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GST will consolidate all indirect taxes under one umbrella and help Indian businesses become globally competitive.

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GST Assessment - An Overview

In accordance with GST, assessment of GST refers to determination of tax liability under this act. Generally people having GST registration have to file GST returns or pay GST every month according to GST liability. However the government can any time reevaluate or execute an assessment itself to ascertain if there are any errors or insufficient payment of GST.

There are various types of assessment under GST:

A) Section 59 - Self Assessment:

Every registered person shall self-assess the taxes payable under this act and furnish the returns for each tax period specified under section 39.

B) Section 60 - Provisional Assessment:

If a registered dealer is unable to determine the value of the goods or tax rate, he can request the officer for provisional assessment. An appropriate officer can authorize the assessee to pay tax on provisional basis at a rate or value specified by him.

C) Section 61 - Scrutiny Assessment:

A GST officer at any point can scrutinize the return to verify its correctness. If the officer noticed any discrepancies in the return he can any time enquire or even ask for explanations.

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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.

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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.

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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%.

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Scrutiny of Returns

The proper officer can scrutinize the return to verify its correctness. It is a non-cassessment under gstompulsory 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.

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When can a special audit be initiated?

The Assistant Commissioner may initiate the special audit, considering the nature and complexity of the case and interest of revenue. If he is of the opinion during any stage of scrutiny/ inquiry/investigation that the value has not been correctly declared or the wrong credit has been availed then special audit can be initiated.

A special audit can be conducted even if the taxpayer’s books have already been audited before.

Who will order and conduct a special audit?

The Assistant Commissioner (with the prior approval of the Commissioner) can order for special audit (in writing). The special audit will be carried out by a chartered accountant or a cost accountant nominated by the Commissioner.

Time limit for special audit

The auditor will have to submit the report within 90 days. This may be further extended by the tax officer for 90 days on an application made by the taxable person or the auditor.

Cost

The expenses for examination and audit including the auditor’s remuneration will be determined and paid by the Commissioner.

Findings of special audit

The taxable person will be given an opportunity of being heard in findings of the special audit.
If the audit results in detection of unpaid/short paid tax or wrong refund or input tax credit wrongly availed then demand and recovery actions will be initiated.
Thus, GST is a completely new tax regime already taking India by storm. Businesses will face challenges in transition and application of GST. To know more about GST, feel free to read more of our articles on our blog.

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