UP Byaj Mafi Yojana-2026 (GO dated 16.10.2026): Interest and Penalty Waiver on Old VAT, Trade Tax and CST Dues

The Uttar Pradesh Government (Rajya Kar Anubhag-3) has issued a Government Order (शासनादेश) No. I/1497681/2026 dated 16.10.2026 to the Commissioner, State Tax, U.P., bringing in the Byaj Mafi Yojana-2026 (ब्याज माफी योजना-2026). Under this scheme, a dealer who pays the full principal dues of old pre-GST state tax demands gets a waiver of the interest, fully or partly, and of the penalty imposed for not paying the dues.

At a Glance

Which Laws Are Covered

The scheme applies to interest and penalty on dues created up to 31.12.2025 under:

• U.P. Sales Tax Act, 1948 (बिक्री कर अधिनियम);
• U.P. Trade Tax Act, 1995 (व्यापार कर अधिनियम);
• Central Sales Tax Act, 1956 (CST);
• U.P. Value Added Tax Act, 2008 (VAT);
• U.P. Tax on Entry of Goods Act, 2007 (प्रवेश कर);
• U.P. Amod Evam Panakar Adhiniyam, 1979 and the entertainment tax rules made under it;
• U.P. Cable Television Network Rules, 1997.

GST dues are not covered. This scheme is only for the old state tax laws that applied before GST.

How Much Is Waived

The slab depends on the principal dues (मूल बकाया). In every slab, the full principal must be paid.

Example: a 2015-16 VAT assessment order has principal dues of ₹15 lakh and interest of ₹12 lakh up to the date of application. The principal falls in the ₹10 lakh to ₹1 crore slab. The dealer pays ₹15 lakh + 10% of ₹12 lakh (₹1.2 lakh) = ₹16.2 lakh. Interest of ₹10.8 lakh is waived, along with any penalty imposed only for not paying the dues.

Key Conditions

• Each order is counted separately. The demand created by every order is treated as a separate demand, so the slab is decided order by order, not on the total of all dues.
• All types of demand are covered: admitted tax or assessed tax, whether the dispute is decided by a court or still pending. Balance amounts due under the composition (समाधान) schemes of these laws are also covered.
• Part payment already made: dealers who paid the principal fully or partly before the scheme started can also take the benefit.
• Cases pending in court: file a "Not Press" application in the court case and an affidavit for withdrawing the case.
• Only one kind of penalty is waived: the penalty imposed for not paying the dues. Other penalties are not waived under this scheme.
• No refund: if a dealer has paid more than the tax, dues, interest or penalty payable, before or after the scheme starts, the excess will not be refunded or adjusted under the scheme.
• Interest and penalty are computed up to the date of application.

How to Apply: Step by Step

1. Collect the orders: list every assessment or demand order up to 31.12.2025 under which dues are pending, with the principal, interest and penalty of each.
2. Compute the amount: for each order, take the full principal plus the interest share as per its slab.
3. Pay online first: the online application can be made only after the computed amount is deposited online.
4. Apply on the portal: file the online application at comtax.up.nic.in.
5. Verification in 15 days: the assessing officer (Joint Commissioner Corporate, Deputy Commissioner, Assistant Commissioner or State Tax Officer) will compute and verify the dues, interest and penalty within 15 days of the application.
6. RC clearance certificate: if the application is correct, the officer will issue the "RC बेबाक होने का प्रमाण पत्र" (certificate that the RC is fully cleared) within 15 days of the application.
7. If there is an error: the officer will issue a notice on the portal within 15 days. The dealer must correct it and upload within the time given. The certificate is issued within 15 days of the correct deposit.

A help desk will be set up at every zone, with officers on duty by roster, and a toll-free number will be issued for dealers. All applications made before the scheme ends will be disposed of within 15 days after the closing date.

Who Should Act

• Dealers with old VAT, Trade Tax, CST or Entry Tax RCs: recovery certificates (RCs) for these dues are often pending for years, and the interest keeps growing. This is the time to close them.
• Brick kiln owners and old traders: many have pre-2017 trade tax or VAT demands under composition or assessment. Check every pending order.
• Dealers with appeals or writs pending: compare the waiver with your chances in the case before deciding to withdraw.
• Dealers facing recovery as arrears of land revenue: a correct application under the scheme ends with an RC clearance certificate for that demand.

Practical tip: get the dues figure of each order confirmed from the department records before paying, because any excess paid will not be refunded under the scheme.

Reference: Government of Uttar Pradesh, Rajya Kar Anubhag-3, GO No. I/1497681/2026 dated 16.10.2026 (Byaj Mafi Yojana-2026), issued to the Commissioner, State Tax, U.P., Lucknow. This page is for general information only.