Delhi cabinet may approve amnesty scheme for ₹85,000 crore unpaid VAT taxes
The scheme, currently under high-level discussion, will offer significant waivers on penalties and interest, encouraging over 300,000 traders across sectors operating in the Delhi to settle long-pending tax liabilities.
A senior official in the Delhi government's finance department said the Trade and Taxes Department has submitted a detailed proposal outlining a framework for full or partial waivers on penalties, interest, or both.
'More than 300,000 traders together owe about ₹85,000 crore. Through the amnesty scheme, the government aims to recover at least 50% of this amount. It will both boost tax revenue and ease the legal burden on the administration,' the official said.
Tax amnesty schemes are periodically rolled out by state governments to allow taxpayers to pay principal dues while availing relief on additional charges such as interest and penalties. Such schemes are notified under laws like the Delhi VAT Act and must receive Cabinet approval.
A second official confirmed that the amnesty framework — which defines eligibility, waiver slabs, deadlines, and conditions — is in its 'final stages', and will soon be presented to the Cabinet. However, officials were unable to provide a clear timeline on when the proposal would be tabled before the Cabinet.
The scheme is expected to offer waivers of up to 50% on total dues, with traders required to pay the remainder to settle their liabilities.
Most of the pending dues date back to before the implementation of Goods and Service Tax, or GST, in July 2017 and are tied up in prolonged litigation, draining departmental resources.
'The amnesty scheme will provide a fast-track resolution mechanism, and will help free up the department's time and energy to focus on current tax collections,' the official cited above said.
The proposal gained momentum after Delhi chief minister Rekha Gupta, while addressing traders at a Confederation of All India Traders (CAIT) event in May 2025, announced plans for a one-time tax amnesty as part of her government's broader effort to revitalise the city's business climate.
GST advocate Sushil Verma noted that such a scheme, implemented under the Delhi VAT Act, would bring welcome relief to thousands of traders.
'Thousands of old VAT cases are languishing in courts. Once the amnesty scheme is launched, traders can withdraw these cases and benefit from the relief offered. Similar schemes in other states have successfully increased revenue and reduced legal backlogs,' he said.
The amnesty initiative is part of Delhi's broader fiscal strategy to meet its ambitious ₹1 lakh crore budget target for FY 2025–26. Of this, ₹68,700 crore is expected from tax revenues—a 16% jump from the previous year. The rest will be raised through non-tax revenues, central grants, and loans.
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