Assessment under GST

Goods and Service Tax or GST has consolidated most indirect taxes under one umbrella and helped Indian businesses become globally competitive. To facilitate easy calculation and payment of taxes, the GST law has provisions for assessments such as self-assessment.

Latest update

11th May 2023
The department has launched the automated return scrutiny module integrated to ACES-GST application for officers to easily auto-select returns for scrutiny and communicate with taxpayers from FY 2019-20 onwards. 

What does Assessment under GST mean

Assessment means determination of tax liability under GST law. The following are the various kinds of assessments 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 themselves assess their taxes payable and furnish a return for each tax period. The GST law operates similar to the Excise, VAT and Service Tax laws and continues to promote self-assessment.

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 a 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 the final assessment.

Time Limit for Final Assessments

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

Interest on Additional Tax Payable and Refunds

The taxpayer will have to pay interest on any tax payable under provisional assessment which was not paid within the due date. The 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

Under scrutiny, the proper officer may scrutinise a return to verify its correctness. If any discrepancies are observed, then the officer may ask for an explanation. 

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
• Initiate demand and recovery provisions

Best Judgement Assessment

In the case of best judgement assessment, an assessing officer assesses based on their reasoning and using the information available. The assessment will be made without any having any bias. Under GST, best judgement assessment becomes applicable in 2 situations-

• When a taxable person has not filed their return
• When a person has not registered under GST even though they are liable to

For a detailed understanding of best judgement assessment under GST, you can refer to our article here.

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.