70,311 dealers avail OTS-3, added 164.35 crore to Government Treasury: Punjab FM Harpal Singh Cheema

Harpal Singh Cheema, Finance, Planning, Excise and Taxation Minister of Punjab, announced on Tuesday that a total of 70,311 dealers have availed the benefits of One Time Settlement Scheme-3 (OTS-3), launched by the Punjab Government in November 2023 to reduce and streamline legacy tax issues.

Revealing this in a press note, Cheema said that the OTS-3 also resulted in a significant addition of Rs. 164.35 Crore to the Government Treasury.” This stands in contrast to the OTS-1 and OTS-2 schemes launched by previous governments, which realized a total tax revenue of only Rs. 13.15 crore from 31,768 cases”, he added.

Disclosing the details, Cheema said that 50,903 dealers with arrears up to Rs 1 Lakh benefited from a 100% waiver of tax, interest, and penalty Under OTS-3, which resulted in a total waiver of Rs. 221.75 Crore. “Additionally, 19,408 dealers with arrears between Rs 1 lakh and Rs 1 crore availed the benefit of 100% waiver of interest and penalty, and 50% waiver in tax, amounting to a total waiver of Rs. 644.46 crore," he added.

The Finance Minister said that the scheme covered cases till the assessment year 2016-17, with arrears up to Rs. 1 Crore. He said the dealers who applied under OTS-3 submitted original statutory forms under the CST Act, 1956, and the waiver was calculated accordingly. Furthermore, applicants were provided with a facility to submit additional statutory declaration forms, which reduced their liability.

The One Time Settlement (OTS) scheme introduced by the Punjab government in the financial year 2023-24 aims to provide relief to traders by enabling them to clear outstanding value-added tax (VAT) arrears from the pre-GST period. The scheme's primary objectives are to alleviate the compliance burden associated with older cases and facilitate the settlement of tax liabilities for over 60,000 traders.

Originally scheduled to operate from November 15, 2023, to March 15, 2024, the OTS scheme was later extended by the state cabinet until June 30, 2024. An important update to the scheme was issued by the government on March 11, 2024, specifying the eligibility criteria for participation. The amendment outlines that the scheme applies to cases where the assessment was conducted by March 31, 2024, and the total demand does not exceed 1 crore rupees for any relevant act, with the exception of the Central Sales Tax Act, 1956. Furthermore, for cases falling under the Central Sales Tax Act, 1956, the net demand should also not surpass 1 crore rupees.

The recent amendment has resulted in modifications to various elements within the scheme, aiming to enhance compliance and transparency. A few notable benefits it offers include the following:

Complete Exemption: As of March 31, 2024, balances up to Rs 1 lakh are entirely exempt from tax, interest, and penalties.
100% Interest and Penalty: For balances falling between Rs 1 lakh and one crore, 100% of interest and penalties are applicable.
50% Tax Exemption: Half of the tax amount is waived under this scheme.