Text
The text below is the section as served by the CBIC tax information portal on 17 September 2026, with the portal's own amendment footnote markers (shown as small numerals before a bracket) and its footnotes.[1] The Act as published in the Gazette of India is the legal source.
Section 138, verbatim (show)
Section 138
* Section 138. Compounding of offences.-
(1) Any offence under this Act may, either before or after the institution of prosecution, be compounded by the Commissioner on payment, by the person accused of the offence, to the Central Government or the State Government, as the case be, of such compounding amount in such manner as may be prescribed:
Provided that nothing contained in this section shall apply to-
1[(a) a person who has been allowed to compound once in respect of any of the offences specified in clauses (a) to (f), (h), (i) and (l) of sub-section (1) of section 132;]
(b) 2[****];
3[(c) a person who has been accused of committing an offence under clause (b) of sub-section (1) of section 132;]
(d) a person who has been convicted for an offence under this Act by a court;
(e) 4[****] and
(f) any other class of persons or offences as may be prescribed:
Provided further that any compounding allowed under the provisions of this section shall not affect the proceedings, if any, instituted under any other law:
Provided also that compounding shall be allowed only after making payment of tax, interest and penalty involved in such offences.
(2) The amount for compounding of offences under this section shall be such as may be prescribed, subject to the minimum amount not being less than 5[twenty-five per cent. of the tax involved and the maximum amount not being more than one hundred per cent. of the tax involved].
(3) On payment of such compounding amount as may be determined by the Commissioner, no further proceedings shall be initiated under this Act against the accused person in respect of the same offence and any criminal proceedings, if already initiated in respect of the said offence, shall stand abated.
*Enforced w.e.f . 1st July, 2017
1. Substituted (w.e.f. 1st October, 2023 vide Notification No. 28/2023 - CT dated 31st july, 2023.) by s. 157 of The Finance Act 2023 (No. 8 of 2023).
2. Omitted (w.e.f. 1st October, 2023 vide Notification No. 28/2023 - CT dated 31st july, 2023.) by s. 157 of The Finance Act 2023 (No. 8 of 2023).
3. Substituted (w.e.f. 1st October, 2023 vide Notification No. 28/2023 - CT dated 31st july, 2023.) by s. 157 of The Finance Act 2023 (No. 8 of 2023).
4. Omitted (w.e.f. 1st October, 2023 vide Notification No. 28/2023 - CT dated 31st july, 2023.) by s. 157 of The Finance Act 2023 (No. 8 of 2023).
5. Substituted (w.e.f. 1st October, 2023 vide Notification No. 28/2023 - CT dated 31st july, 2023.) by s. 157 of The Finance Act 2023 (No. 8 of 2023).
Questions to answer on the file
Questions a reviewer answers from the engagement file, grouped by the part of the section they come from. They describe what the section asks; they do not decide it.
Scope the section as a whole
Questions to answer on the file4 questions
The offence, the person and the Commissioner under sub-section (1) 138(1) opening words
Questions to answer on the file5 questions
The cases the first proviso excludes from the section 138(1) first proviso, clauses (a) to (f)
Questions to answer on the file6 questions
The compounding and proceedings instituted under any other law 138(1) second proviso
Questions to answer on the file2 questions
The payment the third proviso requires before compounding is allowed 138(1) third proviso
Questions to answer on the file3 questions
The compounding amount, its minimum and its maximum 138(1) closing words and 138(2)
Questions to answer on the file7 questions
Whether a further proceeding is one sub-section (3) bars 138(3) first limb
Questions to answer on the file3 questions
Whether criminal proceedings already initiated are ones sub-section (3) abates 138(3) second limb
Questions to answer on the file1 question
Amendment history
The CBIC text carries 6 footnotes. The table gives each in the source's own terms. Effective dates are as the footnotes state them.[1]
| Note | Change | Instrument | Effective from |
|---|---|---|---|
| Enforced the section | — | 1st July, 2017 | |
| 1 | Substituted clause (a) of the first proviso to sub-section (1). The source preserves the substituted words and not the words replaced. | s. 157 of The Finance Act 2023 (No. 8 of 2023)[2] | 1st October, 2023 |
| 2 | Omitted clause (b) of the first proviso to sub-section (1). The source preserves only the fact of the omission, shown as 2[]. | s. 157 of The Finance Act 2023 (No. 8 of 2023)[2] | 1st October, 2023 |
| 3 | Substituted clause (c) of the first proviso to sub-section (1). The source preserves the substituted words and not the words replaced. | s. 157 of The Finance Act 2023 (No. 8 of 2023)[2] | 1st October, 2023 |
| 4 | Omitted clause (e) of the first proviso to sub-section (1). The source preserves only the fact of the omission, shown as 4[]. | s. 157 of The Finance Act 2023 (No. 8 of 2023)[2] | 1st October, 2023 |
| 5 | Substituted, in sub-section (2), the figure the minimum may not fall below and the whole of the maximum limb: the bracket opens at "twenty-five" and closes at the end, so "subject to the minimum amount not being less than" is original and was not touched. The source preserves the substituted words, which are proportions of the tax involved, and not the words replaced. | s. 157 of The Finance Act 2023 (No. 8 of 2023)[2] | 1st October, 2023 |
Relationship with other provisions
| Provision | Connection | Words that tie them |
|---|---|---|
| Section 132 | 138(1) first proviso clause (a) requires Section 132 | 138(1) proviso (a) "offences specified in clauses (a) to (f), (h), (i) and (l) of sub-section (1) of section 132" |
Circulars and notifications
Circulars and notifications in the CBIC repository that cite this section, newest first, by number, date and subject. A listing here does not say what an instrument decides; read the instrument.
Circulars (1)
| Number | Date | Subject |
|---|---|---|
| Circular No. 157/13/2021-GST | 20 July 2021 | Clarification regarding extension of limitation under GST Law in terms of Hon'ble Supreme Court's Order dated 27.04.2021. |
Notifications (1)
| Number | Date | Subject |
|---|---|---|
| Notification No. 15/2017-Central Tax | 1 July 2017 | Amending CGST Rules notification 10/2017-CT dt 28.06.2017 |
Unsettled questions
The words of section 138 do not answer these questions. Where one decides a matter on the file, the answer depends on the position taken on it.
- Are proceedings under a State Goods and Services Tax Act, or under an Act other than a Goods and Services Tax Act, "proceedings... instituted under any other law" within the second proviso to section 138(1)? The proviso names no law and this Act defines the expression nowhere.
- What amount is "the tax involved" that sub-section (2) measures its minimum of twenty-five per cent. and its maximum of one hundred per cent. against? The sub-section names the amount and defines it nowhere, and section 132 treats the tax evaded, the input tax credit wrongly availed or utilised and the refund wrongly taken as three amounts of their own.
See also
- Section 132 of the CGST Act, 2017: punishment for certain offences
- Rule 162 of the CGST Rules, 2017: procedure for compounding of offences
References
- Central Board of Indirect Taxes and Customs. "Section 138. Compounding of offences". Central Goods and Services Tax Act, 2017, CBIC tax information portal, with amendment footnotes 1 to 6. Retrieved 17 September 2026.
- The Finance Act, 2023. Cited in CBIC footnotes 1, 2, 3, 4 and 5.
External links
- CGST Act, 2017, Section 138 on the CBIC tax information portal