Key Takeaways
Section 128A of the CGST Act, 2017, inserted by the Finance (No. 2) Act, 2024 and effective 1 November 2024, offered a one-time conditional waiver of interest under Section 50 and penalty for GST demands relating to FY 2017-18, 2018-19, and 2019-20 (1 July 2017 to 31 March 2020).
The waiver applied only to non-fraud demands raised or confirmed under Section 73. Cases involving fraud, suppression, or wilful misstatement under Section 74 were excluded entirely.
The core condition: the full tax amount in the demand had to be paid by 31 March 2025, and the waiver application had to be filed by 30 June 2025 using Form GST SPL-01 (for pending notices) or Form GST SPL-02 (for confirmed orders).
The scheme is now closed. As of August 2026, no fresh applications can be filed. Taxpayers who missed the window are back to paying interest and penalty in full, subject to whatever appeal or rectification route remains open on their specific order.
Litigation continues on edge cases, including a Madras High Court ruling on 14 August 2026 that waiver applications cannot be rejected merely because a demand order covers multiple states.
What Was Section 128A?
Section 128A was inserted into the CGST Act, 2017 by the Finance (No. 2) Act, 2024 to give businesses a way out of the interest and penalty burden that had accumulated on early-years GST demands. The provision became effective from 1 November 2024, backed by Notification 17/2024-Central Tax and operationalised through Notification 20/2024-CT and Notification 21/2024-CT, both dated 8 October 2024.
The logic behind the scheme was straightforward. GST rolled out on 1 July 2017 and the first three years were marked by portal glitches, unclear circulars, delayed clarifications, and genuine confusion over classification and place of supply rules. A large volume of demands raised for FY 2017-18 through FY 2019-20 arose from interpretation disputes rather than deliberate tax evasion. Section 128A recognised this by offering a clean exit: pay the principal tax, and the government would waive the associated interest and penalty, provided the case was not one involving fraud.
Rule 164 of the CGST Rules, 2017 prescribed the detailed procedure, application forms, and timelines for the scheme. CBIC Circular 238/32/2024-GST dated 15 October 2024 clarified operational questions such as how to treat part-paid demands, partially-litigated orders, and cases spanning multiple financial years. A follow-up circular, 248/05/2025-GST dated 27 March 2025, addressed last-mile issues as the deadline approached, and Notification 11/2025-CT dated 27 March 2025 extended part of the payment timeline for specific categories of taxpayers.
Comparison
Section 73 Route vs Section 128A Waiver: What Changed
How a standard non-fraud demand was treated before and after the waiver was applied
| Parameter | Without Section 128A | With Section 128A Waiver |
|---|---|---|
| Tax payable | Full tax amount as determined in the order | Same: full tax amount as determined in the order |
| Interest under Section 50 | 18% per annum from the original due date until payment | Fully waived on eligible period demands (FY 2017-18 to 2019-20) |
| Penalty | Up to 10% of tax or Rs 10,000, whichever is higher, under Section 73 | Fully waived on eligible demands |
| Pending appeal | Continues through GSTAT or High Court, years of litigation | Had to be withdrawn before filing the waiver application |
| Fraud cases (Section 74) | Full tax, interest, and penalty up to 100 percent applies | Not eligible; scheme excluded Section 74 entirely |
| Deadline pressure | No fixed cut-off, demand stays open until resolved | Tax had to be paid by 31 March 2025, application by 30 June 2025 |
Takeaway: Section 128A did not reduce tax liability. It removed interest and penalty on genuine, non-fraud demands, in exchange for prompt full payment and withdrawal of pending appeals.
Source: CGST Act 2017 Section 128A; CBIC Circular 238/32/2024-GST; Circular 248/05/2025-GST
Timeline: How the Scheme Unfolded
Deadline Timeline
Section 128A Waiver Scheme: Complete Timeline
From legislative insertion to the final closure of the application window
Finance (No. 2) Act, 2024 Enacted
Section 128A inserted into the CGST Act, 2017 as a new relief provision for early-years GST demands
Notifications 20 and 21/2024-CT Issued
CBIC notified Rule 164 of the CGST Rules, prescribing forms SPL-01, SPL-02, and the procedure for claiming the waiver
Section 128A Comes Into Force
Effective date for the scheme, per Notification 17/2024-Central Tax; taxpayers could begin preparing applications
Circular 238/32/2024-GST Issued
Clarified treatment of part-paid demands, multi-year orders, and interplay with pending appeals
Full Tax Payment Deadline
The single most important condition: full tax in the demand had to be paid by this date to remain eligible
Notification 11/2025-CT and Circular 248/05/2025-GST
Addressed last-mile payment and filing issues as the scheme approached closure
Application Filing Deadline (SPL-01/SPL-02)
Final date to submit the waiver application on the GST portal; late filings were not accepted
Scheme Status: Closed
No new applications accepted; only pending applications and related litigation remain active
Source: CBIC Notifications 20/2024-CT, 21/2024-CT, 11/2025-CT; Circulars 238/32/2024-GST and 248/05/2025-GST
The compressed gap between the payment deadline (31 March 2025) and the application deadline (30 June 2025) caught out several businesses that assumed they had more runway. Many taxpayers paid the tax in the final week of March 2025 under portal load, then had roughly twelve weeks to complete the paperwork and file Form SPL-01 or SPL-02 correctly.
Who Was Eligible
Section 128A applied to a narrow, well-defined set of cases. Eligibility depended on three factors: the period of the demand, the section under which it was raised, and the payment status.
Period covered. Only demands relating to the period 1 July 2017 to 31 March 2020, i.e., FY 2017-18, FY 2018-19, and FY 2019-20, qualified. Demands for FY 2020-21 onward were outside the scope of this scheme.
Section covered. Only demands issued or confirmed under Section 73 of the CGST Act, the provision for tax not paid or short paid for reasons other than fraud, suppression, or wilful misstatement.
Stage of proceeding. The scheme covered three scenarios:
- A show cause notice issued under Section 73 but not yet adjudicated (no order passed)
- An order passed under Section 73(9) but the appeal period not yet expired, or an appeal filed but not yet decided
- A case that had reached the appellate or revisional stage, provided the taxpayer withdrew the appeal before filing the waiver application
Reclassified cases. A notable extension of eligibility applied where a demand was originally raised under Section 74 (fraud) but was later reclassified to Section 73 by an appellate authority, tribunal, or court. Once reclassified as a non-fraud demand, such cases became eligible for the Section 128A waiver, even though the original notice cited Section 74.
Who Was Excluded
Comparison
Section 128A Eligibility: Included vs Excluded Categories
A quick reference on which demands qualified for the waiver
| Parameter | Eligible for Waiver | Excluded from Waiver |
|---|---|---|
| Period | 1 Jul 2017 to 31 Mar 2020 (FY 17-18, 18-19, 19-20) | FY 2020-21 and later periods |
| Nature of demand | Section 73: tax not paid for reasons other than fraud | Section 74: fraud, suppression, or wilful misstatement |
| Refund already granted | Not applicable if erroneous refund is the subject demand | Erroneous refund demands under Section 73/74 excluded |
| Reclassified cases | Section 74 demands reclassified to Section 73 on appeal | Demands where reclassification was reversed back to Section 74 |
| Tax payment status | Full tax paid by 31 March 2025 | Partial payment or payment after 31 March 2025 |
| Appeal status | Appeal withdrawn before filing waiver application | Appeal kept pending while applying for waiver |
Takeaway: The dividing line was always the section, not the amount. A genuine classification dispute under Section 73 qualified regardless of size; any hint of fraud under Section 74 disqualified the case entirely.
Source: CGST Act 2017 Section 128A; Rule 164, CGST Rules 2017
Cases involving erroneous refunds already granted to the taxpayer, where the demand sought recovery of that refund, were also kept outside the waiver's scope in most circumstances, since these do not represent a straightforward short-payment of output tax.
How the Waiver Actually Worked: A Worked Example
Consider a mid-sized trading firm that received a Section 73 order for FY 2018-19 covering a demand raised across multiple tax periods, with the following breakup:
- Tax demanded: Rs 5,00,000
- Interest under Section 50 (accumulated over several years): Rs 1,50,000
- Penalty (levied at the higher end, since multiple tax periods were clubbed into a single order): Rs 5,00,000
- Total demand without Section 128A: Rs 11,50,000
With Section 128A applied:
- Tax paid by 31 March 2025: Rs 5,00,000
- Interest waived: Rs 1,50,000 (saved)
- Penalty waived: Rs 5,00,000 (saved)
- Total paid: Rs 5,00,000
- Total saved: Rs 6,50,000
This is the practical arithmetic that made the scheme attractive: the taxpayer paid only the principal tax and walked away from more than half the total demand. For businesses sitting on old, disputed, non-fraud GST notices from the early years of the regime, this was frequently a better outcome than years of continued litigation with accumulating interest, even where the taxpayer believed they had a reasonable chance of winning on merits.
The key trade-off was certainty versus contest. Filing the waiver application meant conceding the tax liability and withdrawing any pending appeal on that demand. Businesses that believed they could fully overturn the demand on merits, and had the appetite for prolonged litigation, sometimes chose to continue the appeal instead of opting into Section 128A.
Application Process: SPL-01 and SPL-02
Step-by-Step Guide
How the Section 128A Waiver Application Worked
The procedure taxpayers followed between November 2024 and June 2025
Identify the Right Form
Form GST SPL-01 applied where only a show cause notice or statement had been issued and no order was yet passed. Form GST SPL-02 applied where a demand order (or appellate/revisional order) had already been issued.
Form SelectionPay the Full Tax Amount
The complete tax amount in the notice or order had to be paid through the electronic cash or credit ledger, as applicable, before 31 March 2025. Partial payment did not qualify.
PaymentWithdraw Any Pending Appeal
Where an appeal, writ petition, or revision was pending against the order, it had to be withdrawn (fully or to the extent of the demand covered) before the waiver application could be filed.
Appeal WithdrawalFile SPL-01 or SPL-02 on the GST Portal
The application was filed electronically under Rule 164, attaching proof of payment, withdrawal application (if any), and supporting details of the demand covered.
FilingProper Officer Verification
The proper officer verified the application, the payment particulars, and the withdrawal of appeal (where applicable), then issued an order in Form GST SPL-05 accepting the waiver or SPL-07 rejecting it.
VerificationTrack the Order and Respond If Needed
Where the officer issued a deficiency memo or proposed rejection, the taxpayer had a defined window to respond or rectify before the application was finally decided.
Follow-upSource: Rule 164, CGST Rules 2017; Circular 238/32/2024-GST dated 15 October 2024
Taxpayers who had already paid tax, interest, and penalty in full before Section 128A was notified were not left worse off. Rule 164 and the accompanying circulars allowed such taxpayers to claim a refund of the interest and penalty already paid, subject to the same eligibility conditions, provided the refund application was filed within the prescribed window.
What If You Missed the Deadline?
The scheme closed on 30 June 2025 for applications, with the underlying payment condition of 31 March 2025 already behind it. As of August 2026, there is no mechanism to apply for the Section 128A waiver retrospectively. If your business missed the window, here are the realistic options that remain:
1. Continue or revive the appeal. If you did not withdraw your appeal (because you chose not to opt into the scheme, or missed the deadline), your appeal before the Appellate Authority, GSTAT, or High Court continues on its normal track. You retain the right to contest the demand, including interest and penalty, on merits.
2. Rectification under Section 161. If the demand order contains an error apparent on the face of the record, a rectification application can still be filed within the statutory time limit from the date of the order, though this route does not offer a general interest or penalty waiver.
3. Watch for a possible second window. Amnesty-style schemes in GST have historically been extended or reopened in later Finance Acts when representations from trade bodies highlight genuine hardship (this happened with earlier schemes such as the SVLDRS under service tax). There is no confirmed second window for Section 128A as of August 2026, but businesses with pending demands should monitor Union Budget announcements and CBIC notifications.
4. Pay under protest and litigate. Where cash flow allows, some businesses pay the tax and interest under protest to stop the interest meter, while continuing to contest the penalty and any interest already accrued through appeal.
5. Get professional review of your specific order. Not every demand that missed the 128A deadline is a lost cause. Some orders qualify for relief on other grounds entirely, such as limitation defects, jurisdictional errors, or non-service of notice, that have nothing to do with Section 128A.
Pending Litigation and Interpretation Disputes
Even though the application window has closed, Section 128A continues to generate litigation on interpretation questions, particularly around borderline eligibility and procedural rejections by field officers.
Madras High Court, 14 August 2026. In one of the more significant recent rulings, the Madras High Court held that a waiver application cannot be rejected merely because the underlying demand order covers tax periods or amounts pertaining to another state within the same consolidated order. The court's reasoning was that a taxpayer should not be denied the benefit of Section 128A on a technical, administrative ground when the substantive conditions (payment of tax, non-fraud nature of the demand, correct period) were otherwise satisfied. This ruling is expected to guide how proper officers treat multi-state or multi-registration orders in pending SPL-02 applications still under verification.
Reclassified Section 74 cases. A recurring dispute involves taxpayers whose original notice was issued under Section 74 but was reclassified to Section 73 by an appellate authority after the 30 June 2025 deadline had already passed. Whether such taxpayers can still be permitted a fresh window to apply, given that their Section 73 eligibility only crystallised after the scheme's formal closure, remains an open question being tested in various High Courts.
Part-payment disputes. Some field officers rejected applications where the taxpayer had paid tax through a combination of cash and credit ledger in a manner the officer considered non-compliant with the prescribed payment method under Rule 164. Several of these rejections are under challenge, with taxpayers arguing that the substance of full payment, not the ledger split, should govern eligibility.
Businesses with SPL-02 applications still pending verification, or with rejection orders (Form SPL-07) received after the deadline, should treat these developments as directly relevant precedent for their own cases.
Lessons for Future Amnesty Schemes
Section 128A's rollout offers a few practical lessons that are worth carrying forward for businesses and advisors, regardless of whether a similar scheme is announced again:
- Compressed windows punish delay. The three-month gap between the payment deadline and the application deadline meant that late payers had very little room to also get the paperwork right. Where a future scheme offers similar relief, treat the payment condition as the real deadline, not the application deadline.
- Section boundaries matter more than facts on the ground. Many taxpayers assumed genuine, defensible disputes would qualify regardless of the section cited in the notice. The scheme drew a hard line at Section 73 versus Section 74, and appellate reclassification became the only route out for taxpayers wrongly slotted into Section 74.
- Appeal withdrawal is irreversible. Once an appeal was withdrawn to access the waiver, that door closed permanently on the underlying tax dispute. Businesses should weigh the strength of their appeal on merits before opting into any future settlement scheme.
- Multi-state orders need extra scrutiny. The Madras High Court ruling shows that consolidated orders spanning multiple states created genuine procedural friction. Businesses with pan-India operations and demands spanning multiple GSTINs should flag this explicitly in any future application.
Looking for expert help with GST Section 128A, GST amnesty scheme 2025, GST interest penalty waiver, Section 73 GST demand, GST SPL-01 SPL-02 forms? The team at Tax Garden, based in Kondapur, Hyderabad, helps Indian SMEs stay compliant. End-to-end filings, notices, and deadline tracking, all in one place.
GST Section 128A Waiver Scheme: Frequently Asked Questions
Is the Section 128A GST waiver scheme still open?
No. The scheme is closed as of August 2026. The tax payment deadline was 31 March 2025 and the application deadline (Form SPL-01/SPL-02) was 30 June 2025. No new applications are being accepted.
What exactly did Section 128A waive?
It waived 100 percent of the interest chargeable under Section 50 and 100 percent of the penalty on eligible GST demands raised under Section 73 for FY 2017-18, 2018-19, and 2019-20, provided the full tax amount was paid by 31 March 2025.
Did Section 128A cover fraud cases under Section 74?
No. Section 74 cases involving fraud, suppression, or wilful misstatement were excluded from the waiver entirely. Only Section 73 (non-fraud) demands qualified, unless a Section 74 case was later reclassified to Section 73 by an appellate authority.
What forms were used to apply for the waiver?
Form GST SPL-01 was used where only a show cause notice was issued and no order had been passed. Form GST SPL-02 was used where a demand order or appellate order had already been issued. Both were filed electronically under Rule 164 of the CGST Rules.
Did I have to withdraw my pending appeal to claim the waiver?
Yes. Where an appeal, writ petition, or revision was pending against the demand, it had to be withdrawn before the waiver application could be filed, and this withdrawal was final for that demand.
I missed the 30 June 2025 deadline. What can I do now?
There is no retrospective route to apply for Section 128A. Options that remain include continuing or reviving your appeal on merits, filing a rectification application under Section 161 if there is an apparent error in the order, or seeking professional review for other grounds of relief unrelated to Section 128A.
What did the Madras High Court rule on 14 August 2026?
The Madras High Court held that a Section 128A waiver application cannot be rejected merely because the underlying demand order covers tax periods or amounts pertaining to another state within the same consolidated order, where the substantive conditions of the scheme were otherwise met.
Can Tax Garden help with a GST demand that missed the 128A deadline?
Yes. Tax Garden's GST advisory team reviews pending Section 73 orders to identify appeal, rectification, or other litigation options where the Section 128A window has closed. Reach out for a review of your specific order.
Sources: CGST Act, 2017, Section 128A (inserted by Finance (No. 2) Act, 2024); Rule 164, CGST Rules, 2017; CBIC Notifications 17/2024-Central Tax, 20/2024-CT, and 21/2024-CT dated 8 October 2024; Notification 11/2025-CT dated 27 March 2025; CBIC Circular 238/32/2024-GST dated 15 October 2024; CBIC Circular 248/05/2025-GST dated 27 March 2025; Madras High Court ruling dated 14 August 2026 (case reporting via legal news wires); GST portal (gst.gov.in). Verify the current status of any pending application and consult the latest CBIC notifications before acting, as procedural details may be updated. This article is general information on the Section 128A waiver scheme and not a substitute for professional advice.
Work with the Trusted Tax & Compliance Services in Kondapur, Hyderabad - Tax Garden for expert GST filing, ITR, TDS, ROC, and startup compliance support.
Frequently Asked Questions: Tax Services in Kondapur & Hyderabad
What makes Tax Garden a preferred GST consultant in Kondapur?
Tax Garden is ISO 9001:2015 certified and backs every engagement with Kavach, our ₹50,000 error-protection cover. Our flat-fee, no-surprise pricing and dedicated account manager make us a compliance partner for startups and SMEs in Kondapur's HITEC City corridor.
Why is Tax Garden a trusted tax compliance partner in Hyderabad?
Trust comes from three pillars at Tax Garden. First, transparency: you know the exact fee before you sign up, and it never changes mid-year. Second, certified expertise: our compliance team is qualified, and the firm holds ISO 9001:2015 certification. Third, accountability: Kavach, our unique error-protection plan, covers up to ₹50,000 in service charges for any clerical mistake made by our team.
Is there a reliable tax consultant near me in Kondapur?
Yes. Tax Garden's office is in Kondapur itself (CWS One Building, Hanuman Nagar). You can book an in-person consultation or get everything done fully online via WhatsApp and our client portal. We serve walk-in clients by appointment and remote clients across all of Hyderabad and Telangana.
I want a friendly CA who explains things clearly. Is that Tax Garden?
Absolutely. Every client gets a dedicated account manager reachable on WhatsApp, plain-language explanations of what is filed and why, and proactive reminders before every deadline. No jargon, no surprises, just friendly, expert compliance support from Kondapur.
Where is Tax Garden located in Hyderabad?
Tax Garden is located at 4th Floor, South Block, CWS One Building, Hanuman Nagar, Kondapur, Hyderabad, Telangana 500084. We serve clients across Kondapur, HITEC City, Gachibowli, Madhapur, Jubilee Hills, Banjara Hills, and all of Hyderabad.
Can I get GST filing and registration services in Kondapur?
Yes. Tax Garden offers end-to-end GST services from our Kondapur office: GST registration, GSTR-1, GSTR-3B, GSTR-9 annual returns, ITC reconciliation, e-invoicing setup, and GST notice handling for businesses of all sizes in Kondapur and Hyderabad.
Do you file ITR for salaried employees and businesses in Hyderabad?
Yes. Our Kondapur team files ITR for salaried employees, freelancers, consultants, business owners, LLPs, and companies across Hyderabad. We cover ITR-1 through ITR-6 with complete Chapter VI-A deduction reconciliation, AIS reconciliation, and proactive deadline management.
Which areas in Hyderabad does Tax Garden serve?
Tax Garden's Kondapur office serves clients across Hyderabad including HITEC City, Gachibowli, Madhapur, Jubilee Hills, Banjara Hills, Begumpet, Secunderabad, Ameerpet, Kukatpally, Uppal, LB Nagar, and all of Telangana. Most services are available fully online.
What compliance services does Tax Garden offer for startups in Kondapur?
Tax Garden is a compliance partner for startups in Kondapur and Hyderabad's HITEC City corridor. We handle company incorporation, GST registration, TDS filings, payroll, ROC annual filings, director KYC, and annual ITR filing, all under one flat-fee plan.
How does Tax Garden's compliance model compare to traditional hourly accounting services in Hyderabad?
Unlike traditional accounting practices that charge hourly and are difficult to reach, Tax Garden operates on flat-fee subscription plans with a dedicated account manager, monthly compliance updates, and WhatsApp-first communication. Our AI-powered workflow catches errors before filings are submitted, and Kavach error-protection ensures you are never left alone if something goes wrong.
