Section 128 of the Central Goods and Services Tax Act, 2017 provides the Government with the power to waive, either partly or fully, certain penalties and late fees under the GST law. The provision is designed to provide relief to specified classes of taxpayers where particular mitigating circumstances justify such waiver.
Section 128 is an enabling provision. It does not automatically cancel or reduce a penalty or late fee for every taxpayer. The Government must exercise the power through a notification, on the recommendations of the GST Council, and the notification must specify the class of taxpayers and the mitigating circumstances to which the waiver applies. The current consolidated CGST Act, as on 11 June 2026, retains this wording.
Section 128 is therefore important for understanding GST relief notifications, especially those issued to waive or reduce late fees and certain penalties during specified periods or for specified categories of taxpayers.
What Is Section 128 of the CGST Act?
Section 128 is titled “Power to waive penalty or fee or both.”
The current provision states that the Government may, by notification, waive in part or in full:
- any penalty referred to in Section 122;
- any penalty referred to in Section 123;
- any penalty referred to in Section 125; or
- any late fee referred to in Section 47.
The waiver can be provided for a specified class of taxpayers and under specified mitigating circumstances, and it must be issued on the recommendations of the GST Council.
The provision is deliberately structured as a power of the Government rather than as an automatic right available to every taxpayer.
Exact Scope of Section 128
Section 128 covers four categories:
| Provision | Subject covered by Section 128 |
|---|---|
| Section 122 | Penalties for specified offences |
| Section 123 | Penalty for failure to furnish information return |
| Section 125 | General penalty |
| Section 47 | Late fee for specified delays |
The Government can waive these amounts in part or in full, but only through a notification satisfying the conditions prescribed under Section 128.
This means Section 128 does not provide a general power to waive every amount payable under the CGST Act.
Section 128 Is Not a General Tax Waiver
One of the most important points is that Section 128 does not give the Government a general power to waive GST tax liability.
The section specifically refers to:
- certain penalties; and
- late fees.
It does not say that the Government can use Section 128 to waive the underlying GST tax payable by a taxpayer.
For example, if a taxpayer has an actual GST tax liability of ₹1,00,000 and also has a late fee for delayed filing, Section 128 may potentially be used for the late fee if a relevant notification applies. It does not, by itself, waive the underlying ₹1,00,000 tax liability.
Similarly, Section 128 should not be treated as a general mechanism for cancelling interest payable under Section 50.
Why Was Section 128 Introduced?
GST compliance involves numerous statutory and procedural requirements.
A taxpayer may sometimes fail to comply because of circumstances that justify special relief for a particular class of taxpayers.
For example, the Government may decide that:
- a particular filing period created unusual compliance difficulties;
- a new compliance mechanism required an adjustment period;
- taxpayers affected by a specific event require relief;
- a specified class of taxpayers should receive late-fee relief; or
- a particular procedural penalty should be reduced or waived.
Section 128 provides the statutory mechanism through which such relief can be granted by notification.
The GST Council has considered and recommended several such relief measures over the years. For example, GST Council records show the use of Section 128 for specific penalty and late-fee relief measures.
Who Can Exercise the Power Under Section 128?
The power under Section 128 belongs to the Government.
The statutory mechanism is:
GST Council recommendation → Government notification → Specified waiver
The taxpayer does not independently waive the penalty or late fee.
Likewise, an individual GST officer cannot simply decide to waive a Section 122 penalty or Section 47 late fee by relying on Section 128 without an applicable Government notification.
The notification must specify the relevant conditions and class of taxpayers.
What Does “By Notification” Mean?
The words “by notification” are important.
A waiver under Section 128 must be formally notified by the Government.
This means taxpayers should not rely merely on:
- informal announcements;
- media reports;
- representations;
- general expectations;
- an officer’s verbal assurance; or
- a GST Council recommendation that has not resulted in the required notification.
The actual notification determines the operative waiver and its conditions.
The GST Council’s notification database, for example, records Central Tax Notification No. 08/2025 concerning waiver of late fee.
What Is a Partial Waiver?
Section 128 permits the Government to waive a penalty or late fee in part.
A partial waiver means that the Government may reduce the amount payable without eliminating the entire amount.
Example
Suppose a taxpayer has a late fee of ₹5,000.
If a notification issued under Section 128 provides that ₹4,000 of the applicable late fee is waived for the specified class of taxpayers, the remaining ₹1,000 would continue to be payable, subject to the exact terms of that notification.
The taxpayer cannot assume that a partial waiver means the entire liability disappears.
What Is a Full Waiver?
A full waiver means that the specified penalty or late fee is completely waived for taxpayers covered by the notification and satisfying its conditions.
Example
Suppose a notification provides that the entire late fee payable for a specified return will be waived for a particular class of registered persons if the return is furnished within a specified period.
A taxpayer satisfying all conditions can receive the full waiver specified in the notification.
The exact benefit depends on the wording of the notification.
What Are “Mitigating Circumstances”?
Section 128 specifically refers to “mitigating circumstances.”
These are circumstances that justify granting relief to the specified class of taxpayers.
The Act itself does not provide a single universal list of mitigating circumstances for every future Section 128 notification.
Instead, the Government’s notification specifies the circumstances and conditions applicable to the particular waiver.
Therefore, a taxpayer should always read the relevant notification rather than assuming that a particular personal difficulty automatically qualifies for relief.
Section 128 and Section 47 – Late Fee
Section 47 deals with late fees for failure to furnish specified returns or other prescribed documents within the required time.
Section 128 allows the Government to waive, wholly or partly, a late fee referred to in Section 47.
This creates an important relationship:
Section 47 → Provides for late fee
Section 128 → Provides power to waive that late fee in specified circumstances
The waiver is therefore dependent on a notification issued under Section 128.
Example of Section 128 and Late Fee
Suppose a registered person fails to furnish a GST return by its prescribed due date.
Under the applicable provisions, late fee may arise under Section 47.
Later, the Government issues a notification under Section 128 providing a waiver or reduction of late fee for a specified class of taxpayers and specified filing period, subject to conditions.
If the taxpayer satisfies those conditions, the taxpayer can receive the notified relief.
The taxpayer cannot claim the waiver merely because the return was delayed. The relevant notification must cover the taxpayer, return, period and circumstances.
Section 128 and Section 122
Section 122 contains penalties for various specified offences under GST.
Examples include specified failures involving:
- supplies without proper documentation;
- issuing incorrect or false invoices in specified circumstances;
- collecting tax but failing to pay it to the Government;
- taking or utilising input tax credit in specified circumstances;
- failure to keep or maintain books of account or documents as required; and
- other offences listed in Section 122.
Section 128 permits the Government to waive, partly or fully, penalties referred to in Section 122, subject to the conditions of the relevant notification.
However, the existence of Section 128 does not mean that every Section 122 penalty is automatically waivable.
There must be a specific notification covering the relevant class of taxpayers and mitigating circumstances.
Section 128 and Section 123
Section 123 provides a penalty for failure to furnish an information return.
Section 128 specifically includes penalties referred to in Section 123 within its potential waiver scope.
Therefore, if the Government issues an applicable notification under Section 128 covering a particular Section 123 penalty, the specified relief may be available to taxpayers satisfying the notification’s conditions.
Again, Section 128 itself does not automatically waive the penalty.
Section 128 and Section 125
Section 125 contains the general penalty provision.
Where no specific penalty is provided elsewhere under the CGST Act, a person who contravenes the Act or Rules may, subject to the statutory requirements, be liable to the general penalty under Section 125.
Section 128 specifically includes Section 125 penalties among the penalties that may be waived in part or in full by Government notification.
The GST Council has previously discussed use of Section 128 in relation to Section 125 penalties. For example, the GST Council considered relief concerning penalties for specified QR-code compliance during the early implementation period.
Section 128 Does Not Cover Every Penalty Under the CGST Act
This is another important limitation.
The wording of Section 128 specifically identifies penalties under:
- Section 122;
- Section 123; and
- Section 125.
Therefore, it should not be interpreted as giving a general power to waive every penalty appearing anywhere in the CGST Act.
For example, a taxpayer should not assume that a penalty imposed under another specific provision is automatically covered by Section 128 merely because the taxpayer is facing financial difficulty.
The relevant statutory provision and any applicable notification must be examined.
Section 128 Does Not Automatically Waive Interest
Section 128 and interest under Section 50 are separate matters.
Section 128 expressly refers to specified penalties and late fees. It does not generally provide for waiver of interest under Section 50.
Therefore:
| Amount | Section 128 automatically covers it? |
|---|---|
| Penalty under Section 122 | Potentially, if notification applies |
| Penalty under Section 123 | Potentially, if notification applies |
| Penalty under Section 125 | Potentially, if notification applies |
| Late fee under Section 47 | Potentially, if notification applies |
| GST tax liability | No |
| Interest under Section 50 | Not under Section 128 merely by itself |
A separate statutory provision or Government notification may provide a different relief mechanism where authorised.
Section 128 vs Section 128A
Section 128 should be carefully distinguished from Section 128A.
The two provisions have similar-looking numbers but operate differently.
Section 128
Section 128 is a general enabling power allowing the Government, through notification, to waive in part or full specified penalties under Sections 122, 123 and 125 and late fees under Section 47 for specified classes of taxpayers and mitigating circumstances.
Section 128A
Section 128A was introduced as a separate provision concerning waiver of interest or penalty or both relating to certain demands raised under Section 73 for specified tax periods.
The current CGST Act separately lists Section 128A immediately after Section 128.
Section 128A was introduced with effect from 1 November 2024 and relates to tax periods from 1 July 2017 to 31 March 2020, subject to its statutory conditions. CBIC issued Circular No. 238/32/2024-GST explaining implementation of Section 128A, and later Circular No. 248/05/2025-GST addressed additional issues.
Thus, Section 128A should not be treated as merely another example of a Section 128 notification.
Section 128 vs Section 126
Section 126 contains the general disciplines related to penalty.
It requires consideration of circumstances and provides safeguards concerning penalty proceedings.
Section 128 is different.
Section 126
Deals with general principles and safeguards governing imposition of penalties.
Section 128
Provides Government power to waive specified penalties and late fees through notification.
Therefore:
Section 126 → How penalty should generally be approached
Section 128 → Government’s power to provide specified waiver
Section 128 vs Section 127
Section 127 allows the proper officer to impose a penalty in certain cases where the penalty is not covered under specified proceedings.
Section 128, in contrast, gives the Government the power to waive specified penalties and late fees.
The two provisions operate at different levels.
👉 Read More → Section 127 – Power to impose penalty in certain cases
| Provision | Main function |
|---|---|
| Section 126 | General discipline relating to penalties |
| Section 127 | Power of proper officer to impose penalty in certain cases |
| Section 128 | Government’s power to waive specified penalty or late fee |
| Section 128A | Special waiver of interest or penalty for specified Section 73 demands |
Section 128 and GST Council Recommendations
Section 128 expressly requires the waiver to be issued on the recommendations of the Council.
This means the GST Council has an important role in recommending the circumstances and classes of taxpayers for which relief should be provided.
The Government then exercises the statutory power by issuing the relevant notification.
GST Council records show several instances in which the Council considered waiver or reduction of penalties and late fees under Section 128.
How Does a Section 128 Waiver Work?
A simplified process can be understood as follows:
Step 1 – GST Council Considers Relief
The Council considers whether specified taxpayers and circumstances justify a waiver or reduction.
Step 2 – Recommendation
The Council makes its recommendation.
Step 3 – Government Notification
The Government issues a notification under Section 128.
Step 4 – Conditions Are Specified
The notification identifies matters such as:
- class of taxpayers;
- relevant return or compliance requirement;
- relevant period;
- amount or percentage of waiver;
- deadline for compliance; and
- other conditions.
Step 5 – Taxpayer Satisfies Conditions
The taxpayer must satisfy the conditions specified in the notification.
Step 6 – Waiver or Reduction Applies
The specified penalty or late fee is waived or reduced according to the notification.
Why Taxpayers Should Read the Notification Carefully
A common mistake is to see a news report stating that the Government has waived a late fee and assume that all taxpayers qualify.
Section 128 relief is generally conditional.
A notification may specify:
- a particular category of taxpayer;
- a particular financial year;
- a particular return;
- a particular filing window;
- a maximum amount;
- a reduced amount instead of complete waiver; or
- additional compliance conditions.
Therefore, the taxpayer should check the exact notification.
For example, the GST Council’s official notification listing records Notification No. 08/2025-Central Tax specifically as a Central Tax notification for waiver of late fee.
Example – Late Filing Relief
Suppose the Government issues a notification under Section 128 providing that a specified class of taxpayers who file a particular return within a specified period will receive a waiver of a specified portion of the late fee.
A taxpayer who:
- belongs to the notified class;
- has the relevant return;
- falls within the specified period; and
- satisfies the filing conditions
may receive the waiver.
A taxpayer outside the notified class cannot claim the same benefit merely because the taxpayer also filed late.
Example – Penalty Relief
Suppose a Government notification issued under Section 128 provides partial waiver of a particular Section 125 penalty for taxpayers affected by specified mitigating circumstances.
A taxpayer must establish that the taxpayer falls within the notified class and circumstances.
If the notification provides only a partial waiver, the balance remains payable.
Can an Officer Waive the Penalty Under Section 128?
Section 128 gives the Government the power to waive specified penalties or late fees through notification.
Therefore, an individual proper officer does not obtain a general discretionary power to waive any Section 122, 123 or 125 penalty simply by invoking Section 128.
The officer must apply the applicable notification and its conditions.
Is Section 128 an Automatic Relief Provision?
No.
Section 128 is an enabling provision.
It authorises the Government to grant relief when the prescribed statutory mechanism is followed.
Whether a taxpayer actually receives relief depends on the existence and terms of the applicable notification.
This distinction is important because the words “may, by notification” indicate a power rather than an automatic waiver available in every case.
Can the Government Waive the Entire Late Fee?
Yes.
Section 128 expressly permits waiver “in part or full” of a late fee referred to in Section 47.
Therefore, depending on the notification, the Government may provide:
- full waiver;
- partial waiver; or
- a specified reduction or cap, depending on the notified mechanism.
The actual relief depends on the notification issued under Section 128.
Can the Government Waive a Penalty Completely?
Yes.
The same phrase “in part or full” applies to the specified penalties covered by Section 128.
Therefore, where a notification provides a complete waiver of a covered penalty for the specified class of taxpayers and circumstances, the entire notified penalty can be waived subject to the conditions.
Does Section 128 Waive the Underlying Tax?
No.
This is a crucial distinction.
Suppose a taxpayer has:
- GST tax: ₹50,000
- Interest: ₹5,000
- Penalty: ₹10,000
- Late fee: ₹2,000
If a Section 128 notification completely waives the applicable penalty and late fee, it does not automatically mean that the ₹50,000 tax and ₹5,000 interest are also waived.
The tax and interest must be considered under their respective statutory provisions.
Section 128 and Compliance
Section 128 can provide relief, but taxpayers should not treat potential future waivers as a reason to delay compliance.
A taxpayer should generally:
- file returns on time;
- pay tax within the prescribed time;
- maintain proper records;
- comply with invoice requirements;
- monitor GST notifications; and
- check the GST portal for applicable compliance requirements.
A waiver is generally a special relief measure, not a replacement for ordinary GST compliance.
Importance of GST Notifications
Because Section 128 operates through notifications, taxpayers dealing with late fees or specified penalties should regularly check official GST notifications.
The GST Council maintains a Central Tax notification section containing notifications issued under the CGST framework, including notifications concerning late-fee relief.
The exact notification should always be checked for:
- effective date;
- taxpayer category;
- relevant return;
- relevant period;
- waiver amount;
- filing deadline; and
- conditions.
Practical Compliance Checklist
If you believe a penalty or late fee may be covered by a Section 128 waiver, use the following checklist:
1. Identify the Amount
Determine whether the amount is:
- a Section 122 penalty;
- a Section 123 penalty;
- a Section 125 penalty; or
- a Section 47 late fee.
2. Find the Relevant Notification
Check whether the Government has issued a notification under Section 128 covering the particular liability.
3. Check the Taxpayer Category
Confirm that your business falls within the class of taxpayers specified in the notification.
4. Check the Relevant Period
Confirm that the return, tax period or default falls within the period covered by the notification.
5. Check the Conditions
Read all conditions carefully.
6. Check the Filing Deadline
Some relief notifications require the taxpayer to furnish the pending return or comply with another requirement within a specified period.
7. Check the Amount of Waiver
Determine whether the notification provides:
- full waiver;
- partial waiver; or
- another specified form of relief.
8. Keep Evidence
Retain the notification and records showing that its conditions were satisfied.
Key Takeaways of Section 128
Section 128 can be summarised through the following points:
- Section 128 is titled “Power to waive penalty or fee or both.”
- It gives the Government power to waive specified penalties and late fees.
- The waiver may be partial or complete.
- The Government must exercise the power through a notification.
- The waiver is issued on the recommendations of the GST Council.
- Section 128 covers penalties referred to in Section 122.
- It covers penalties referred to in Section 123.
- It covers penalties referred to in Section 125.
- It covers late fees referred to in Section 47.
- The notification must specify the relevant class of taxpayers.
- The notification must specify the mitigating circumstances.
- Section 128 does not automatically waive GST tax liability.
- Section 128 does not by itself provide a general waiver of interest under Section 50.
- Section 128 does not automatically waive every penalty under the CGST Act.
- Taxpayers must satisfy the conditions of the applicable notification.
- A partial waiver leaves the non-waived amount payable.
- A full waiver can eliminate the notified amount subject to the notification’s conditions.
- Section 128 should be distinguished from Section 128A.
- Section 128A is a separate statutory provision dealing with specified interest or penalty relief relating to certain Section 73 demands.
- Section 128 should also be read with Sections 47, 122, 123, 125, 126 and 127.
👉 Read More → Section 129 – Detention, seizure and release of goods and conveyances in transit
Conclusion
Section 128 of the CGST Act provides the Government with an important statutory mechanism to grant relief from certain penalties and late fees. The provision permits the Government to waive, either partly or fully, penalties referred to in Sections 122, 123 and 125 and late fees referred to in Section 47.
However, Section 128 is not an automatic waiver available to every GST taxpayer. The Government must issue a notification on the recommendations of the GST Council, and that notification must identify the relevant class of taxpayers and mitigating circumstances. Therefore, the actual benefit depends on the specific notification issued under Section 128.
The provision is particularly relevant when the Government introduces special compliance relief, such as a waiver or reduction of late fees for specified taxpayers and periods. Official GST records show that Section 128 has been used for such targeted relief measures, including late-fee and certain penalty waivers.
At the same time, taxpayers should distinguish Section 128 from Section 128A, which is a separate provision introduced for a specific waiver of interest or penalty relating to certain Section 73 demands for specified tax periods. Section 128A came into effect on 1 November 2024 and has its own statutory conditions and implementation framework.
In practical terms, Section 128 should be understood as a conditional Government relief mechanism, not as a general power to cancel GST liabilities. A taxpayer seeking to rely on a waiver should always verify the applicable notification, taxpayer category, relevant period, amount of waiver and compliance conditions before claiming the benefit.
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