Here’s good news for thousands of traders and small businesses in Delhi. The state government is all set to launch a Tax Amnesty Scheme, promising major relief for traders burdened with pending tax dues and long-running legal disputes.
The scheme, once approved, is expected to benefit more than 3.5 lakh traders, many of whom have faced penalties and interest on unpaid Value Added Tax (VAT), Excise, and Service Tax dues from before the Goods and Services Tax (GST) regime was implemented in 2017.
Let’s break down what this Tax Amnesty Scheme means, who qualifies, how much tax can actually be waived, and why it’s a win-win for both traders and the Delhi government.
Before the nationwide GST rollout in 2017, traders in Delhi were governed under the old VAT system. Over the years, disputes related to unpaid VAT, Excise, and Service Tax piled up, pushing nearly 3.5 lakh traders into long court battles. According to estimates, over ₹15,000 crore remains locked in these disputes — out of which about ₹5,500 to ₹6,000 crore is the actual principal tax amount. The rest is fines and accumulated interest.
The proposed Tax Amnesty Scheme aims to resolve these legacy cases in a fair and hassle-free manner — just like the water bill waiver scheme that Delhi once implemented successfully. Under this new plan:
Traders will be allowed to pay only the principal tax amount.
All interest and penalties will be waived off.
The government hopes this will end pending litigation and bring in long-awaited revenue.
The scheme primarily covers tax dues pending before July 1, 2017 — the date when GST replaced VAT, Excise, and Service Tax in India. This means traders with disputes linked to VAT, Entry Tax, and other local levies could benefit significantly.
An estimated 3.5 lakh traders could see their old dues settled by paying only the base tax — avoiding the burden of large interest amounts and heavy fines that have accrued over years.
According to initial projections:
The principal disputed tax is roughly ₹5,500 crore.
Penalties and interest could total nearly ₹9,500 crore, which may now be waived.
Traders could save a massive chunk — paying only the original dues.
There are discussions on whether a part of the principal tax can also be discounted further. However, Delhi’s finance department has not agreed to this yet. The final structure will depend on cabinet approvals and legal vetting.
Interestingly, the idea of a Tax Amnesty Scheme is not new. The previous Aam Aadmi Party (AAP) government had planned to launch it, but the plan did not progress. Now, the current BJP-led administration has revived the proposal. It will soon be presented to the Delhi Cabinet for final approval.
Once cleared, the proposal will require consent from the planning and law departments. While no fixed timeline has been announced yet, officials suggest that the scheme could be rolled out quickly to boost revenue collection and ease the burden on courts.
This scheme is not just good news for traders — it’s a strategic move for the Delhi government as well. Here’s why:
Settling these legacy disputes will unlock ₹5,500–6,000 crore of direct revenue for the government.
The state will save significant time and legal costs by clearing over 3.5 lakh cases stuck in various stages of litigation.
Delhi’s tax collections rely heavily on GST and VAT. For 2025–26, the government expects ₹68,700 crore from total tax revenue, out of which ₹49,000 crore will come from GST and VAT alone.
So, recovering old dues quickly will help bridge revenue gaps and fund public welfare projects.
Traders with pending disputes should keep a close watch for official notifications. Once the scheme is notified:
Eligible traders will likely need to register under the scheme.
They may have to submit proofs of pending cases and settle the principal tax amount within a specific window.
On-time compliance will ensure they get the full benefit of waived penalties and interest.
It’s a golden opportunity for traders who have been struggling with old dues and costly court cases to finally close the chapter.
Delhi’s proposed Tax Amnesty Scheme is a big win for both sides — traders get freedom from legacy tax burdens, and the government unlocks thousands of crores stuck in disputes for years.
Keep an eye on upcoming cabinet decisions and official announcements to ensure you don’t miss this one-time chance for relief!
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