Businesses and other eligible taxpayers will have three months to clear legacy tax liabilities, with interest waivers ranging from 50% to 100% and penalties linked to non-payment waived.
Uttar Pradesh has introduced a three-month tax relief programme aimed at helping businesses and other eligible taxpayers settle long-pending liabilities without the full weight of interest and penalties. According to reports from The Times of India and Free Press Journal, the state cabinet has approved the Interest Waiver Scheme-2026, which applies to arrears accrued up to December 31, 2025 and will operate across all 75 districts.
The scheme is structured around the size of the principal tax outstanding. Taxpayers with dues of up to ₹10 lakh can obtain a full waiver of interest and eligible penalties if they pay the principal in full. For those owing between ₹10 lakh and ₹1 crore, the interest relief is 90%; the rate falls to 75% for dues of between ₹1 crore and ₹5 crore, and to 50% for liabilities above ₹5 crore. Reports said the penalty waiver applies across all bands, but only for penalties linked to non-payment of dues.
Officials have said the measure covers a wide range of legacy taxes, including liabilities under the Uttar Pradesh Sales Tax Act, the Central Sales Tax Act, the UP Trade Tax Act, the UP Entry Tax Act and the Uttar Pradesh Value Added Tax Act. The relief is available for both accepted and disputed demands, which could give businesses an incentive to close older cases that have remained unresolved for years. Finance Minister Suresh Khanna said the initiative is intended to help clear long-standing disputes and ease the burden on taxpayers, according to local reporting.
Taxpayers with matters already before the courts will need to meet additional conditions, including filing the required documents and affidavits where withdrawal of proceedings is necessary. That detail suggests the relief is not automatic: it is designed to reward prompt settlement and compliance, while still requiring taxpayers to regularise their position within the scheme’s limited window.
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