Incentives to clear tax arrears can improve municipal finances: By waiving most accumulated interest, the government reduces the burden on taxpayers, encouraging them to settle dues that have otherwise remained unpaid. This can lead to improved short-term revenue for municipal bodies.

Targeted interest waivers balance revenue recovery and taxpayer relief: Offering partial interest payment as a condition ensures the government recovers some interest without pushing taxpayers into full financial burden, balancing fiscal needs and taxpayer affordability.

This scheme may set a precedent for other Indian states' local tax policies: As urban local bodies face revenue shortfalls, such waivers can become a model for improving tax collections while addressing taxpayer willingness and capacity to pay.