GST Amnesty Scheme 2025: Interest Waiver, GSTR-9 Late Fees & New GST Updates

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What is Meant by the GST Amnesty Scheme?

The GST Amnesty Scheme was first introduced for tax periods from July 2017 to September 2018, allowing taxpayers to file pending returns by 31st March 2019.

In early 2020, due to the COVID-19 pandemic, tax experts and industry bodies requested the government to reopen the scheme. The government later agreed, and CBIC reintroduced the Amnesty Scheme through a notification dated 1st June 2021. This second phase covered all pending GSTR-3B returns from July 2017 to April 2021.

In February 2023, during its 49th meeting, the GST Council recommended extending amnesty benefits to taxpayers who had not filed GSTR-4, GSTR-10, and GSTR-9 for past years. It also suggested relief for taxpayers whose registrations were cancelled and allowed more time for revocation. Additionally, authorities were instructed not to invoke Section 62 for certain non-filers if they submitted returns by 30th June 2023.

Later, in its 53rd meeting, the GST Council recommended introducing Section 128A to provide waiver of interest and penalties. In the 54th meeting, Rule 164 was introduced and made effective from 1st November 2024 through Notification No. 20/2024–Central Tax dated 8th October 2024. CBIC also issued Circular No. 238/32/2024-GST to clarify various points related to Section 128A.

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Implementation of Section 128A and Introduction of Rule 164 in the CGST Act

Section 128A, introduced through the Finance (No. 2) Act, 2024, was added to the CGST Act, 2017 following the recommendations from the 53rd GST Council Meeting, with Notification 17/2024 – Central Tax, making it effective from November 1, 2024. In line with the 54th GST Council Meeting's suggestions, Rule 164 has now been incorporated into the CGST Rules, 2017 via Notification No. 20/2024 – Central Tax dated October 8, 2024, and will also come into effect on November 1, 2024. This rule lays down the procedures, terms, and conditions to benefit from Section 128A, including specified forms.

Additionally, March 31, 2025, has been set as the deadline for the payment of tax to qualify for Section 128A benefits, as per Notification No. 21/2024 – Central Tax dated October 8, 2024. The government will issue further clarifications in a forthcoming circular, but this has not yet been released.

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Who is Eligible for Waiver of Interest and/or Penalty?

Section 128A(1) outlines three categories of individuals eligible for the waiver scheme:

Those liable to pay tax based on:

• A Show Cause Notice under Section 73(1) or a statement under Section 73(3).
• An Adjudication Order under Section 73(9).
• An Order issued by the Appellate Authority or Revisionary Authority under Section 107(11) or Section 108(1).

Also, the first proviso to Section 128A(1) extends eligibility to cases where the original notice was issued under Section 74(1), but the proper officer has been directed under Section 75(2) to reassess the tax under Section 73(1).

Further Eligibility Conditions:

(A) The Notice or Order must relate to the period from 1st July 2017 to 31st March 2020.

(B) The individual must have paid the full tax amount stated in the notice, statement, or order before the notified date.

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Deadlines for Payment and Filing under the Waiver Scheme

The timelines for tax payment have been set by Notification No. 21/2024 – Central Tax dated 08.10.2024, with the following provisions:

• The general deadline for tax payment is 31.03.2025.
• If tax is being re-determined under Section 73 instead of Section 74, based on an order under Section 75(2), the payment deadline will be six months from the date the re-determination order is issued by the proper officer under Section 73.

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Deadlines for Filing the Waiver Application

Rule 164(6) specifies the final dates for applying under the waiver scheme:

• In standard cases, the last date for submitting an application is 30.06.2025.
• For cases involving re-determination, the deadline is six months from the date the re-determination order is communicated by the proper officer under Section 73.

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When Does the GST Amnesty Scheme Not Apply?

The waiver scheme shall not apply in the following cases:

• For any amount payable due to an erroneous refund, as specified under Section 128A (2).
• If there is a pending appeal or writ petition filed by the person, and the applicant has not withdrawn it, in accordance with Section 128A (3).

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Challenges and Issues Under the GST Amnesty Scheme

Although the scheme helps non-filers resume their business by declaring pending GST data, it still comes with several challenges.

No relaxation in interest Taxpayers who have pending GSTR-3B filings and tax dues do not receive any interest waiver. Only the late fee is reduced if they file before 31st August 2021.

ITC not allowed Many tax professionals have raised concerns about the non-admissibility of Input Tax Credit (ITC) under the scheme. While the scheme permits payment of past tax dues, it does not extend the deadline for claiming ITC for those periods. Under the CGST Act, ITC for a financial year must be claimed by the due date of the September return of the following year or before filing the annual return, whichever is earlier. Since the amnesty scheme does not change this timeline, taxpayers cannot legally claim ITC when filing old GSTR-3B returns.

No relief for GSTR-1 Pending GSTR-1 filings do not get any late-fee waiver, as the scheme covers only GSTR-3B.

Revocation of cancelled GST registrationTaxpayers with cancelled GSTINs cannot file pending GSTR-3B. The CBIC later extended the deadline to apply for revocation of cancellations (for GSTINs cancelled between 1st March 2020 and 31st August 2021) to 30th September 2021. Before this clarification, taxpayers had no clear guidance on how cancelled GSTINs due to non-filing would be restored.

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Benefits of GST Amnesty Scheme

The GST Amnesty Scheme offers several key benefits:

• It promotes compliance among defaulters by encouraging adherence to tax regulations, leading to a more stable and predictable revenue stream for the government.
• Provides financial relief to taxpayers burdened with late fees, allowing them to reinvest saved funds into their business for growth and operational improvements.
• Enables businesses with cancelled GST registrations due to non-filing to re-register, while also allowing taxpayers to clear pending returns without incurring steep interest charges.
• Significantly reduces penalties for taxpayers filing overdue GST returns, helping them address backlogs and meet regulatory requirements.
• Facilitates the updating of tax records without hefty penalties, easing the administrative burden on both tax authorities and taxpayers for smoother operations.

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Procedure for Filing a Waiver Application

Rule 164 outlines the steps for filing a waiver application and conducting subsequent proceedings, detailing 17 sub-rules and 8 forms. These sub-rules encompass both procedural requirements and essential conditions. To simplify understanding, the process can be examined step-by-step as follows:

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