Punjab OTS Scheme: Recover Pre-GST Arrears

Chandigarh, Sep 24 (PTI) The Punjab Cabinet on Wednesday approved a One-Time Settlement (OTS) scheme, aimed at resolving tax arrears amounting to Rs 11,968 crore pending under different laws before the implementation of the Goods and Services Tax in the state.

The cabinet also gave prosecution sanction against former Punjab minister Sadhu Singh Dharamsot in a corruption case registered by vigilance bureau in 2022.

The cabinet, in a meeting here headed by Chief Minister Bhagwant Mann, also gave approval to set up a special court in Mohali to deal with cases of the National Investigation Agency.

One post of district and sessions judge or additional district and session judge-level for constitution of Executive Special Court at Mohali will be created for investigation of cases under Section 22 of the NIA Act at SAS Nagar, Mohali in Punjab.

Apart from the NIA, this court will also be mandated to hear cases from Enforcement Directorate, CBI, and other special cases, said an official statement.

Addressing the media later, Finance Minister Harpal Singh Cheema said a OTS scheme will be launched for recovery of pre-GST arrears.

These are arrears pending under the Punjab Value Added Tax Act 2005, the Central Sales Tax Act 1956, Punjab Infrastructure Development and Regulation Act 2002, Punjab General Sales Tax Act 1948, Punjab Entertainment Tax (Cinematograph Show) Act 1954, and Punjab Entertainment Duty Act 1955, he explained.

"We will bring a one-time settlement under all these cases," Cheema said.

"There are 20,039 cases. We have decided to dispose of them under the OTS scheme. Interest and penalty will be waived," he said, adding that the move will benefit more than 20,000 traders.

Cheema said the scheme, which will be effective from October 1 to December 31, aims to resolve approximately 20,039 pending cases involving outstanding dues amounting to Rs 11,968.88 crore across various pre-GST laws, providing substantial relief to the state's trade and industry.

It will be the final opportunity for taxpayers to settle their outstanding dues, he said, adding that after January 1, 2026, recovery proceedings will commence for those who fail to opt for this scheme.

Under this OTS scheme, for outstanding demands up to Rs 1 crore, taxpayers will receive a 100 percent waiver on interest and penalty, along with a 50 percent waiver on the tax amount.

For demands between Rs 1 crore and Rs 25 crore, there will be a 100 percent waiver on interest and penalty, and a 25 percent waiver on the tax amount.

"If all eligible taxpayers avail this scheme, we anticipate a recovery of approximately Rs 3,344.50 crore for the state while waiving over Rs 8,441.56 crore in old dues," he said.

He said this scheme is applicable to all taxpayers whose assessment orders were framed by September 30.

Cheema said in another important decision, the Cabinet decided to claim charges for the government land meant for common roads and water channels which have been illegally occupied by people or colonisers.

A price fixation committee headed by deputy commissioners will decide about the charges for such land and half of which will be given to municipal committees.

In another decision, the cabinet gave approval for an OTS scheme for rice mills.

"There are 1,688 default cases involving rice mills. Interest and penalty will be waived in these cases as well but they will have to pay 50 percent over and above the principal amount, Cheema said.

Some rice mills over the years have not deposited their outstanding dues due to which these millers have been declared defaulter and legal or arbitration proceedings have been initiated against such millers. The new OTS has been introduced to minimize the litigation cases of all the agencies.

The Cabinet also gave its concurrence to amend Punjab Goods and Services Tax (Amendment Bill) 2025 in order to facilitate taxpayers and to ensure tax compliance by the taxpayers.

Pertinently Finance Act, 2025 has amended the provisions of Central Goods and Services Tax Act, 2017 as per the recommendation of GST Council.

Similar amendments have to be carried out in the Punjab Goods and Services Tax Act, 2017.

Industry minister Sanjeev Arora said amendments in the Right to Business Act will be made to give approvals concerning labour department, factory licenses, pollution control board's consent to establish and operate and no objection certificate from the forest department.