Punjab Government Announces Extension for Tax Dues Settlement Scheme till March 31, 2026

The Punjab government has announced an extension of its one-time settlement framework for resolving pre-GST tax disputes, offering taxpayers additional time to settle long-pending dues. 

Extension Decision and Uptake 

The Punjab Government has extended the deadline of the One-Time Settlement scheme until March 31, 2026. The decision was taken after representations from stakeholders, including the GST Practitioners Association (GSTPA), Punjab.  

Punjab finance minister Harpal Singh Cheema said that 6,348 applications have already been received under the scheme, reflecting strong participation from taxpayers. 

Rationale, Scope and Relief Offered 

Explaining the rationale for the extension, an official said, “The extension is a relief for the trading community and industry. Taxpayers faced a heavy statutory compliance burden during the final months of 2025, which saw overlapping deadlines for various tax filings. 

Furthermore, practical challenges such as the pending service of VAT assessment orders made it difficult for many eligible businesses to accurately determine their liabilities before the original December deadline.”  

The OTS Scheme-2025, launched on October 1, is aimed at settling pre-GST disputes, including those related to VAT and central sales tax. Depending on the demand amount, taxpayers can avail themselves of waivers of up to 100% on interest and penalties, along with significant relief on the principal tax component.  

Final Window and Warning 

Cheema urged eligible businesses and rice millers to use the extended window to clear outstanding arrears and begin the new financial year without legacy disputes.  

He also warned, “After the new deadline of March 31, 2026, the department will initiate strict recovery proceedings against defaulters who fail to opt for this settlement.” 

Read More: India’s GST Collections Reach ₹1.75 Lakh Crore in December, up 6.1% YoY! 

Conclusion 

With the extension of the OTS deadline to March 31, 2026, the Punjab government is seeking to maximise participation, reduce legacy litigation and provide a final opportunity for taxpayers to resolve pre-GST dues before enforcement action resumes. 

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