The term “Assessment of tax” means acknowledgment of the tax liability of an individual. The tax liability of a person is determined by the amount of tax paid by him/her during the tax timeline. However, the types of taxes in the GST is same as the old regime. There are commonly two types of tax assessments, namely, assessment by the taxable individual by themselves, also known as self- assessment and the other one is the assessment by the tax authorities.
In order to extract the relevant return for each tax period, every registered taxable individual must assess the tax payable by themselves. The returns have been specified according to the type of the taxable person. A registered regular dealer must furnish Form GSTR-3 on a monthly basis and Form GSTR-9 annually. This is the process where the tax payer is doing self-assessment.
The assessment of tax by the tax authorities is carried out in 4 ways:
- Provisional assessment
- Scrutiny assessment
- Best judgement assessment
- Summary assessment
We will explain you the process in details.
Assessment by the Tax Authorities
1. Provisional Assessment
In case a taxable person is unable to determine the value of goods and services, then to know the rate of applicable tax, the person may seek an officer to allow the payment of tax on a provisional basis. The officer will pass an order to allow the person to pay the tax. The rate and the taxable value will be specified by the officer eventually.
The officer must pass the final assessment order within 6 months from the date of the provisional assessment order.
The applicable interest on any additional tax payable under provisional assessment for the person will be on the due date, i.e. 20th of the month. Interest will be applicable from the 21st of the month till the date of actual payment.
2. Scrutiny Assessment
Under scrutiny assessment, a tax officer can investigate the return and other detail furnished by a person, to verify the correctness of the return.
If any discrepancy is noticed, the officer will notify the person and seek his explanation.
3. Best Judgement Assessment
Under best judgement assessment, an officer will assess the tax liability of a taxable individual to the best of his/her judgement. The procedure for this is:
A. Assessment of non-filers of returns If a person fails to furnish a return, even after a special notification, an officer will assess the tax liability of the taxable person to the best of his judgement. All relevant document which is available or which the officer has acquired will be taken into account. He will then issue an assessment order within 5 years from the due date of filing of the annual return for the year in which the tax return was not filed. 30 days time will be given to the defaulter, if he manages to provide relevant cause then the order will be withdrawn.
B. Assessment of unregistered persons If a taxable person is unable to get registered even though he/she is liable to do so, an officer will assess the tax liability of the person to the best of his judgement for the relevant tax time period, and issue an assessment order within 5 years from the due date of filing of the annual return for the year in which the tax was due.
In special cases, finding evidence, the officer with the permission of the Additional/Joint Commissioner, assess the tax liability of the person to save the interest of revenue and issue an assessment order.
Therefore, it is mandatory for a taxable person to be aware of various types of assessment under GST and adhere to the compliance requirements. Self-assessment is always important in case the assessment has not been initiated by the tax authorities. It is the duty of the dealer to furnish all the required details to the tax officers when asked for.
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