Section 60 CGST Act — Provisional Assessment Under GST

1. Why Section 60 matters

Searches such as “Section 60 CGST Act”, “provisional assessment under GST”, “GST provisional assessment”, “ASMT-01”, “GST provisional tax rate”, “provisional valuation GST” and “final assessment GST” all relate to this provision.

Normally, GST is based on self-assessment. But sometimes a business genuinely cannot determine the correct value of a supply or the applicable tax rate at the time tax has to be paid.

Section 60 provides a controlled mechanism for that situation. The taxpayer asks the proper officer for permission to pay tax provisionally, gives reasons, follows the bond/security requirements and later settles the difference through final assessment.

2. Section 60 in very simple language

Imagine a company is supplying a specialised product. At the time of supply, there is a genuine uncertainty about whether the applicable GST rate is 12% or 18%.

The company does not have to simply guess and hope the department agrees later.

It can make a written request to the proper officer explaining the uncertainty and asking for provisional assessment.

If permission is granted, the officer specifies the provisional rate/value. The taxpayer pays tax accordingly. Later, the officer completes the final assessment when the required information is available.

3. What is provisional assessment?

“Provisional” simply means temporary for the purpose of determining the amount of tax until the final position can be established.

It does not mean the taxpayer is permanently allowed to choose a lower rate or value.

4. When can Section 60 be used?

Section 60 specifically covers two situations:

The taxpayer must give the proper officer reasons for requesting provisional payment. This is important: ordinary commercial uncertainty is not automatically enough. The facts should demonstrate why the statutory uncertainty exists.

5. When should Section 60 not be used?

Section 60 should not be treated as a general facility for every difficult GST question.

For example, a taxpayer should not ordinarily seek provisional assessment simply because:

• the finance team has not completed its monthly reconciliation;
• the taxpayer has not checked the applicable notification;
• the accounting system has not been configured correctly;
• the taxpayer wants to pay less tax temporarily; or
• the taxpayer expects the officer to make the tax decision without a genuine statutory uncertainty.

6. Statutory structure

The current statutory framework provides an initial officer order within 90 days, final assessment within six months from communication of the provisional order, and specified extension powers. citeturn0search4

7. Taxpayer's written request

The process begins with the taxpayer, not the officer.

The taxpayer should submit a written/electronic application explaining:

• the goods or services involved;
• the relevant HSN/SAC or description;
• the value/rate issue;
• why the value or rate cannot currently be determined;
• the taxpayer's proposed provisional basis;
• supporting agreements, valuation workings or technical documents; and
• the likely method by which the uncertainty will eventually be resolved.

Rule 98 requires the application in FORM GST ASMT-01 with supporting documents. citeturn0search0turn0search5

8. 90-day order period

After receiving the request, the proper officer must pass the order allowing provisional payment within a period not later than 90 days from receipt of the request, subject to the statutory framework.

The officer may allow provisional payment at the rate or on the value specified in the order.

9. Bond and security

Once provisional assessment is allowed, the taxpayer must secure the potential difference between:

The taxpayer executes the prescribed bond and furnishes the required security/surety.

Rule 98 provides for FORM GST ASMT-05 and security in the form of a bank guarantee where required. The security amount under the Rule is subject to the prescribed ceiling. citeturn0search0turn0search5

10. ASMT-01 to ASMT-05

This sequence shows the basic process: application → clarification → reply → order → security. citeturn0search0

11. 25% security ceiling under Rule 98

Rule 98 provides that the security to be furnished is determined under the Rule and is not to exceed 25% of the amount covered under the bond.

This does not mean that every taxpayer automatically has to provide a bank guarantee equal to 25%. The Rule says the amount is determined by the proper officer within the prescribed framework, subject to that ceiling.

12. Final assessment

Provisional assessment eventually has to be brought to an end.

The proper officer examines the information required to establish the final value or rate and then passes the final assessment order.

The final result can be:

13. Six-month period and extensions

The proper officer must finalise the assessment within a period not exceeding six months from the date of communication of the provisional assessment order.

The Act provides extension powers:

Therefore, the ordinary six-month period is not necessarily the absolute end date in every case. Any extension must follow the statutory requirements. citeturn0search4

14. Interest on final differential tax

Suppose a taxpayer provisionally paid ₹10 lakh, but the final assessment determines tax of ₹12 lakh.

The additional ₹2 lakh becomes payable. Section 60(4) provides for interest on tax payable under provisional assessment but not paid by the relevant due date, at the rate specified under Section 50(1).

The exact interest calculation depends on the applicable tax period, due date and operative Section 50 rate.

15. When final assessment creates a refund

The opposite can also happen.

Suppose:

• Provisional tax paid = ₹15 lakh
• Final tax liability = ₹12 lakh

The taxpayer has paid ₹3 lakh more than the final liability.

The excess is not simply ignored. The refund must be handled through the applicable GST refund framework. The refund Rules specifically recognise refund claims arising from finalisation of provisional assessment and require the final assessment order to support the claim. citeturn0search3

16. ASMT-06 to ASMT-09

Rule 98 provides that the security can be released after ensuring the amount specified in the final assessment has been paid, with the prescribed order issued within seven working days from the application for release. citeturn0search0turn0search5

17. Detailed business examples

Example 1 — Uncertain valuation

A specialised supply has a valuation mechanism dependent on information that is not available at the time of supply. The taxpayer documents the uncertainty and requests provisional assessment based on a reasonable provisional value.

Example 2 — Uncertain GST rate

A new product has characteristics that create a genuine classification/rate issue. The taxpayer requests provisional assessment rather than simply treating the issue as permanently unresolved.

Example 3 — Final tax higher

Provisional tax is ₹10 lakh and final tax is ₹13 lakh. The ₹3 lakh differential becomes payable, together with applicable interest.

Example 4 — Final tax lower

Provisional tax is ₹13 lakh and final tax is ₹10 lakh. The ₹3 lakh excess can form the basis of a refund under the applicable refund provisions.

Example 5 — Security

The officer requires a bond covering the potential differential. The security requirement is determined under Rule 98 and cannot exceed the prescribed 25% ceiling of the bond amount.

Example 6 — Additional information

The officer issues ASMT-02 requesting technical documents. The taxpayer replies in ASMT-03 with contracts, valuation reports and calculations.

Example 7 — Finalisation notice

The officer later issues ASMT-06 requesting records necessary to finalise the assessment. The taxpayer submits the required records.

Example 8 — Security release

After the final assessment and payment of the final amount, the taxpayer applies in ASMT-08 for release of security.

Example 9 — Long-term contract

A multi-year contract has a valuation component that cannot initially be determined with certainty. The company should document exactly why the statutory uncertainty exists rather than using provisional assessment merely because the contract is complicated.

Example 10 — No difference

If the final assessment confirms the provisional rate/value and no differential tax remains, the process can be closed with the prescribed final order and security-release process.

18. Construction and infrastructure examples

Example — Complex infrastructure contract

A contractor has a specialised infrastructure arrangement where the taxable value cannot initially be determined because the final consideration depends on specified contractual variables. If the statutory requirements are genuinely met, the taxpayer may consider Section 60.

RA bills and adjustments

Where provisional valuation is permitted, the finance team should separately track provisional tax, subsequent contract adjustments, final value and differential tax.

Variation orders

Variation orders should be documented carefully because they can affect the eventual taxable value. A provisional assessment should not become a substitute for proper contract administration.

Multiple GST registrations

Where the same group has several GSTINs, each registration should maintain its own provisional-assessment application, order, bond, security, tax payment and finalisation records.

19. Imports and provisional assessment — an important distinction

Do not automatically treat every “provisional assessment” under Indian indirect taxes as Section 60 of the CGST Act.

Customs law has its own provisional-assessment mechanism for imported goods. Section 60 CGST Act concerns GST tax on supplies under the CGST framework where the value or applicable GST rate cannot be determined.

20. Accounting and finance treatment

A business using provisional assessment should create a separate reconciliation between provisional and final tax.

21. Documents and evidence

A strong Section 60 file should normally contain:

• ASMT-01 application;
• description of the supply;
• contracts and purchase/sale agreements;
• technical specifications;
• valuation workings;
• classification/rate analysis;
• ASMT-02, where issued;
• ASMT-03 reply;
• ASMT-04 provisional order;
• ASMT-05 bond/security documents;
• periodic provisional tax calculations;
• ASMT-06 notice;
• final assessment records;
• ASMT-07 final order;
• ASMT-08 security-release application; and
• ASMT-09 release order.

22. Internal controls

23. Legislative development

24. Section 59 vs Section 60

25. Common mistakes

• Assuming provisional assessment is available whenever the taxpayer is uncertain about GST.
• Failing to explain why value or rate cannot actually be determined.
• Starting provisional payment before obtaining the proper officer's order.
• Ignoring the bond/security requirement.
• Failing to track the six-month finalisation period.
• Forgetting the possibility of statutory extensions.
• Not reconciling provisional tax with final tax.
• Ignoring interest on differential tax.
• Failing to claim an eligible refund where final tax is lower.
• Confusing CGST provisional assessment with Customs provisional assessment.

26. Professional workflow

27. Section 60 GST FAQs

What is Section 60 of the CGST Act?

Section 60 provides for provisional assessment where a taxable person is unable to determine the value of goods/services or the applicable GST rate.

When can provisional assessment be requested under GST?

When the taxpayer genuinely cannot determine the value or the applicable tax rate and can explain the reasons to the proper officer.

Can the GST officer order provisional assessment on his own?

The Section 60 mechanism begins with a request by the taxable person. The proper officer then considers the request and passes the provisional order.

What is ASMT-01?

ASMT-01 is the application for provisional assessment under Section 60 and Rule 98.

What is ASMT-04?

ASMT-04 is the proper officer's order allowing or rejecting provisional assessment.

What is ASMT-05?

ASMT-05 is the bond/security documentation used for provisional assessment.

How long does the officer have to pass the provisional order?

Section 60(1) provides for an order within a period not later than 90 days from receipt of the request.

How long does final assessment take?

The normal statutory period is not exceeding six months from communication of the provisional order, subject to the extension powers specified in Section 60(3).

Can the six-month period be extended?

Yes. The Act provides extension powers for the Joint/Additional Commissioner and Commissioner subject to sufficient cause, recorded reasons and the prescribed maximum periods.

What happens if final tax is higher?

The taxpayer must pay the differential tax, together with applicable interest where Section 60(4) applies.

What happens if final tax is lower?

The excess provisional tax can be dealt with through the applicable GST refund mechanism.

Is bank guarantee required?

Rule 98 provides for security in the form of a bank guarantee where required, subject to the prescribed conditions and the 25% ceiling for the security amount.

Is provisional assessment the same as provisional refund?

No. Provisional assessment under Section 60 determines tax provisionally. Provisional refund is a separate concept under Section 54 and the refund Rules.

Can Section 60 be used just because the contract is complicated?

Not automatically. The taxpayer should establish that the statutory value or rate cannot be determined and provide reasons to the proper officer.

28. Related provisions