The Delhi state government may soon introduce a one-time tax amnesty scheme to settle pre-GST disputes related to value-added tax (VAT), excise, and service tax.
The trade and taxes department has made a proposal recommending the exemption of penalties and interest to expedite the recovery of the actual tax amount and facilitate court cases that might be sent before the cabinet for its approval.
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The scheme, on approval, may propose relief before the traders and enhance the revenue of the state while facilitating the administrative burden of long-pending litigation.
As per the officials, at present, there are more than 3.5 lakh traders engaged in tax-pertinent litigation with the Delhi Government, and the total disputed tax amount is approximated to be more than Rs 15,000 crore.
Rs 5,500-6,000 crore is the approximated actual unrecovered value, with the rest of the amount due from traders in the form of interest and penalties. These legacy cases date back to before the introduction of GST in July 2017.
A Delhi government official mentioned, “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.” The initial proposal has been shared by the trade and taxes department with the finance department. The scheme must be evaluated under the planning and law departments before it is placed before the cabinet for its approval.
A tax amnesty scheme has been proposed by the former AAP government that has the objective of providing relief to the traders and unlocking revenue stuck in legal disputes. During the 2022–23 budget speech, Finance Minister Manish Sisodia announced the plan, though the scheme was never implemented.
The traders of the city took up the case every time their delegation met the chief minister to discuss issues of tax, revenue, and the redevelopment of markets, a senior Delhi government official mentioned.
The stuck tax revenue recovery shall strengthen the financial position of the Delhi government, as well as save money spent via the dispensation of a large number of tax recovery cases against the traders in the courts.
The biggest source of tax revenue for the Delhi government is GST and VAT. The Delhi government has estimated that Rs 68,700 crore will be collected via tax revenue, which comprises Rs 49,000 crore from GST and VAT, of the Rs 1 lakh crore budget proposed by BJP-govt for the 2025-26 fiscal year.
Source: Times of India
