Provisional_Assessment_GST

Provisional_Assessment_GST

GST

Provisional Assessment in GST

Provisional

Assessment

in GST

GOODS AND SERVICES TAX

GST

Provisional

Assessment

in GST

Prepared by:

National Academy of Customs, Indirect Taxes & Narcotics

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Directorate General of Taxpayer Services

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Provisional

Assessment in GST

Introduction

A supplier will come to know the extent of his tax liability which

has to be discharged on a continuous and regular basis only after

assessment. Assessment means determination of tax liability and

includes self-assessment, re-assessment, provisional assessment,

summary assessment and best judgment assessment. The major

determinants of the tax liability are generally the applicable tax rate

and the value. There might be situations when these determinants

might not be readily ascertainable and may be subject to the

outcome of a process that requires deliberation and time. Hence

like under the previous laws, when due to various circumstances it

might not be always possible, at that point of time, to carry out an

assessment and determine the exact duty liability, the GST law also

provides for provisional assessment.

The Asst. Commissioner/Dy. Commissioner of Central Tax

provisionally determines the amount of tax payable by the supplier

and is subject to final determination. On provisional assessment,

the supplier can pay tax on provisional basis but only after he

executes a bond with security, binding them for payment of the

difference between the amount of tax as may be finally assessed

and the amount of tax provisionally assessed. On finalization of the

provisional assessment, any amount that has been paid on the basis

of such assessment is to be adjusted against the amount that has

been finally determined as payable.In case of short payment, the

same has to be paid with interest and incase of excess payment, the

same will be refunded with interest.

Procedure

In case a supplier is unable to determine the value of goods or

services or both or to determine the rate of tax applicable thereto,

he can request the Asst. Commissioner/Dy. Commissioner of Central

Tax in writing, giving reasons for payment of tax on aprovisional

basis. The supplier requesting for payment of tax on a provisional

basis has to furnish an application along with the documents in

support of his request, electronically in FORM GST ASMT-01 on

the common portal, either directly or through a Facilitation Centre

notified by the Commissioner.

The Asst. Commissioner/Dy. Commissioner of Central Tax will

scrutinize the application in FORM GST ASMT-01. In case, additional

information or documents in support is required by the Asst.

Commissioner/Dy. Commissioner of Central Tax to decide the

case, notice in FORM GST ASMT-02 will be issued to the supplier

requesting for submission of the same.

The supplier has to file a reply to the notice in FORM GST ASMT

– 03, and if he desires can also appear in person before the Asst.

Commissioner/Dy. Commissioner of Central Tax to explain his case.

The Asst. Commissioner/Dy. Commissioner of Central Tax will then

issue an order in FORM GST ASMT-04 within a period not later than

ninety days from the date of receipt of the request, allowing the

payment of tax on a provisional basis.The order will indicate the

value or the rate or both on the basis of which the assessment is

to be allowed on a provisional basis and the amount (this amount

shall include the amount of integrated tax, central tax, State tax or

Union territory tax and cess payable in respect of the transaction)

for which the bond is tobe executed along with the security to be

furnished. The security will not exceed twenty-five percent of the

amount covered under the bond.

The supplier has to execute the bond in FORM GST ASMT-05 along

with a security in the form of a bank guarantee for an amount as

mentioned in FORM GST ASMT-04.A bond furnished to the proper

officer under the State Goods and Services Tax Act or Integrated

Goods and Services Tax Act shall be deemed to be a bond furnished

under Central Goods and Services Tax Act.

On executing the bond the process of the provisional assessment is

complete and the supplier can supply the goods or services or both

and pay the tax at the rate or on the value that has been indicated in

the order in FORM GST ASMT-04.

Finalization of provisional assessment

The provisional assessment will be finalized, within a period not

exceeding six months from the date of issuance of FORM GST

ASMT-04. The Asst. Commissioner/Dy. Commissioner of Central Tax

will issue a notice in FORM GST ASMT-06, calling for information and

records required for finalization of assessment and shall issue a final

assessment order, specifying the amount payable by the registered

person or the amount refundable, if any, in FORM GST ASMT-07.

On sufficient cause being shown and for reasons to be recorded

in writing, the time limit for finalization of provisional assessment

can be, extended by the Joint Commissioner or Additional

Commissioner for a further period not exceeding six months and

by the Commissioner for such further period not exceeding four

years.

Interest liability

In case any tax amount becomes payable subsequent to finalization

of the provisional assessment, then interest at the specified rate

will also be payable by the supplier from the first day after the due

date of payment of the tax till the date of actual payment, whether

such amount is paid before or after the issuance of order for final

assessment.

In case any tax amount becomes refundable subsequent to

finalization of the provisional assessment, then interest (subject

to the eligibility of refund and absence of unjust enrichment) at

the specified rate will be payable to the supplier.

Release of Security consequent to Finalization

Once the order in FORM GST ASMT-07 is issued, the supplier

has to file an application in FORM GST ASMT- 08 for the release

of the security furnished. On receipt of this application the Asst.

Commissioner/Dy. Commissioner of Central Tax will issue an order

in FORM GST ASMT–09 within a period of seven working days from

the date of the receipt of the application, releasing the security

after the amount payable if any as specified in FORM GST ASMT-07

has been paid.

Conclusion

Provisional assessment provides a method for determining the

tax liability in case the correct tax liability cannot be determined

at the time of supply. The payment of provisional tax is allowed

only against a bond and security. The provisional assessment has

to be finalized within six months unless extended. On finalization,

the tax liability can either be more or less as compared to the

provisionally paid tax. In case of increase in the tax liability, the

difference is payable along with interest and in case of decrease in

the tax liability the amount will be refunded with interest.








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