GST Amnesty Scheme: Government amends Section 128A to Provide Relief Just Before the Deadline

March 31 is the last date to deposit the GST tax demand due amount for applying to the GST Amnesty Scheme under Section 128A. The government has introduced some changes to Rule 164. These changes focus on addressing two main challenges that GST-registered taxpayers were facing, which were stopping the taxpayers from using the scheme effectively.

The key benefit of this scheme is the waiver of penalties and interest. The changes are linked to the payment of GST tax demand and its appeal application for years when the GST Amnesty Scheme doesn’t apply. The government has also published a list of frequently asked questions (FAQs) to help taxpayers understand these changes clearly.

Two Deadlines to Keep in Mind

March 31, 2025

This is the deadline to pay the GST Amnesty Scheme tax demand.

June 30, 2025

This is the last date to apply for the GST Amnesty Scheme.

Overview of New Amendments to GST Amnesty Scheme

Amendment 1: GST Tax Demand Appeals:

As per the notification (No. 11/2025–Central Tax) dated March 27, 2025, for the removal of doubt, it is clarified that the appeal application shall be considered as withdrawn to the extent of the said notification for the period from the 1st July, 2017 to the 31st March, 2020 or part thereof, for sub-clause (3) of section 128A.

Amendment 2: Payment of GST tax demand

As per the notification (No. 11/2025–Central Tax) dated March 27, 2025, there shall be no refund granted for any interest, tax and penalty that has already been discharged for the whole period before the implementation of the Central Goods and Services Tax (Second Amendment) Rules, 2025, in cases where a notice or statement or order stated in sub-section (1) of section 128A includes a demand of tax, partially for the period stated in the said sub-section and partially for a period other than mentioned in the said sub-section.

Reason for the amendment about GSTR 3B and DRC-03

The circular dated March 27, 2025, explains the following things:

• Taxpayers who paid their GST dues using FORM GSTR 3B before the law changed on November 1, 2024, are asking if they are still eligible for the relief under Section 128A of the GST Amnesty Scheme.
• The issue has been reviewed, and through Circular No. 238/32/2024-GST dated 15th October 2024, it was clarified that any payments made towards the tax demand before the 1st November 2024 (the date when Section 128A came into effect) will be treated as payments made under Section 128A(1), under the condition that the payment was made with the intention of settling the said demand before that date.
• Additionally, Rule 164(1) states that to benefit from Section 128A, payments must be made using FORM GST DRC-03 for the tax demand specified in the notice or statement mentioned in Section 128A(1)(a). Meanwhile, Rule 164(2) mandates that tax payments for orders under Section 128A(1)(b) and (c) must be made by crediting the amount into the electronic liability register against the corresponding debit entry. This sub-rule also outlines the procedure for cases where payments have already been made using FORM GST DRC-03.
• Based on the review of the above provisions, it is clarified that a taxpayer who made the payment through FORM GSTR-3B before the implementation of Section 128A (i.e., before 1st November 2024) will also be eligible to avail of the benefits under this section. However, any taxpayer wishing to benefit from this provision on or after the section comes into effect (i.e., from 1st November 2024) will be required to make payments exclusively through the methods specified in Rule 164 of the CGST Rules.

FAQs related to the GST Amnesty Scheme under Section 128A

Q1. Will cases where tax was paid through the return in FORM GSTR-3B instead of FORM GST DRC-03 before the notification of Section 128A on 1st November 2024 be eligible for the benefits under Section 128A of the CGST Act?

Ans: It is clarified that cases where tax payment was made through FORM GSTR-3B before the issuance of a demand notice and/or adjudication order before 1st November 2024 will also be eligible for benefits under Section 128A of the CGST Act, provided they are verified by the proper officer.

An expert states the meaning of this clarification. He explained that the GST-registered taxpayers earlier had to pay the tax demand’s principal amount, excluding interest and penalty, through DRC-03 only; there was no other option. This drawback has now been eliminated up to the specified date.

Q2. (i) Does the entire amount of tax demanded need to be discharged?

(ii) Does the appeal need to be withdrawn for the entire period when the notices/statements/orders issued to taxpayers cover both the period partially under Section 128A and the period outside it?

Ans: In cases where a notice, statement, or order relates to a period that is partially covered under Section 128A and partially outside it, Rule 164(4) and the proviso to Rule 164(7) have been amended. These amendments allow taxpayers to file an application using FORM SPL-01 or FORM SPL-02, as the case may be, after paying their tax liability for the periods covered by Section 128A.

Once the taxpayer files FORM SPL-01 or FORM SPL-02, they must inform the appellate authority or Tribunal of their intent to benefit from Section 128A. The taxpayer must also confirm that they do not wish to continue the appeal for the period covered by Section 128A (i.e., FY 2017-18 to 2019-20).

The Appellate Authority or Appellate Tribunal will review the taxpayer’s request. After considering the request, they will issue an order for the period other than that mentioned in the said subsection, based on what they believe is fair and proper.

An expert explains the meaning of this amendment. He explains that as the GST Amnesty Scheme under Section 128A only covered FY 2017-18, 18-19 and 19-20, taxpayers with GST tax demand spanning across multiple years (such as FY 2020-21, 2021-22, etc.) were facing problems.

As per the expert, if a taxpayer has received a GST tax demand order for several years of tax periods, including FY 17-18, 18-19 and 19-20, along with other FYs, i.e., FY 20-21, 21-22, etc., beyond the period of the GST Amnesty Scheme under Section 128A, then the taxpayer can divide the payment and pay the tax demand for only the periods that occur under the GST Amnesty Scheme (FY 17-18 to 19-20). The rest of the period (2020-21) for which the tax demand order has been issued can be continued in GST Appeal Proceedings.