An assessment is a process used to calculate a taxpayer’s tax liability. In other words, how much tax they should pay. There are following types of Assessment under GST:
1. Self Assessment under GST
Under GST, every registered taxpayer will assess the tax amount they must pay and file their periodic returns on time. The government promotes self-assessment under GST just like Excise, VAT and Service Tax.
2. Summary Assessment under GST
Tax officials carry out summary assessment. A tax official carries out summary Assessment if there is a valid reason to believe that delay in assessment would affect the overall revenue. The tax official also has proof of the concerned taxpayer’s tax liability. Summary Assessment is essentially a fast-track assessment based on the return filed by the assessee.
Officials complete it on a priority basis without the presence of the taxpayer. The delay in such assessments may lead to loss of revenue. The Joint Commissioner or Assistant Commissioner can withdraw the order within 30 days of receipt if it is wrong.
3. Provisional Assessment under GST
The taxpayer can opt for provisional assessment if he:
- Is unable to accurately calculate their own tax rate or
- Cannot determine whether he should include certain receipts or not.
The tax official will calculate the tax rate and notify the taxpayer of the result. The taxpayer can then pay their taxes at the rate set by the tax official.
Provisions of Provisional Assessment under GST
- The officer has to give the requests for provisional assessments in writing
- The proper officer can allow paying tax on provisional basis at a rate which he specifies.
- Order will be passed within 90 days from date of request.
- The taxable person has to issue a bond with a security. As per this bond, he will pay the difference between provisionally assessed tax and final assessed tax.
- Final assessments take place after Provisional assessments. The proper officer can ask for information before final assessment.
Time Limit for Final Assessments under GST
The tax official does the final assessment within 6 months of the provisional assessment. Joint/Additional Commissioner can extend this by 6 months. But, the Commissioner can extend it for further 4 years as he seems fit.
4. Scrutiny assessment under GST
The tax officer can scrutinize a taxpayer’s returns and related information. He/she can seek explanation about any inconsistencies. It is not a compulsory assessment. There is no legal rule to scrutinize returns.
- If the explanation is satisfactory: The officer will inform the taxable person. No further action will be taken.
- If the 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 inconsistency 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 & Search the places of business of the tax payer
- Start Demand and Recovery provisions
5. Best judgement assessment
If scrutiny assessment fails, a tax official will assess the taxpayer’s records using the available evidence. This is likely to happen when:
- The taxpayer does not provide necessary documents, financial records, or returns.
- Tax official rejects the documents or records due to inaccuracy.
- Any taxable person fails to pay taxes despite being eligible to pay taxes under GST.
Assessment of Non-Filers
If the registered taxable person does not file his return (even with a notice) he will get a notice u/s 62. If he does not file the returns, the proper officer will assess the tax liability to the best of his judgement. He will assess on the basis of the available information.
The tax official will issue the assessment order within 5 years from the due date of the annual return.
Filing of Valid Return
If the taxable person files a valid return within 30 days from the above assessment order, then the authorities will withdraw the best judgement assessment order. Valid return includes return along with payment of all due taxes.
Assessment of Unregistered Persons
The officer will assess the tax liability for relevant tax periods to the best of his judgement. He can issue assessment order within 5 years from the due date of the annual return for the year when the tax was not paid.
The taxable (unregistered) person will receive a show cause notice. He wiil also get an opportunity to defend himself before passing any order.
If taxpayers don’t register when they should, then:
This shows that even unregistered persons will be assessed. Register for GST within 10 minutes here.