In a major taxpayer facilitation initiative aimed at resolving long-pending legacy tax disputes, the Government of Haryana has issued a detailed set of Frequently Asked Questions (FAQs) clarifying various provisions of the Haryana One Time Settlement Scheme for the Recovery of Outstanding Dues, 2026 (OTS Scheme, 2026). The FAQs are intended to assist taxpayers in understanding the eligibility conditions, application procedures, waiver benefits, payment mechanisms, and settlement processes under the Scheme.
The OTS Scheme, 2026 provides an opportunity to taxpayers to settle their quantified outstanding dues pertaining to the period up to 30 June 2017 under specified pre-GST taxation laws. The Scheme covers liabilities arising under seven relevant enactments, namely the Haryana Value Added Tax Act, 2003; Central Sales Tax Act, 1956; Haryana Tax on Luxuries Act, 2007; Haryana Entertainment Duty Act, 1955; Haryana General Sales Tax Act, 1973; Haryana Local Area Development Tax Act, 2000; and the Haryana Tax on Entry of Goods into Local Areas Act, 2008.
The Government has clarified that any person or assessee, whether registered or unregistered, having quantified outstanding dues under the aforesaid Acts for the period up to 30 June 2017, may avail the benefits of the Scheme. However, the Scheme excludes persons against whom criminal proceedings have been initiated under the relevant Acts, cases involving erroneous refunds, and applicants whose applications under the earlier OTS Schemes of 2023 or 2025 remain pending without rejection.
A notable relief measure under the Scheme is the provision that where quantified outstanding tax dues do not exceed ₹1 lakh for a particular assessment year under a relevant Act, the entire outstanding amount, including interest and penalty, shall stand waived automatically, without requiring the assessee to submit an application under the Scheme for that assessment year.
The FAQs further clarify that taxpayers are not obligated to opt for settlement under all relevant Acts or for all assessment years. They may choose to settle dues selectively for any eligible assessment year under any of the relevant Acts. However, all quantified outstanding dues relating to a particular assessment year under the chosen Act must be included in the application.
To ensure transparency and ease of access, the Department has mandated that applications under the Scheme shall be submitted only through online mode by logging into the official portal of the Excise and Taxation Department, Haryana. Taxpayers are required to file Form OTS-1 along with proof of payment of the settlement amount or the first instalment, as applicable.
The Scheme introduces the concept of Declaration Linked Waiver (DLW), enabling taxpayers to claim additional relief where tax demands have arisen due to non-submission of statutory forms. The waiver is available in respect of specified documents, including VAT D-1, VAT D-2, Tax Invoice/C-4, C Forms, H Forms, F Forms, E-1 Forms and E-2 Forms, subject to verification of their genuineness by the jurisdictional authorities.
The Department has emphasized that all interest and penalties forming part of the quantified outstanding dues shall be fully waived under the Scheme. Additionally, taxpayers shall be entitled to standard waivers on the tax component in accordance with the slab-wise relief structure prescribed under the Scheme.
For most of the covered Acts, the Scheme provides progressive tax waivers ranging from 100 per cent to 35 per cent, depending upon the amount of quantified outstanding tax dues. Under the Haryana General Sales Tax Act, 1973, taxpayers are eligible for a 100 per cent waiver for dues up to ₹1 lakh and a 70 per cent waiver on dues exceeding ₹1 lakh.
The FAQs also provide flexibility in payment options, allowing taxpayers to discharge their settlement liabilities either through a lump sum payment or in three instalments. The first instalment is payable at the time of filing Form OTS-1, while the subsequent instalments are linked to the issuance of the provisional settlement order.
The Government has further clarified that taxpayers whose appeals are pending before appellate authorities, the High Court, or the Supreme Court are also eligible to avail the benefits of the Scheme, provided they withdraw such appeals unconditionally within the prescribed time frame and furnish proof of withdrawal before the jurisdictional authority.
The benefits of a final settlement order under the Scheme are substantial. Upon issuance of the final order, the applicant shall not be liable to pay any further tax, interest, or penalty for the matter and period covered by the settlement. Furthermore, the settled matters shall not be reopened under the relevant Acts, and no prosecution shall be initiated in respect of the liabilities so settled.
The FAQs reiterate that all payments under the Scheme must be made through cash mode only, and utilisation of Input Tax Credit for payment of settlement amounts shall not be permissible.
The Department has stated that the OTS Scheme, 2026 represents a significant opportunity for taxpayers to resolve legacy disputes, reduce litigation, and regularise outstanding liabilities under the erstwhile tax regime, thereby promoting voluntary compliance and improving the ease of doing business in the State.
Background: The Haryana One Time Settlement Scheme, 2026 has been introduced with the objective of providing taxpayers with a fair and transparent mechanism for resolution of long-standing tax disputes arising under the pre-GST taxation framework. By offering substantial waivers and simplified procedures, the Scheme seeks to reduce litigation, improve revenue realisation, and facilitate closure of legacy tax matters in a time-bound manner.
The Complete FAQs can be accessed at: https://haryanatax.gov.in/HEX/DownloadPDF?formName=/Notifications/OTS26FAQS.pdf
