New Delhi: The Delhi government is preparing to introduce a one-time tax amnesty scheme aimed at settling pre-GST tax disputes and recovering long-pending dues from traders. The initiative, currently being drafted by the Department of Trade and Taxes, proposes waiving penalties and interest on disputed tax amounts to encourage faster recovery and reduce legal backlog.
If approved by the Cabinet, the scheme would cover legacy cases linked to VAT, excise, and service tax, many of which date back to before the rollout of the Goods and Services Tax (GST) in July 2017. Officials say the goal is to provide relief to over 3.5 lakh traders entangled in litigation and simultaneously boost state revenues.
“The intent is to ease the burden on the judicial system and allow traders to settle disputes without the weight of interest and penalty charges. This scheme could be a game changer,” a Delhi government official said.
Officials estimate that the total disputed tax involved exceeds Rs.15,000 crore. However, the actual principal tax yet to be recovered is believed to be between Rs.5,500 and Rs.6,000 crore, with the remaining amount attributed to interest and penalties.
The draft proposal has already been circulated to the Finance Department for initial review and will soon be examined by the Law and Planning Departments before being tabled in the Cabinet for final clearance. Once implemented, the scheme could bring significant fiscal relief and expedite the disposal of long-standing court cases.
This is not the first time such a proposal has been considered. In 2022–23, the previous Aam Aadmi Party government had announced a similar plan, which was included in then Finance Minister Manish Sisodia’s budget speech but never took off.
It was revealed that traders’ associations have persistently raised this issue in meetings with the Chief Minister, urging intervention to resolve tax-related disputes and facilitate market redevelopment.
With GST and VAT contributing significantly to Delhi’s projected Rs.68,700 crore tax revenue for 2025–26, the government sees the amnesty scheme as an opportunity to unlock much-needed funds and reduce the state’s
litigation expenses.