Goods & Services Tax (GST) Procedure in India

GST has the provision of self assessment which facilitates payment of taxes and compliance. The GST model law also explains recovery and demand provisions along with notices, when returns are not filed, or the taxes are either paid short or not paid.

GST Procedure for Audit

Under GST audit is nothing but an examination of maintained records by the business/ person which helps in verification of information declared being correct. It also verifies the compliance and payment of taxes in full. Audit can be done by the tax authorities or by the taxpayer himself.

As per described by the law, for taxpayers where the annual turnover crosses the prescribed limit of 1 crore, the business needs to be audited by a CA or CMA.

Audit by Tax Authorities

This audit is conducted by the authorities authorized by the commissioner of SGST/ CGST.

Special Audit

A special audit may be started if the tax authorities give opinion that a wrong credit has been availed or the value has not been declared correctly. This audit can be initiated at any point of time during the investigation if the need is felt by the authority.

Assessment

It means determination of tax liability under GST which covers

  • Provisional assessment
  • Summary assessment
  • Self assessment
  • Scrutiny assessment
  • Best judgment assessment ( includes assessment of persons not registered or those who don’t file any returns)

Self Assessment

Under GST a person can file a return for a particular period personally by himself and assess the payable tax on his own.

Provisional Assessment

An officer can be requested by the taxpayer for the purpose of provisional assessment if the taxpayer is himself not able to determine the value of tax. On proper investigation, the officer can tell the taxpayer to pay the tax on provisional basis as specified by him.

Scrutiny of Returns

The correctness of return can be verified by the proper officer after scrutiny. If any discrepancies are noticed in the returns, the office may ask for explanations.

Best Judgment Assessment

Assessment of Non Filers

Even after getting a notice, if a registered taxpayer doesn’t file the return, the taxpayer is judged for tax liability by the proper officer to the best of his judgment with the relevant material and data that is available with him.

Assessment of Unregistered Persons

This head is related to the persons who even after being liable for registration do not register themselves under GST. The officer will assess such a person to best of his knowledge/ judgment. A show cause notice will be given to the taxpayer.

Summary Assessment in Certain Special Cases<

This can be done by the officer if he comes across sufficient grounds that make him believe that any delay display of tax liability may harm interest of revenue. In order to protect that interest, he can pass such an assessment with the permission of the joint or additional commissioner.

Demand and Recovery

As the concept of GST is at primary stage and very new to the public, being payable on self assessment, there are chances that the taxable person has made errors which include short payment or even non-payment of tax. In these cases, the provisions of demand and recovery may become applicable.

The authorized officer will issue show cause notice along with the demand of payment of tax amount due. The demand may arise in following cases:

  • Paid IGST whereas CGST/ SGST was payable and vice versa
  • Wrong refund, non-payment of tax or short payment, both for fraud and negligence (lack of knowledge) cases
  • Tax collected but not deposited with the government

Recovery of Tax

The IT department can start recovery if demand is not paid.

Advance Ruling

When individuals and corporations request for clarification of certain tax matters, the tax authorities issue advance ruling. Such a ruling is applied for the proposed activity being before started. It helps reducing litigation. As per the law, it is a written decision of the tax authorities given to an applicant for questions relating to the supply of goods or services.

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