GST Amnesty Scheme 2025: Waiver of Late Fees & Interest Under Section 128A

The GST Council has periodically announced amnesty schemes to give businesses a fresh start by waiving accumulated penalties, interest, and late fees that have built up over years of non-compliance. The latest and most significant of these is the GST Amnesty Scheme under Section 128A of the CGST Act, introduced in the Finance Act 2024 and operationalized through a series of CBIC notifications in 2024-25. This guide provides a complete, practical breakdown of who can benefit, how much can be waived, and the exact procedure to apply.

What is the GST Amnesty Scheme 2025?

The scheme under Section 128A provides for waiver of interest and penalty on GST demands relating to the period FY 2017-18, FY 2018-19, and FY 2019-20 (i.e., the first three years of GST implementation). These were the years when the GST system was new, compliance was difficult, and many businesses inadvertently made errors.

The logic behind the amnesty is simple: the government would rather collect the principal tax owed than spend years in litigation to collect interest and penalties. Businesses get a clean slate, and the government gets much-needed revenue without expensive legal battles.

The critical condition: You must pay the full principal tax amount (as determined in the demand notice). Only then will the interest and penalty be waived. This is not a scheme where you can negotiate the principal — only the add-ons are forgiven.

Which Demands Are Eligible?

The waiver under Section 128A covers:

1. Demands under Section 73 (without fraud/suppression): These are “bonafide” errors — like claiming wrong ITC, incorrect tax rate application, or computation mistakes — where there was no intention to evade tax.

2. Specifically Excluded — Section 74 demands: Cases involving fraud, wilful misstatement, or suppression of facts are NOT eligible for this amnesty scheme. If the demand was raised under Section 74, you must follow the normal adjudication or appeal route.

Eligible Period: FY 2017-18 to FY 2019-20 Only

This scheme specifically covers:

• Returns and demands for FY 2017-18 (July 2017 to March 2018)
• Returns and demands for FY 2018-19
• Returns and demands for FY 2019-20

Demands for FY 2020-21 onwards are NOT covered. Those must be resolved through normal channels.

What is Waived and What is Not?

Component	Status Under Amnesty
Principal GST Tax Amount	❌ Must be paid in full
Interest (Section 50)	✅ Fully Waived
Penalty (Section 73(9))	✅ Fully Waived
Late fees for returns	❌ Separate scheme (not covered here)

Deadline to Apply

As per the latest CBIC notifications, the deadline to avail the Section 128A amnesty scheme is 31 March 2025 for filing the application (FORM GST SPL-02). However, some extensions have been granted in specific cases. Always check the latest official CBIC circulars for the most current deadline.

Important: If you have already paid interest or penalty on eligible demands, you can apply for a refund of those payments under Section 128A(2).

Step-by-Step: How to Apply for GST Amnesty

Step 1: Identify Your Eligible Demands

Log in to the GST portal → Services → User Services → My Applications or the Litigation Dashboard. Look for all pending or adjudicated demand notices under Section 73 for FY 2017-18, 2018-19, and 2019-20.

Step 2: Verify the Demand Amount

For each eligible demand notice (DRC-01/DRC-07), note down the principal tax amount. This is the amount you must pay in full to avail the waiver.

Step 3: Pay the Principal Tax

Make the full payment of the outstanding tax through the GST portal (PMT-06 or electronic cash ledger). Alternatively, if you have sufficient ITC in your credit ledger, you can use it to discharge the liability.

Step 4: File Form GST SPL-02

Navigate to Services → Disputes → Amnesty under Section 128A → Apply. Fill in the form specifying:

• The reference number of the demand order
• Amount of tax paid
• Payment reference number
• Declaration that the demand was under Section 73 (not fraud)

Step 5: Receive Acknowledgement & Waiver Order

After filing SPL-02, the jurisdictional GST officer will verify your application. If found valid, they will issue a waiver order confirming the interest and penalty forgiven.

GSTR Late Fee Amnesty Schemes (Separate from Section 128A)

Separate from the Section 128A scheme, the GST Council has also periodically announced late fee amnesty for pending/unfiled returns. Under this type of scheme:

• Late fees for pending GSTR-3B, GSTR-1, GSTR-4, GSTR-9, GSTR-10 are reduced to a nominal amount (typically ₹500 to ₹1,000 for nil returns and up to ₹10,000 for other returns).
• The window to file pending returns at the reduced fee is typically 2-3 months.

These schemes are announced separately and have different notification numbers. Use our GST Late Fee Calculator to estimate your late fee exposure if you have pending returns.

Who Should Immediately Check Their Eligibility?

• Businesses that received show cause notices (SCNs) or demand orders for GST periods 2017-18 to 2019-20
• Businesses with ITC mismatch demands from the early GST years
• Businesses that had GSTR-2A/GSTR-3B mismatches during the initial years when supplier compliance was low
• Traders who inadvertently applied wrong HSN codes or GST rates in 2017-18

Practical Tips for Using the Amnesty Scheme

1. File first, optimize later: Even if you are not 100% sure of the correct tax amount, file the application to preserve your eligibility within the deadline. You can always amend it later.

2. Reconcile your ITC first: Before paying the demanded principal, reconcile your GSTR-2A/2B to ensure you are not double-paying tax that you are entitled to as ITC.

3. Check for erroneous orders: Some demand orders may have been raised erroneously by the system (e.g., automation mismatches). Have a CA review the demand order before paying, to ensure you are not paying more than you legally owe.

4. Preserve all documentation: Keep copies of all SPL-02 applications, payment challan numbers, and the final waiver order. These documents will be critical for your tax audit files.

Conclusion

The GST Amnesty Scheme 2025 under Section 128A is a significant relief measure, particularly for MSMEs and small businesses that struggled to navigate the new GST compliance framework in the initial years (2017-2020). If you have any pending demands for those years, evaluating this scheme should be your top priority. The principal tax will need to be paid, but the savings on interest (at 18% p.a.) and penalties (up to 100% of tax) can be enormous. Act quickly before the deadlines expire.

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