GST Amnesty Scheme (Section 128A): How to Waive Interest & Penalties

If you’ve been carrying a GST demand from FY 2017-18, 2018-19, or 2019-20 — whether under Section 73 (non-fraud) or pending litigation — Section 128A is one of the most generous reliefs the GST Council has offered since the regime began. Pay the tax in full, and interest plus penalty are waived in entirety.

But the relief is conditional, the timelines are strict, and the application process has caught many taxpayers off-guard. This guide walks through eligibility, the SPL-01 / SPL-02 forms, and the operational steps.

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What Section 128A actually offers

Section 128A — inserted by the Finance (No. 2) Act, 2024, effective 1 November 2024 — provides:

• Full waiver of interest and penalty on GST demands for FY 2017-18, 2018-19, and 2019-20
• Applicable only to demands raised under Section 73 (non-fraud cases) — not Section 74 (fraud, suppression, wilful misstatement)
• Conditional on payment of full tax demand by the notified deadline
• Withdrawal of any pending appeal / writ petition required

In practice this means: if you owe ₹10 lakh in tax, ₹4 lakh in interest, and ₹1 lakh in penalty for FY 2018-19, you pay only ₹10 lakh, and the ₹5 lakh interest + penalty drops away entirely.

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Eligibility — who can apply

You can apply under Section 128A if any one of the following applies:

1. A show cause notice (SCN) under Section 73 has been issued for FY 2017-18 / 18-19 / 19-20 and not yet adjudicated.
2. An adjudication order has been passed and is pending appeal.
3. An appeal is pending before the Appellate Authority, Tribunal, or High Court.
4. An order has been passed by the Appellate Authority for which Tribunal appeal is yet to be filed (within limitation).

You cannot apply under Section 128A if:

• The case is under Section 74 (fraud / wilful suppression).
• The demand pertains to erroneous refund received.
• The demand relates to FY 2020-21 onwards.
• You’ve already received any earlier amnesty / waiver for the same demand.

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The application forms — SPL-01 and SPL-02

Form	When to use
SPL-01	When you want to apply for waiver before adjudication / appellate order — i.e., SCN stage
SPL-02	When you want to apply for waiver after an adjudication / appellate order has been passed

Both forms are filed online on the GST portal under the Amnesty section. The application must include:

• Reference to the SCN / order
• Demand amount break-up (tax / interest / penalty / fees)
• Proof of full payment of tax (DRC-03 challan reference)
• Withdrawal proof of any pending appeal / writ petition
• Self-declaration regarding non-applicability of Section 74

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Deadlines — what’s been notified

The original deadline for paying the disputed tax was 31 March 2025. The CBIC has subsequently issued multiple extensions; the current notified payment deadlines are:

Demand category	Tax payment deadline
Cases under SCN (Section 73)	Date notified — currently 30 June 2026 (verify latest CBIC notification)
Cases with adjudication order	Same

The waiver application (SPL-01 / SPL-02) must be filed within 3 months of the tax payment deadline. Miss the application window and you lose the relief, even if you’ve paid the tax.

Always confirm the active deadline against the most recent CBIC notification before payment. The 128A regime has been extended twice already; another extension is possible but not guaranteed.

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How payment must be made

The tax payment for amnesty must be:

• Through Form GST DRC-03, with the specific reference type “Amnesty under Section 128A”
• For the full demand amount of tax (no part-payment, no installments)
• Cannot be paid using Input Tax Credit (ITC) — must be paid in cash through the electronic cash ledger

If the demand mixes ITC reversal and tax payable, the ITC reversal portion is treated as tax for amnesty purposes. ITC available in the credit ledger cannot offset this — pay in cash.

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Step-by-step application playbook

Step 1 — Verify eligibility. Confirm the demand is under Section 73 (not 74), pertains to FY 2017-18 / 18-19 / 19-20, and isn’t a refund-recovery case. Retrieve the SCN / order copy.

Step 2 — Reconcile the demand. Break down the demand into tax / interest / penalty. Identify exactly what tax amount must be paid for waiver. Reconcile against your books and any partial pre-deposit already made.

Step 3 — Withdraw appeal (if pending). File withdrawal application before the appropriate forum (Commissioner Appeals / Tribunal / HC). Get the formal withdrawal order — you’ll attach it to SPL-01 / SPL-02.

Step 4 — Pay tax via DRC-03. Generate DRC-03, select payment reason “Tax payment for Amnesty u/s 128A,” pay full tax in cash. Save the challan.

Step 5 — File SPL-01 / SPL-02. Within the prescribed window, file the relevant amnesty form on the GST portal with:

• Demand reference
• DRC-03 challan
• Appeal withdrawal proof
• Self-declaration

Step 6 — Track ARN status. The proper officer issues an order under Form SPL-05 (waiver granted) or SPL-07 (waiver rejected) within 3 months. Until then, the demand isn’t formally extinguished.

Step 7 — Reconcile credit ledger. Once SPL-05 is received, ensure the demand is closed in your GST records and the related ledger entries are reconciled.

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Worked example

Facts: XYZ Pvt Ltd received an SCN under Sec 73 for FY 2018-19 alleging short payment of GST of ₹15 lakh. After adjudication in 2024, the order confirmed ₹15L tax + ₹6L interest + ₹1.5L penalty = ₹22.5L total. Appeal is pending before the Commissioner (Appeals).

Without amnesty: Even if appeal succeeds partially, exposure remains. If lost fully: ₹22.5L plus continued interest accrual.

Under Section 128A:

• Withdraw the pending appeal
• Pay ₹15L (tax only) via DRC-03 in cash
• File SPL-02 with all annexures
• ₹6L interest + ₹1.5L penalty waived

Saving: ₹7.5 lakh, plus ongoing interest exposure that’s now extinguished.

The cash flow hit (₹15L) is real, but the certainty is the bigger win — no more litigation, no more interest meter running, books cleaner for future audit.

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Common pitfalls

1. Paying via credit ledger. ITC cannot be used for amnesty payment. Several taxpayers have offset using ITC, only to find the application rejected.
2. Missing the appeal-withdrawal step. Filing SPL-01 / SPL-02 without proof of appeal withdrawal leads to rejection.
3. Part-payment. Section 128A is all-or-nothing. Partial tax payment doesn’t qualify for partial relief.
4. Ignoring the 3-month application window. Tax paid but application not filed in time = no waiver. We’ve seen this happen.
5. Misclassifying Section 74 cases. If your SCN is under Section 74 (fraud), 128A doesn’t apply at all. Verify before paying.

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Should you opt for amnesty?

A few decision factors:

• Strong case on merits, low exposure. If you’re confident the demand will be substantially reduced on appeal, litigation may still be cheaper than full payment.
• Weak case on merits. Pay under amnesty, save interest + penalty, eliminate uncertainty.
• Cash flow constraints. Amnesty requires full cash payment — if liquidity is tight, weigh against ongoing interest at 18% p.a.
• Multiple connected demands. If demands span FY 2017-18 to 2020-21, you can amnesty the eligible years and continue litigation on later years.

We help clients model both paths — present value of full payment now vs expected value of litigation outcome — before recommending an approach.

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Beyond 128A — other GST amnesty windows

The GST Council has occasionally announced other concessional schemes:

• Late fee waiver for delayed GSTR-9 / GSTR-9C / GSTR-10 (Final Return)
• Conditional waivers for late filing of GSTR-1 / GSTR-3B
• One-time settlements for specific industry-wide disputes

Track CBIC notifications via the GST portal or work with a CA who tracks them for you. Our Compliance Calendar flags major amnesty windows as they’re announced.

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How we approach 128A engagements

For each 128A application we handle:

1. Eligibility confirmation against latest CBIC notifications
2. Demand reconciliation against books and 26AS / GSTR-9C
3. Appeal-withdrawal coordination with counsel
4. DRC-03 challan generation with correct reason code
5. SPL-01 / SPL-02 filing with all annexures
6. Follow-up until SPL-05 (waiver order) is received
7. Books closure entries for the discharged demand

If you’re carrying a GST demand from FY 2017-18 to 2019-20 and want to evaluate whether Section 128A makes sense for your specific case — get in touch. The eligibility check itself is free; we’ll only suggest the amnesty route if the math works in your favour.

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Frequently Asked Questions

Can I pay the amnesty tax using my GST input tax credit?

No. Tax payment under Section 128A must be made in cash through the electronic cash ledger via DRC-03. ITC cannot be used. Several applications have been rejected for this reason.

What if my demand has multiple FYs — say 2018-19 and 2020-21?

You can apply amnesty only for the eligible years (2017-18, 2018-19, 2019-20). The 2020-21 portion remains subject to normal proceedings. The SCN / order will need to be split for tracking purposes.

Is the waiver applicable to Section 74 (fraud) demands?

No. Section 128A explicitly excludes Section 74 demands. Only Section 73 (non-fraud) demands qualify.

Can I apply if I’ve already paid the demand with interest?

You can apply for refund of the interest and penalty already paid, provided the case otherwise meets 128A criteria and the application is within time. The procedure differs and requires careful handling — consult a CA before filing.

What’s the cost of filing the amnesty application?

There’s no statutory fee for filing SPL-01 / SPL-02. Professional fees for evaluation, reconciliation, and filing typically range ₹15,000–₹75,000 depending on complexity (multiple FYs, multiple GSTINs, appeal coordination).

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Related reading

• Compliance Calendar FY 2025-26
• TDS Rate Chart FY 2025-26
• ITR Filing FY 2025-26: The Complete Guide
• Use our free Compliance Checker to surface pending GST risks across your business.