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Delhi govt may roll out one-time tax amnesty scheme to settle pre-GST disputes

Delhi govt may roll out one-time tax amnesty scheme to settle pre-GST disputes

Time of India08-07-2025
New Delhi: Delhi govt may soon roll out a one-time tax amnesty scheme to settle pre-GST disputes related to value-added tax (VAT), excise, and service tax. Sources said a proposal recommending the waiver of penalties and interest to expedite the recovery of the actual tax amount and reduce court cases is being prepared by the trade and taxes department, which is likely to be sent to the cabinet for its approval.
If approved, the scheme is expected to offer relief to traders and boost state revenue while easing the administrative burden of long-pending litigation.
According to officials, there are more than 3.5 lakh traders currently involved in tax-related litigation with the Delhi govt, and the total disputed tax amount is estimated to be over Rs 15,000 crore. Sources said the actual unrecovered value would be around Rs 5,500-6,000 crore, with the rest of the amount due from traders in the form of interest and penalties.
They added that these legacy cases date back to before the rollout of GST in July 2017.
"Several of these cases are currently stuck in courts, contributing to administrative delays and backlog. The proposed amnesty aims to reduce this legal burden by offering traders a clean slate," said a Delhi govt official. Sources said the trade and taxes department has shared the initial proposal with the finance department. The scheme will also have to be vetted by the planning and law departments before it is placed before the cabinet for its approval.
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The previous AAP govt also proposed to bring the tax amnesty scheme to provide relief to traders and recover the much-needed revenue that was stuck in litigation. The announcement was made by the then finance minister Manish Sisodia in the budget speech for the 2022-23 financial year, but the scheme never saw the light of day.
A senior Delhi govt official said the city's traders took up the matter every time their delegation met the chief minister to discuss issues related to tax, revenue, and the redevelopment of markets.
Sources said the recovery of tax revenue stuck for years will not only strengthen the financial position of Delhi govt, but will also save a large amount of money spent by the dispensation on a large number of tax-recovery cases against the traders in courts.
The GST and VAT are the biggest source of tax revenue earned by the Delhi govt. Of Rs one lakh crore budget presented by BJP-govt for the 2025-26 financial year, Delhi govt has estimated that Rs 68,700 crore will come from tax revenue, which includes Rs 49,000 crore from GST and VAT.
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