Relief for Small Traders: VAT dues up to ₹25,000 pending for over 10 years to be waived off

Raipur, July 12

In a major move to encourage ease of doing business for small traders in Chhattisgarh, the state government is set to waive off pending VAT dues of up to ₹25,000 in cases that are more than 10 years old. Simultaneously, multiple amendments to GST provisions will also be introduced under the broader agenda of improving the business climate.

In the cabinet meeting chaired by Chief Minister Shri Vishnu Deo Sai, the drafts of the Chhattisgarh Goods and Services Tax (Amendment) Bill 2025 and the Chhattisgarh Settlement of Outstanding Tax, Interest and Penalty (Amendment) Bill 2025 were approved. Both legislations will be tabled in the upcoming monsoon session of the State Assembly.

The move to write off old VAT dues is expected to benefit over 40,000 traders across the state and will help reduce litigation in more than 62,000 cases, significantly easing the compliance burden.

The approved GST amendment draft incorporates key changes aligned with the decisions taken in the 55th meeting of the GST Council. One of the significant provisions allows Input Service Distributors (ISDs) to distribute IGST received under RCM to their branch offices. This will address existing discrepancies in the GST Act and improve ease of business operations.

Another major relief proposed pertains to penalty-only cases, where no tax demand is involved. In such cases, the mandatory pre-deposit for filing an appeal before the appellate authority has been reduced from 20% to 10%, providing much-needed relief to the business community.

In an effort to bring uniformity, the provision related to ‘Time of Supply’ has been deleted with respect to taxability on vouchers, as there were conflicting views among various Advance Ruling Authorities on the matter. This amendment aims to bring clarity and consistency.

Further, based on the recommendations of the Group of Ministers constituted on capacity-based taxation and special composition levy, a trace and track mechanism has been introduced for demerit goods like tobacco products. This will ensure real-time monitoring of the entire supply chain — from production to final sale — enabling tighter compliance.

Additionally, a key amendment has been proposed to exclude SEZ warehousing transactions from the GST ambit. These involve goods kept in Special Economic Zone (SEZ) warehouses, which may be traded multiple times without any physical movement. The change is aimed at boosting trade activities in SEZs.