Provisional assessment

Provisional assessment under the CGST Act, 2017, is designed to assist taxpayers who face difficulty in determining the correct tax liability due to uncertainty about the value of goods or services or the applicable tax rate. Here is a detailed explanation of the provisional assessment process as per the CGST Act:

 

  Key Provisions and Steps for Provisional Assessment:

 

1.  Request for Provisional Assessment (Section 60(1)) :

   - A registered person may submit a written request for provisional assessment to the proper officer if he/she is unable to determine:

     - The value of goods or services.

     - The tax rate applicable to the goods or services.

 

2.  Order for Provisional Assessment (Section 60(1)) :

   - The proper officer, after receiving the request, can allow the taxpayer to pay tax on a provisional basis.

   - The officer must issue an order within 90 days from the date of the request.

 

3.  Execution of a Bond (Section 60(2)) :

   - The taxpayer may be required to execute a bond with a surety or security as deemed fit by the proper officer, binding the taxpayer for the differential tax amount, which may become payable after the final assessment.

 

4.  Finalization of Provisional Assessment (Section 60(3)) :

   - The proper officer must finalize the provisional assessment within six months from the date of the order.

   - This period can be extended by the Joint/Additional Commissioner for a further period not exceeding six months.

   - The Commissioner can extend it further for a period not exceeding four years.

 

5.  Additional Tax Payment or Refund (Section 60(4) and (5)) :

   - If the final assessment results in an additional tax liability, the taxpayer is required to pay the balance amount with interest.

   - If the provisional assessment results in excess tax paid, the taxpayer is entitled to a refund, along with interest as per Section 56.

 

  Detailed Steps and Procedural Aspects:

 

1.  Application Submission :

   - The registered person must apply in writing, providing all necessary details and justifications for the request for provisional assessment.

 

2.  Processing of Application :

   - The proper officer reviews the application and may seek further information or clarification from the applicant.

 

3.  Issuance of Provisional Assessment Order :

   - After satisfactory verification, the proper officer issues an order permitting the taxpayer to make provisional payments.

   - This order specifies the conditions and the amount of bond/security required.

 

4.  Bond/Security Execution :

   - The taxpayer executes the bond/security as specified by the proper officer.

 

5.  Periodic Review and Finalization :

   - The proper officer continuously monitors the provisional payments and initiates the process for final assessment within the stipulated time frame.

 

6.  Final Assessment Order :

   - The final assessment order is issued, determining the exact tax liability or refund amount.

   - The taxpayer adjusts the payments accordingly, including payment of interest if additional tax is due or receipt of interest on refunds.

 

  Importance and Benefits:

 

-  Reduction of Compliance Burden : Helps taxpayers comply with GST laws even in uncertain situations.

-  Revenue Protection : Ensures that the government’s revenue is protected by requiring bonds/security.

-  Legal Certainty : Provides legal certainty to taxpayers by formally assessing tax liability.

 

  References and Resources:

 

- [CGST Act, 2017](https://cbic-gst.gov.in/CGST-bill-e.html)

- [Provisional Assessment under GST – ClearTax](https://cleartax.in/s/provisional-assessment-gst)

- [Understanding Provisional Assessment under GST – TaxGuru](https://taxguru.in/goods-and-service-tax/understanding-provisional-assessment-gst.html)

 

These resources provide comprehensive insights into the procedural and regulatory framework of provisional assessment under the CGST Act, ensuring that taxpayers and practitioners can navigate the complexities effectively.