Assessment of GST refers to the calculations of indirect tax under GST law. Read this blog to know more about the topic in detail.
The Goods and Services Tax, or GST, will bring all indirect taxes under one roof, allowing Indian firms to compete on a global scale. GST offers provisions for assessments such as self-assessment to make tax calculation and payment easier.
The phrase “assessment” under GST refers to a determination of tax due under this Act, which comprises self-assessment, re-assessment, summary assessment, provisional assessment, and best judgment assessment. Persons with GST registration typically file GST returns and pay GST monthly based on their self-assessment of the liability of GST. However, the government reserves the right to re-assess or conduct an evaluation on its own to evaluate if there is a deficient payment of GST. In this essay, we will go over the various forms of GST assessments in depth.
Types of Assessment Under GST
The assessment is the calculation of the taxpayer’s tax due under GST law. It is the process of determining how much tax an individual must pay each month.
GST assessments come in a variety of forms. These are their names:
- Self-Assessment – This is done by the taxpayer herself or himself under Section 59
- Provisional Assessment – A tax authority’s Section 60 assessment
- Scrutiny Assessment – This is done by tax officials under Section 61
- Tax officials perform best judgment assessments
- Non-filers of returns are assessed under Section 62
- Unregistered Persons Assessment – This is covered by Section 63
- Tax officials perform a summary assessment under Section 64.
Every registered taxable individual can assess his or her own tax due and file returns for each taxable period. GST Audit, like other tax liabilities such as VAT, Excise, and Service Tax, allows for self-assessment under the present taxing structure. Section 59 of the GST Act specifies self-assessment.
Following self-assessment, the individual is expected to pay tax in accordance with this assessment.
Section 59 of the GST Act specifies this, “Every registered person shall self-assess the taxes payable under this Act and furnish a return for each tax period as specified under section 39.”
If an assessee is not able to ascertain his or her liability of tax value or rate, he or she may request a provisional assessment from the officer under this section. This is followed by two circumstances under which this assessment is performed:
- If the taxpayer is not able to ascertain value due to difficulties in calculating transaction amount or has any confusion about whether items should be included or not.
- If the taxpayers are not able to ascertain the rate of tax because of difficulties in categorizing services and goods or determining whether any notice is applicable.
Procedure for Provisional Assessment:
- Step 1: The taxable person must submit a written application for provisional assessment to the relevant GST officer
- Step 2: After assessing the application, the GST officer will issue an order within ninety days of receiving it, enabling tax payment on a provisional basis, at a GST rate, or on such value as he specifies
- Step 3: If the taxable person is making a preliminary payment, he or she must post a bond with security guaranteeing to pay the distinction between the provisionally assessed tax and the final assessed tax
- Step 4: The GST officer will issue a final assessment within six months after the date of the communication.
The appropriate official can scrutinize the return to ensure its accuracy. It is a voluntary pre-adjudication process. In other words, the officer is not required to examine the return. Returns scrutiny is not a judicial or legal action, hence no order may be issued.If any disparities are discovered, the officer in charge might request explanations. Following receipt of the explanations, the officer may take the following actions:
- When the explanation is satisfactory, the officer will notify the taxpayer and no additional action will be taken.
- When the Explanation is Unsatisfactory- If the taxpayer has not provided explanations within 30 days or has not fixed the errors, the officer may issue a citation.
- Execute a tax audit in accordance with Section 65.
- Assess and search the taxpayer’s places of business.
- Begin a special audit in accordance with Section 66.
- Begin demand and recovery provisions.
- When there is no deliberate intent to commit fraud, send notices for unpaid demand or deficiency under Section 73.
- When there is a wilful purpose to commit fraud, send notices for outstanding demand or deficiency under section 74.
Section 64 specifies this form of assessment. To conduct this evaluation, the authorized officer must first request approval from a joint commissioner or additional commissioner. To protect revenues, a GST officer may undertake to assess the tax burden of a person presenting evidence of tax liability. If the officer has evidence that the postponement in assessment is affecting revenue, he can also file an assessment order.
Assessment of non-filers of returns
If an assessee fails to file returns despite receiving a notice u/s 46, a GST officer is obligated to perform an assessment under section 62. In this scenario, the GST officer assesses the taxpayer’s tax liability to the best of his abilities, considering all relevant materials.
The officer has five years from the date of filing the annual return for the fiscal year for which the tax has yet to be paid to issue an assessment order. After receiving this order, if the concerned taxpayer files a valid return within 30 days of the assessment order’s issuance, the order may be rescinded.
Assessment of Unregistered Person
If a taxpayer fails to get a GST registration or whose registration has been terminated under section 29(2), even if he is required to be registered and pay tax, the GST officer may process his or her tax liability to the most of his or her ability under section 63. This must be done for the applicable period during which the tax is due. The officer may issue an assessment order within five years of the date indicated in section 44 for filing an annual return for the fiscal year for which taxes have not been paid.
Consequence and Penalties of non-compliance under GST
If there is noncompliance, the following sanctions and penalties under GST may be imposed:
- For tax evasion and short deduction, a penalty of 100% of the amount involved is imposed, with a minimum penalty of ₹10,000.
- In the following scenarios, a penalty of up to ₹25000 would be imposed:
- Persons who acquire or receive goods or services knowing that they are in breach of the GST Act.
- Assist others in committing GST fraud
- Individuals are not issuing invoices in line with GST regulations.
- Individuals fail to account for invoices in their books of accounts.
- The tax authority where the notice is issued is absent.
- If the taxable amount is between ₹1 crore and ₹2 crores, imprisonment for one year in addition to the fine is permissible.
- If the taxable amount is between ₹2 crores and ₹5 crores, imprisonment for three years, in addition to the fine, is permissible.
- If the taxable amount is not paid or is paid in part, the penalty is 10% of the tax amount due, with a minimum penalty of ₹10000.
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