best judgment assessment
•  Assessment of non-filers of returns
•  Assessment of unregistered persons
• Summary assessment

Only self-assessment is done by the taxpayer himself. All the other assessments are by tax authorities.

Self-Assessment

Every registered taxable person shall himself assess the taxes payable and furnish a return for each tax period. This means GST continues to promote self-assessment just like the Excise, VAT and Service Tax under current tax regime.

Provisional Assessment

An assessee can request the officer for provisional assessment if he is unable to determine value or rate. Unable to determine value due to difficulty in –

• Calculating the transaction value
• Understanding whether certain receipts should be included or not

Unable to determine rate of tax due to difficulty in –

• Classifying the goods/services
• Identifying whether any notification is applicable or not

Provisions of Provisional Assessment

• Requests for provisional assessments will be given in writing
• The proper officer can allow paying tax on provisional basis at a rate or on a value specified by him.
• Order will be passed within 90 days from date of request.
• The taxable person has to issue a bond with a security promising to pay the difference between provisionally assessed tax and final assessed tax.
• Provisional assessments will be followed by final assessments. The proper officer can ask for information before final assessment.

Time Limit for Final Assessments

The final assessment will be done within 6 months of the provisional assessment. This can be extended for 6 months by the Joint/Additional Commissioner. However, the Commissioner can extend it for further 4 years as he seems fit.

Interest on Additional Tax Payable and Refunds

The tax payer will have to pay interest on any tax payable under provisional assessment which was not paid within the due date. Interest period will be calculated from the day when tax was first due on the goods/services (and not the date of provisional assessment) till the actual payment date, irrespective of payment being before or after final assessment. Rate of interest will be maximum 18%. If the tax as per final assessment is less than provisional assessment then the taxable person will get a refund. He will also get interest on refund. Rate of interest will be maximum 6%.

Scrutiny of Returns

The proper officer can scrutinize the return to verify its correctness. It is a non-compulsory pre-adjudication process. In simple words, it is not mandatory for the officer to scrutinize return. Scrutiny of  returns is not a legal or judicial proceeding,i.e., no order can be passed. The officer will ask for explanations on discrepancies noticed.

When Explanation is Satisfactory

If the officer finds the explanation satisfactory then the taxable person will be informed and no further action will be taken.

When Explanation is not Satisfactory

The proper officer will take action-

• If the taxable person does not give a satisfactory explanation within 30 days Or
• He does not rectify the discrepancies within a reasonable time (not yet prescribed)

The officer may-

• Conduct audit of the tax payer u/s 65
• Start Special Audit procedure u/s 66
• Inspect and search the places of business of the tax payer
• Start Demand and Recovery provisions

Similar provisions regarding scrutiny are existing in current excise, VAT and service tax laws.   Thus, most of the assessment provisions under GST are similar to the current indirect tax system. Please click here to read about best judgement assessment, scrutiny of returns, summary assessment.