Provisional Assessment – Section 60 of GST

Section 60 of the CGST Act, 2017, deals with Provisional Assessment. This provision is a crucial relief mechanism for taxpayers who are uncertain about the value of goods or services or the applicable rate of GST. Let’s break down the key aspects of this section to understand its purpose, conditions, and implications.

What is Provisional Assessment Under GST?

Provisional Assessment under Section 60 allows a registered taxable person to pay tax on a provisional basis when they are unable to determine either the value of supply or the applicable tax rate. This flexibility ensures compliance without causing delays or disruption to business operations.

Key Scenarios for Provisional Assessment:

• Ambiguity in determining the correct transaction value.

• Uncertainty regarding the applicable tax rate.

• Situations involving complex contracts, composite supplies, or industry-specific complications.

Step-by-Step Procedure for Provisional Assessment

1. Application to the Proper Officer

As per sub-section (1), the taxable person must submit a written request to the proper officer, stating reasons for the need to pay tax on a provisional basis. The officer must issue an order within 90 days from the date of receiving the request.

2. Execution of Bond

According to sub-section (2), the taxpayer must execute a bond with surety or security as specified by the proper officer. This bond binds the taxpayer to pay any difference between the provisionally assessed tax and the final assessment.

3. Final Assessment Order

Under sub-section (3), the proper officer is required to pass the final assessment order within 6 months of the provisional assessment order. This period may be extended:

• By the Joint/Additional Commissioner for a further 6 months, and

• By the Commissioner for an additional period not exceeding 4 years, upon recording valid reasons.

4. Interest on Differential Tax

As per sub-section (4), if there is a tax shortfall between the provisional and final assessments, interest is payable from the due date of tax (under Section 39(7)) until the date of actual payment. The interest rate is governed by Section 50 of the CGST Act.

5. Refund and Interest

If the final assessment results in a refund for the taxpayer, interest is payable on the refundable amount, in accordance with Section 56 of the CGST Act, subject to the conditions laid out in Section 54(8).

Benefits of Provisional Assessment

• Ensures legal compliance even when clarity is lacking.

• Prevents penalties and litigation arising out of incorrect self-assessment.

• Offers a structured process to resolve valuation or rate-related disputes.

Compliance Tips

• Maintain accurate records and provide detailed justifications in your request.

• Follow up with the proper officer to ensure timely issuance of the final order.

• Be prepared with the necessary surety or security before opting for provisional assessment.

Final Thoughts

Section 60 provides a practical solution for taxpayers navigating uncertainties under GST. However, it must be approached with caution, legal clarity, and a proactive compliance strategy. With proper documentation and procedural adherence, businesses can leverage this provision to manage GST liabilities more efficiently.

For professional assistance with GST assessments, provisional filings, or compliance support, reach out to us at +91 9769647582.