Section 128A Amnesty Scheme: Final Wave of GST Relief in 2026

Introduction

The Section 128A Amnesty Scheme represents a massive relief measures for Indian businesses dealing with old GST disputes from the "implementation era" (FY 2017–18 to 2019–20). As we reach the final stages of this scheme in early 2026, many taxpayers are using this window to settle long-standing demands without the massive burden of accumulated interest.

Under GST 2.0's focus on litigation reduction, Section 128A is a "one-time settlement" for non-fraudulent cases. If you have a pending demand under Section 73, the government offers a clean slate: pay the core tax and walk away from 100% of the interest and penalties. However, failure to follow the specific portal procedures in 2026 can lead to the rejection of amnesty benefits.

Scope Clarification

What This Article Covers

• Eligibility criteria for the Section 128A interest and penalty waiver.
• Mandatory deadlines for tax payment and waiver application (SPL-01).
• The "APL-01W" procedure for withdrawing pending appeals.
• Critical portal reconciliation rules for linking payments to orders.

What This Article Does Not Cover

• Fraudulent cases or investigations conducted under Section 74.
• Disputes relating to erroneous refunds or non-transition of pre-GST credit.
• Detailed analysis of state-specific VAT amnesty schemes.

Legal Reference

Relevant Law: Section 128A of the CGST Act, 2017 – Prescribing the waiver of interest or penalty or both in respect of any amount of tax payable for specific years. Notification No. 21/2024–Central Tax – Framework for application and procedural guidelines for the GST Amnesty.

1. The "Waiver of Interest & Penalty"

The scheme applies specifically to demand notices and orders issued under Section 73 (cases involving non-payment or short payment of tax without intent of fraud).

• The Deal: You pay the 100% Tax amount demanded in the order.
• The Relief: The government waives 100% of the Interest and Penalty associated with that demand.

For many businesses that had ₹10 Lakh in tax and ₹8 Lakh in accumulated interest for 2017-18, this means saving the entire ₹8 Lakh interest cost, provided the ₹10 Lakh tax is paid before the revised deadlines.

2. Critical Procedures in 2026

To avail of the amnesty in the current year, the following "hard-coded" portal steps must be completed:

• Appeal Withdrawal (APL-01W): If you have already filed an appeal against the tax demand, you cannot get amnesty while the appeal is active. You must file Form APL-01W to withdraw the litigation.
• Waiver Application (SPL-01/02): Merely paying the tax is not enough. You must file a formal application for waiver via Form GST SPL-01 (if you pay after the order) or SPL-02 (if you pay during the notice stage).

3. Important Deadlines (The Final Call)

The scheme operates on a strictly time-bound basis. Missing the cut-off dates will reinstate the full interest and penalty automatically.

*Deadlines vary based on when the final order was communicated. Always check the 'Amnesty Status' on your GST dashboard for your specific case.

Common Mistakes

• Using DRC-03 instead of the Demand Link: Many taxpayers pay tax via 'Voluntary Payment' (DRC-03) without linking it to the specific order entry in the Electronic Liability Register. This often leads to the portal rejecting the amnesty claim because the system can't verify that the specific demand was settled.
• Forgetting Interest already paid: Some taxpayers think they can claim a refund for interest paid in 2022 if they apply for amnesty now. No refunds of interest or penalty already paid are allowed under Section 128A.
• Appeal Non-Withdrawal: Filing the amnesty application while the appeal is still "Pending" in system records. Ensure the Appellate Authority approves the withdrawal and the status changes to "Closed" before clicking the Amnesty submit button.

Related Resources

Conclusion

The Section 128A Amnesty Scheme is a rare opportunity to clear the "GST Baggage" of the initial years at a significantly reduced cost. By 2026, as the GST Appellate Tribunal (GSTAT) becomes the hub for newer disputes, settling the 2017-20 cases through amnesty is a prudent business decision. It provides finality, improves yours GST compliance rating, and protects your working capital from the spiraling costs of interest and litigation.

Received a notice for FY 2018-19 and want to calculate your potential Amnesty savings? Our legal experts can help you reconcile your liability and file the correct SPL forms for 100% waiver success.