Punjab Announces Final One Time Settlement Scheme
Chandigarh – Punjab Finance Minister Harpal Singh Cheema has announced the launch of the Punjab One Time Settlement (OTS) Scheme for Recovery of Outstanding Dues, 2025, which will be effective from October 1 to December 31, 2025.
The scheme, approved by the Punjab Cabinet led by Chief Minister Bhagwant Singh Mann, aims to settle 20,039 pending cases involving outstanding dues of nearly ₹11,968.88 crore under various pre-GST Acts.
“This initiative is the final opportunity for taxpayers to clear their legacy tax dues,” Cheema said while addressing the media. He warned that recovery proceedings will begin after January 1, 2026, for those who fail to opt for the scheme.
Substantial Relief for Taxpayers
The Finance Minister explained that the OTS scheme is structured with a tiered waiver system to provide maximum relief:
- For outstanding dues up to ₹1 crore: 100% waiver on interest and penalty, plus 50% waiver on tax.
- For dues between ₹1 crore and ₹25 crore: 100% waiver on interest and penalty, plus 25% waiver on tax.
- For dues above ₹25 crore: 100% waiver on interest and penalty, plus 10% waiver on tax.
“This structure ensures that small, medium, and large taxpayers all benefit while encouraging maximum compliance,” Cheema said.
The cases covered include assessments under the Punjab VAT Act, the Central Sales Tax Act, and other pre-GST tax laws. However, government food agencies will not be eligible under the scheme.
Potential Recovery and Waivers
The Punjab government expects that if all eligible taxpayers participate, the state could recover around ₹3,344.50 crore, while providing relief worth ₹8,441.56 crore by waiving old dues.
Cheema stressed that the objective is not just to recover dues but to create a business-friendly environment in Punjab. “By reducing the compliance burden, we are giving trade and industry a clean slate to grow without the weight of unresolved tax disputes,” he said.
The minister added that this is the third such OTS scheme introduced by the Aam Aadmi Party-led government and will be the last opportunity for businesses to settle their pre-GST dues.
Boost to Ease of Doing Business
Officials stated that the scheme is aligned with the government’s broader vision of making Punjab a competitive and attractive destination for industry and commerce.
By clearing legacy disputes, the initiative is expected to:
- Improve investor confidence.
- Reduce litigation in tax-related cases.
- Strengthen compliance mechanisms.
- Allow businesses to focus on growth instead of prolonged legal battles.
Cheema also urged taxpayers to act promptly: “Do not wait for the last date. Take advantage of this historic opportunity to close all old disputes.”
Political and Economic Significance
The announcement comes at a time when Punjab is working to revitalize its economy by supporting industries and ensuring smoother tax administration. Experts suggest that the timing of the scheme is crucial, as it allows the state to increase revenue collections while providing relief to struggling businesses.
For the ruling AAP government, the scheme highlights its focus on transparency, compliance, and ease of business. For taxpayers, it offers long-awaited clarity and closure on disputes that have lingered for years.
Towards a Stronger Tax System
The Finance Minister reiterated that the OTS scheme is not just about clearing dues but about streamlining Punjab’s tax system. By wiping out pending cases, the government aims to focus on robust tax compliance under GST, minimizing future disputes.
“This is about building trust between the government and businesses,” Cheema concluded. “We want Punjab to be known as a state where compliance is simple, disputes are minimized, and growth is encouraged.”