Haryana One Time Settlement Scheme 2026 for Entry Tax Dues: A Practical Alternative to Litigation

Introduction

In our earlier article, “Haryana Entry Tax Notices 2025-26: HC Stay & Key Steps Before 17 July 2026,” we discussed the constitutional challenge pending before the Punjab and Haryana High Court against the revival of entry tax demands under the Haryana Tax on Entry of Goods into Local Areas Act, 2008 (LADT Act), and recommended that affected businesses join the batch of writ petitions led by M/s Merino Panel Products Limited vs. State of Haryana, CWP-3185 of 2025.

That view holds for businesses willing to litigate. But litigation is not for everyone. Some businesses would simply prefer certainty — to pay a reduced, known amount now and close the matter permanently, rather than wait for a constitutional question to be resolved over months or years.

For such businesses, the State of Haryana has notified the Haryana One Time Settlement Scheme for Recovery of Outstanding Dues, 2026 (“OTS Scheme 2026”), vide Notification No. 07/ST-1 dated 29 May 2026. This article explains the scheme specifically from the perspective of a business that does not wish to litigate at all, and wants to know: what will I actually pay, and what do I give up?

What the Scheme Covers

The scheme applies to quantified outstanding dues under seven Acts, including the LADT Act, 2008 and its predecessor, the Haryana Local Area Development Tax Act, 2000. It came into force on 1 June 2026 and is open for 120 days — that is, broadly until late September 2026.

The critical eligibility condition is that the outstanding dues must relate to a period up to 30 June 2017. This is a hard cutoff. If your entry tax demand relates to a period after that date, it falls outside this scheme entirely.

It is worth noting that since GST commenced on 1 July 2017 and the LADT Act was repealed with effect from that date, any entry tax demand for an assessment year described as “2017-18” would, by definition, relate only to the period 1 April 2017 to 30 June 2017 — since no entry tax liability could have accrued under this Act beyond that date. Such a demand therefore falls comfortably within the scheme’s cutoff in its entirety, with no apportionment required.

How Much Will You Actually Pay? The Waiver Structure

This is the part that matters most to a business deciding whether to settle. The scheme offers three kinds of relief:

1. Complete waiver of interest and penalty

Whatever interest or penalty has been charged on your outstanding dues is waived in full, with no conditions. If your assessment order shows interest or penalty, this alone could represent significant savings.

2. Declaration Linked Waiver (not relevant to most entry tax cases)

This waiver applies only where the tax demand arose from non-submission of statutory forms such as C-Forms or F-Forms under the CST or VAT framework. Most entry tax assessments under the LADT Act are based on gross turnover computations, not form-based shortfalls, so this waiver will typically not apply to a straightforward entry tax demand.

3. Standard waiver — the main relief for entry tax cases

This is a slab-based waiver applied progressively to your net tax demand. For all the relevant Acts other than the Haryana General Sales Tax Act, 1973 (which has its own separate, narrower table), the slabs are as follows:

The key word here is progressive. Each slab is taxed at its own rate, not the whole amount at the rate of the highest slab you fall into. So if your tax demand is Rs.5 lakh, the first Rs.1 lakh gets a 100% waiver and only the remaining Rs.4 lakh gets the 60% waiver — you do not lose the benefit of the lower slabs just because your total crosses into a higher one.

A worked example

Suppose a hypothetical dealer, M/s ABC Industries, has an entry tax demand of Rs.4,50,000 for a given assessment year, with no interest or penalty (as is common in many of the ex-parte LADT assessments currently being issued).

That is a reduction of roughly 69% on this particular demand. Now suppose the same dealer has similar demands across three consecutive assessment years, each independently assessed and each requiring a separate application under the scheme:

The exact percentage will vary depending on where your specific demand falls across the slabs, but for most entry tax demands in the range of a few lakhs per year — which is typical for mid-sized businesses under these LADT assessments — the effective relief tends to fall somewhere between 60% and 70% of the original tax demand.

Payment Terms

How you pay depends on the size of your settlement amount, not your original demand — and importantly, this is assessed separately for each assessment year, since a distinct application is required for each year under each relevant Act:

For most entry tax demands raised under the LADT revival — which, going by the assessment orders we have reviewed, tend to range from a few lakhs to a few tens of lakhs after deductions — the settlement amount for any single assessment year will often fall under Rs.5 lakh once the waiver is applied. In such cases, the entire settlement amount for that year must be paid upfront with the application itself. There is no instalment flexibility at this level. This holds true even where a business has multiple years of demand, since each year is settled through its own separate application — a business cannot pool several years together to cross the Rs.5 lakh threshold and access instalments. This is an important practical point: a business cannot apply and “wait and see” without committing the cash first.

What You Give Up: The Honest Trade-Off

This is the part every business considering this route should weigh carefully before applying.

1. No appeal against the settlement order

Once you settle, that is final. The scheme expressly bars any appeal against the settlement order before any appellate authority, the Haryana Tax Tribunal, the High Court, or the Supreme Court. There is no second chance to argue the matter differently later.

2. No refund of the amount paid, under any circumstances

If your application is later rejected for any reason — including failure to pay subsequent instalments on time, or failure to submit proof of appeal withdrawal within the stipulated period — the amount you have already paid is not refunded. It is simply adjusted against your existing liability, and the original proceedings continue as if you had never applied. This makes the decision to apply a serious commitment, not a low-risk trial.

3. If you are already litigating, you must withdraw — eventually

If you currently have an appeal or writ petition pending — including, notably, the very writ petition route we recommended in our earlier article — you can still apply for this scheme. The pending case is automatically kept in abeyance once you apply. However, you must withdraw it fully and unconditionally within 60 days of receiving the provisional settlement order, failing which your settlement application itself is treated as never made, and you still lose the money paid.

In other words, this scheme is not designed for businesses who want to keep both options open indefinitely. It allows you to apply while litigation is pending, but it forces a final choice within a defined window.

4. You are settling under a law that may itself be unconstitutional

This is worth saying plainly: the very Removal of Difficulties Order under which these entry tax demands have been raised is, as we discussed in our previous article, under serious constitutional challenge before the Punjab and Haryana High Court, which has already recorded a strong prima facie view against the State’s competence to revive this tax at all. If a business settles now and the High Court later strikes down the entire framework, the business that settled will have paid money — at a discount, but still paid — that businesses who litigated and won would not have had to pay at all. There is no provision in this scheme to reopen a settlement on the ground that the underlying law was later held invalid.

Who Should Consider This Scheme

This route makes practical sense for businesses that:

• Want certainty and finality rather than an uncertain, possibly lengthy constitutional litigation;
• Have the cash available to pay the settlement amount upfront, particularly where the amount for each assessment year is under Rs.5 lakh;
• Are not otherwise inclined to engage with High Court litigation, whether for cost, bandwidth, or risk-appetite reasons;
• Have outstanding dues that fall comfortably within the favourable lower slabs (the relief is most generous for demands under Rs.10 lakh, where the waiver is 60% or more); and
• Have demands relating to periods clearly before 30 June 2017, so there is no ambiguity on eligibility.

This route is less suited to businesses with very large entry tax demands (where the standard waiver tapers off significantly, and disappears entirely above Rs.60 crore), or businesses that believe strongly in the constitutional challenge and are prepared to wait for the outcome of the pending writ petitions.

Conclusion

The OTS Scheme 2026 offers a genuine, quantifiable, and relatively fast way to close out old entry tax exposure under the LADT Act at a substantial discount — often 60% to 70% of the assessed tax for small and mid-sized demands. For a business that simply wants the matter behind it and has no appetite for litigation, this is a real and reasonable option, not a token gesture.

But it is a final decision, not a provisional one. There is no refund if things go wrong, no second appeal, and no reopening if the underlying law is later struck down for everyone else. Businesses should review their specific assessment orders, confirm eligibility for the relevant years, and make an informed, considered decision — ideally with professional advice — before committing funds under the scheme.

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About the Author: Anshul Mittal is an advocate and working partner at RSA Legal Solutions, a boutique indirect tax and regulatory law firm based in Gurugram, Haryana. The firm specialises in GST, Customs, Foreign Trade Policy, BIS/QCO compliance, DGFT licences, and tax litigation, and has been advising clients on the Haryana entry tax issue, including evaluating both litigation and settlement options under the LADT Act.  For feedback on this article, contact: RSA Legal Solutions, Gurugram, Haryana | info@rsalegalsolutions.com

Disclaimer: This article is intended for general informational purposes only and does not constitute legal or tax advice. The figures and examples used, including the hypothetical dealer M/s ABC Industries, are entirely illustrative and do not relate to any actual taxpayer. Businesses should examine their own assessment orders and the full text of the Haryana One Time Settlement Scheme for Recovery of Outstanding Dues, 2026 (Notification No. 07/ST-1 dated 29.05.2026) before making any decision, and are encouraged to seek specific professional advice tailored to their facts. The author and RSA Legal Solutions do not accept liability for actions taken or not taken in reliance on this article without specific professional consultation.