The Punjab government has announced a significant extension for its taxpayer-friendly One-Time Settlement (OTS) scheme, providing businesses with more time to resolve long-pending tax disputes. The new deadline is now March 31, 2026, offering a final window for settlement before strict recovery actions begin.
Why the Extension Was Needed
State Finance Minister Harpal Singh Cheema explained that the decision to extend the deadline came after receiving numerous representations from stakeholders, including the GST Practitioners Association (GSTPA), Punjab. The original deadline of December 2025 posed practical challenges for many businesses.
An official highlighted that taxpayers faced a heavy burden of statutory compliance in late 2025, with overlapping deadlines for various tax filings. Furthermore, issues like the pending service of old VAT assessment orders made it difficult for eligible entities to accurately calculate their dues in time. The extension is seen as a major relief for the trading community and industry, ensuring no genuine taxpayer is left behind due to administrative hurdles.
Details of the OTS Scheme-2025
Launched on October 1, 2025, the OTS scheme is designed to settle outstanding pre-GST dues, including disputes related to VAT and Central Sales Tax. It aims to reduce legacy litigation and unlock revenue for the state by offering substantial financial relief.
The scheme's benefits are substantial:
- Up to a 100% waiver on interest and penalties.
- Significant concessions on the principal tax amount, depending on the specific demand.
So far, the state has received 6,348 applications under this initiative, indicating strong interest from the business community.
A Final Call for Compliance
Finance Minister Cheema has urged all eligible businesses, including rice millers, to take advantage of this final opportunity to clear their arrears. Settling dues through this scheme will allow them to start the new financial year with a clean slate.
The minister issued a clear warning: After March 31, 2026, the tax department will initiate strict recovery proceedings against defaulters who fail to opt for this settlement. The OTS remains one of the state's most taxpayer-friendly initiatives, designed to resolve disputes without procedural stress.
