Self-Assessment and Provisional Assessment under GST

Understand Self-Assessment and Provisional Assessment

Key rules to remember

Self-assessment (section 59)

Every registered person self-assesses the tax payable and files the return for each tax period under section 39

The law places the duty on the registered person. The officer does not assess first.

Eligibility for provisional assessment (section 60(1))

Unable to determine value, or unable to determine rate of tax → written request with reasons to the proper officer

Both the inability and the written request are conditions. A wish to defer tax does not qualify.

Time for provisional order (Rule 98(2))

Order within 90 days from the date of receipt of the request

The 90 days come from Rule 98, not section 60. The order allows payment at the rate or value specified in it.

Bond and security (section 60(2), Rule 98(3))

Bond amount = differential tax fixed by the officer (the full amount, no multiplier). Bank guarantee = 25% × amount covered by the bond (the bond amount)

Section 60(2) requires a bond with security. The bond is executed under Rule 98(3) in FORM GST ASS-05, with a bank guarantee as security. Differential tax = tax at the higher value or rate claimed − tax at the provisional value or rate. The 25% is on the bond amount. Example: differential tax ₹100 gives bond ₹100 and bank guarantee ₹25.

Time for final assessment order (section 60(3))

Within 6 months from the date of communication of the provisional order. Extension by Joint/Additional Commissioner: further period not exceeding 6 months. Extension by Commissioner: such further period not exceeding 4 years

The extension must be for reasons recorded in writing, on sufficient cause. Know who grants which extension.

Final tax higher than provisional tax (section 60(4))

Pay the difference + interest under section 50(1), from the first day after the due date of payment of tax till the date of actual payment

Interest runs whether the tax is paid before or after the issuance of the final order. Interest is at the rate notified under section 50(1), normally 18% per annum.

Final tax lower than provisional tax (section 60(5))

Refund of the excess in accordance with section 54, which includes the unjust enrichment provisions

Under section 60(6), interest under section 56 is payable if the refund is not made within 60 days of the final order.

How to solve Self-Assessment and Provisional Assessment questions

1. 1Identify the stage: ordinary self-assessment (section 59), request for provisional assessment, bond and security, or final assessment.
2. 2Test the eligibility. Check whether the person is genuinely unable to determine the value or the rate of tax. Check whether a written request with reasons was made.
3. 3Check the officer's step: under Rule 98(2), order within 90 days of receipt of the request, stating the provisional value or rate.
4. 4Apply the safeguards under Rule 98(3): take the differential tax, which is the tax at the higher value or rate less the tax at the provisional value or rate. The bond covers this full amount, with no multiplier. The security is a bank guarantee of 25% of the amount covered by the bond, that is, 25% of the bond amount. Compute both if a figure is given.
5. 5Compute the provisional tax and the final tax. Take the difference.
6. 6Apply the time limits under section 60(3): 6 months from the date of communication of the provisional order, then the extension by the Joint/Additional Commissioner (not exceeding 6 months) and by the Commissioner (not exceeding 4 years).
7. 7If the final tax is higher, compute interest under section 50(1) from the day after the due date. If it is lower, state that the excess is refunded under section 60(5) in accordance with section 54, including unjust enrichment, with interest under section 56 under section 60(6) if the refund is not made within 60 days of the final order.
8. 8Write a one-line conclusion that states the amount payable or refundable and the status of the bond.

Quickest way: Four-line check for provisional assessment questions

Common mistakes in Self-Assessment and Provisional Assessment

• Treating provisional assessment as a right available whenever the taxpayer wants to defer tax.

  Students read it as a relief and forget the condition.

  Fix: Always state the condition: inability to determine value or rate of tax, with a written request giving reasons.

• Mixing up the time limits, for example giving 90 days for the final order or 6 months for the provisional order.

  Both periods relate to the same process and are easy to swap.

  Fix: Remember: 90 days (Rule 98(2)) is for the officer to pass the provisional order from receipt of the request. 6 months (section 60(3)) is for the final order from the date of communication of the provisional order.

• Taking the bank guarantee as 25% of the tax or of the supply value, instead of 25% of the bond amount.

  The rule says 25% but students forget the base.

  Fix: Work out the differential tax first. The bond covers that amount. The bank guarantee is 25% of the amount covered by the bond, which is the bond amount. Compute the bond first, then the guarantee.

• Charging interest only from the date of the final order.

  Students think interest arises only after the order is passed.

  Fix: Interest at the rate notified under section 50(1) runs from the first day after the due date of payment of tax until actual payment, whether the tax is paid before or after the order.

• Saying the department assesses the registered person first under GST.

  Old indirect tax assessment ideas carry over.

  Fix: Under section 59 the registered person self-assesses. Departmental assessment applies only in specified situations such as provisional assessment, scrutiny or non-filers.

• Forgetting who can extend the final assessment time.

  Extensions are layered and the officers differ.

  Fix: Joint/Additional Commissioner gives a further period not exceeding 6 months. Commissioner gives such further period not exceeding 4 years.

• Assuming a refund on finalisation is automatic or carries interest under section 60.

  Students overlook the cross-references in section 60(5) and (6).

  Fix: Under section 60(5) the excess is refunded in accordance with section 54, which includes unjust enrichment. Under section 60(6), interest under section 56 is payable if the refund is not made within 60 days of the final order.

Worked examples