How assessment is done under GST – A Complete guide

Introduction

GST is reality and regular practice for all class of entrepreneur’s. Since it is single tax system, therefore, it does not only aim to reduce compliance burden but also it helps to eliminate the cascading effect. However, it is also true that without the right compliance tax machinery cannot work efficiently.

As said, the only way to make sure that the tax structure works efficiently is assessments. Assessment is a procedure by which a tax calculation is verified in accordance with the applicable laws so that no avoidance or evasion should be there. Hence, the assessment forms an important part of the law.

What is meant by assessment?

The term assessment means the act of judging the amount and value especially tax that person officially required to pay to the tax authority by the relevant date and at a prescribed rate and at specific timelines.
 

Types of tax assessment under GST

There are basically two types of assessment recognized under GST which we will discuss in details, However, assessment by tax authorities are further divided into four categories. Let us discuss the each of the terms:

1. Tax assessment by Individual (Self Assessment)
    
2. Tax assessment by the tax authorities

Assessment by person himself (Self Assessment)

The process of assessment by a person is also called self-assessment where taxable person himself acknowledges, assess and determine the tax liability and pay the final tax to the authorities and also furnish the return in the prescribed form and particular time.

Self-assessment under GST is carried out in the same manner just like self-assessment under Excise/VAT/Services. A registered taxable person must furnish Form GSTR-3 on monthly basis and Form GSTR-9 annually for each tax period respectively.


Tax assessment by the tax authorities

Except for the self-assessment which is carried out by a registered taxable person, all the other assessment is done by tax authorities. We will discuss in brief each assessment of tax one by one.

Further, there are basically four types of assessment recognized under GST which is carried out by tax authorities and we will discuss in details.

• Provisional assessment
   
• Scrutiny assessment
   
• Summary assessment

• Best Judgment assessment 
  
  a) Assessment of non-filer of return
  b) Assessment of unregistered person

 

Provisional assessment

Provisional assessment is done by tax authorities on a provisional basis on the request of the assessee when assessee is unable to assess the tax payable due to the following reason.

The officer will pass an order to allow the person to pay the tax.

• If assessee is not able to determine the rate of tax due to difficulty in classifying of the  goods and services and due lack of clarification of any notification
• If he is not able to determine the value due to the difference in calculating the transaction value and due to lack of understanding of certain receipt.

Complete procedure for provisional assessment

The following procedure is followed if the assessee chose the provisional registration under GST:

• Assessee needs to file Form GST ASMT-01 in support of necessary documents for paying the tax on a provisional basis.

• Notice of Form GST ASMT-02 shall be issued by assessee officer to call the assessee to furnish additional information or documents.

• The assessee shall file the reply in GST ASMT-03.

• Assessee Officer shall issue order in Form GST ASMT-04 within 90 days to pay the prescribed amount of tax

• Proper Officer may reject by justifying the reason for rejecting the application

• The Proper officer may ask assessee to execute bond or surety/sureties to pay differential tax liability between provisional and final tax liability.

• The assessee shall execute the bond in GST ASMT-05.

• Assessee Officer shall issue a notice of Form GST ASMT-06 for furnishing information and records for final assessment.

• The Assessee Officer shall pass the final assessment order within 6 months Form No. GST ASMT-07.

 

Scrutiny assessment

Scrutiny assessment is a non-mandatory assessment which is carried out by proper officer to scrutinize, verify the correctness and accuracy of the return furnish by the assessee.

The process of scrutiny return

The Proper officer would call for further information and may seek clarification from the assessee in case of any doubt or discrepancies found during the course of scrutiny of return. The Proper officer may proceed to initiate appropriate action-

• If no explanation  received and
• If no satisfactory explanation received.
• If the assessee does not rectify the discrepancy within a reasonable time.

What action can be initiated? 

If assessee does not furnish explanation within a reasonable time or does not comply with the instruction of the authority or does not rectify the discrepancy then the proper officer may take following corrective measure:

• He may conduct audit of the taxable person
   
• Can order special audit
   
• Can inspect and search the business premises of the assessee.
   
• Can demand the recovery of the evaded tax

Summary assessment

Summary assessment means fast-track assessment, where assessee officer has sufficient reason to believe that due to the belated, nonfiling or short filing of return and due to absconding or defaulting taxpayers, which reduces the tax liability of the taxpayer and thereby causing loss of revenue income.

In such case assessing officer complete the assessment without the physical presence of taxpayer.

Extraction of Summary Assessment

Summary assessment can be withdrawn if taxpayer confirms, proves and satisfied to the Additional / Joint commissioner that order was passed was not correct and wrongly passed and must be cancelled. Further, AC/JC is of opinion that order was wrongly passed then on being satisfied he may cancel order.

Best Judgment assessment

When the assessing officer makes the assessment of the income and tax levied upon the same as per best of his knowledge, reasoning and use the information available.

In the following two circumstances, the best judgment assessment becomes applicable:

• Assessment of non-filer of return
• Assessment of unregistered person
   

Assessment of non-filer of return

This is applicable in a case where a registered taxable person does not file any monthly, quarterly and annual return as well as well as TDS or TCS return even after sending so many remainders by tax authorities by way of notice. Then in such case, the proper officer shall assess the tax liability on the basis of information available to the best of his knowledge.

Extraction of Best Judgment Order

The best judgment shall be withdrawn immediately when the assessee files the valid return within 30 days along with the payment of all due tax from receiving an order for assessment by the authority.


Assessment of Unregistered Persons

This is applicable in a case where assessee does not take registration although he was liable to obtain registration then Proper officer shall make the assessment to the best of his knowledge and may take appropriate action can also impose penalty and may initiate demand for recovery of unpaid tax

Note: Assessment order can be made within 5 years from the due date of the annual return for the year when the tax was not paid.

Conclusion
We have tried to cover almost all the relevant point in this article further if you need further guidance and assistance and have any doubt or query related to GST feel free to write us on info@hubco.in.