The Punjab government has lengthened the deadline for its one-time settlement (OTS) scheme for outstanding tax dues to 31 March, offering relief to traders, industrial units and rice millers struggling with multiple tax obligations. Finance Minister Harpal Cheema said the extension, approved after consultations with stakeholders, aims to reduce compliance pressure and help businesses resolve long-standing disputes.
Punjab tax one-time settlement scheme
Launched on 1 October, the OTS scheme was originally scheduled to end on 31 December but will now remain open until the end of March. Cheema told reporters the decision followed representations from groups including the GST Practitioners Association of Punjab, which highlighted practical difficulties for taxpayers in assessing liabilities within the earlier timeframe.
Authorities say 6,348 applications have been filed under the scheme to date, signalling a strong response from the trading community. The government cited overlapping tax deadlines towards the end of 2025 and delays in the service of VAT assessment orders as factors that made it hard for many businesses to determine exact dues before the original deadline.
The OTS scheme targets pre‑GST disputes under the laws governing value‑added tax and Central Sales Tax. It offers substantial relief options: in some cases taxpayers may receive up to a 100% waiver of interest and penalties, alongside significant reductions in the principal tax amount depending on the specifics of each case. Officials expect the concessions will encourage voluntary settlements and reduce prolonged litigation.
Cheema framed the extension as part of the state’s effort to foster a pro‑business environment and ease compliance burdens that can stifle trade and industry. He appealed directly to eligible traders, industrial units and rice millers to make use of the scheme to settle long‑pending dues and avoid more onerous enforcement measures.
At the same time, the minister issued a clear warning to those who choose not to participate. He said strict recovery proceedings would be launched against defaulters who fail to opt into the OTS after 31 March, signalling that the extension is a final opportunity rather than an open‑ended concession.
Business groups welcomed the announcement, saying the extra time will help firms finalise figures, complete paperwork and seek professional advice where required. Small and medium enterprises in particular had flagged administrative bottlenecks and the strain of concurrent compliance obligations, making the extension a pragmatic response for many.
Tax practitioners noted that the scheme could reduce the backlog of disputed cases and free up administrative capacity within the department to focus on current assessments. However, they advised eligible taxpayers to act promptly: concessions under the scheme are conditional and depend on timely, accurate submissions.
With the extended window, the government hopes to convert informal arrears into settled liabilities, improve certainty for businesses and clear years of contested assessments. As the 31 March deadline approaches, both the administration and industry will be watching application volumes and the scheme’s impact on fiscal collections and dispute resolution.
Key Takeaways:
- Punjab government extends the one-time settlement scheme deadline to 31 March to ease compliance pressure on traders and industry.
- Scheme offers large relief for pre-GST VAT and Central Sales Tax disputes, including up to 100% waiver of interest and penalties.
- So far 6,348 applications received; extension follows stakeholder representations and overlapping tax deadlines.
- Minister Harpal Cheema urged eligible businesses to avail the scheme and warned of strict recovery action after 31 March.
