Punjab govt extends One-Time Settlement scheme till March 31 to recover Rs. 11,968 crore tax dues from businessmen and rice millers; only Rs. 52 crore collected so far.

Punjab is grappling with a massive tax default of Rs. 11,968.88 crore by businessmen and entrepreneurs under pre-GST laws, including VAT and Central Sales Tax. Despite the government launching a One-Time Settlement (OTS) Scheme to recover dues, only Rs. 52 crore could be collected by the original deadline of December 31, 2025, highlighting the challenge of clearing longstanding tax arrears.

The state government has now extended the OTS scheme until March 31, 2026, offering taxpayers a last opportunity to settle their pending dues without facing strict recovery actions. Initially, the scheme, launched on October 1, 2025, was supposed to end on December 31, 2025. The extension comes after persistent requests from the GST Practitioners Association and other stakeholders, who urged the Finance Ministry to provide more time for compliance.

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Applications and Settlements Under the Scheme

So far, the tax department has received 6,348 settlement applications. However, as of December 31, only 3,574 cases were resolved, resulting in a meager recovery of Rs. 52 crore. The majority of pending dues are from businessmen and rice millers, who continue to owe substantial amounts to the state exchequer.

How Taxpayers Can Benefit

The OTS scheme provides significant relief depending on the amount of outstanding tax:

Up to Rs. 1 crore: 100% waiver on interest and penalties, 50% waiver on the principal tax.

Rs. 1 crore to Rs. 25 crore: 100% waiver on interest and penalties, 25% waiver on the principal tax.

Above Rs. 25 crore: 100% waiver on interest and penalties, 10% waiver on the principal tax.

The scheme does not apply to government food agencies.

Final Opportunity for Tax Settlement

Finance Minister Harpal Singh Chima urged all defaulters to take advantage of this final opportunity to clear their dues and start the new financial year free of tax liabilities. He warned that after March 31, the government will initiate strict recovery actions against those who fail to settle their arrears under the scheme.

The OTS initiative aims to resolve old legal disputes, enhance government revenue, and provide businesses a clean slate, while strengthening Punjab’s economic framework.