Haryana One Time Settlement Scheme, 2026: Golden Opportunity to Resolve Old VAT & Pre-GST Litigations and Major Relief for Pending VAT/CST Demands
The Haryana Government has approved the Haryana One Time Settlement (OTS) Scheme, 2026 to resolve long-pending disputes arising under various pre-GST laws, including VAT, CST, and related tax enactments. The scheme applies to outstanding dues under several Acts such as the Haryana VAT Act, Central Sales Tax Act, Haryana General Sales Tax Act, and other legacy tax laws. Effective from 1 June 2026 for a period of 120 days, the scheme offers substantial relief through waiver of interest and penalty, and in certain cases, relief in the principal tax component as well. Taxpayers may also get an opportunity to submit pending statutory forms or documents that previously resulted in higher tax demands. The scheme aims to reduce litigation, recover blocked revenue, and provide closure to businesses facing unresolved assessments, recovery proceedings, pending appeals, and growing interest liabilities from the pre-GST era. Businesses are advised to review eligibility and pending disputes promptly.
This scheme is a major relief for taxpayers and businesses struggling with legacy tax disputes, the Government of Haryana has approved the Haryana One Time Settlement (OTS) Scheme, 2026 for settlement of outstanding dues arising under various pre-GST laws.
For many businesses, old VAT, CST and related demands have continued for years due to pending appeals, statutory form issues, interest accumulation, penalty notices, and prolonged departmental litigation. This scheme now offers an opportunity to resolve such disputes with substantial waivers and bring long-pending matters to closure.
The move is expected to benefit thousands of taxpayers across Haryana while also helping the Government recover stuck revenue efficiently.
Applicability of Haryana OTS Scheme, 2026
The scheme covers outstanding dues under the following Acts:
- Haryana Value Added Tax Act, 2003
- Central Sales Tax Act, 1956
- Haryana General Sales Tax Act, 1973
- Haryana Local Area Development Tax Act, 2000
- Haryana Entertainment Duty Act, 1955
- Haryana Tax on Luxuries Act, 2007
- Haryana Passengers and Goods Tax Act, 1952
This means businesses having disputes relating to the pre-GST era can now evaluate the possibility of settlement under the scheme.
Effective Date & Validity
The Haryana OTS Scheme, 2026 shall be operational from:
Effective From: 1 June 2026
Validity: 120 Days
Since the scheme is available only for a limited period, businesses should start reviewing pending cases immediately rather than waiting for the last date.
Major Benefits Available Under the Scheme
One of the biggest attractions of the scheme is the substantial waiver provided to taxpayers.
Key Reliefs Include:
1. Waiver of Interest and Penalty
In many cases, taxpayers may get:
- 100% waiver of interest
- 100% waiver of penalty
This can significantly reduce the overall liability, especially in old disputed matters where interest and penalties have become much larger than the principal tax amount itself.
2. Relief in Tax Component
The scheme also provides substantial relief even in the principal tax amount in specified categories of disputes.
This makes settlement commercially viable for businesses that were otherwise unwilling to continue lengthy litigation.
3. Opportunity to Submit Pending Forms/Documents
Many assessments under VAT/CST laws resulted in heavy demands due to non-submission of prescribed forms. The scheme provides an opportunity to submit such pending forms/documents, subject to verification, which can further reduce outstanding liabilities.
Why This Scheme Is Important for Businesses
The transition from VAT to GST left behind thousands of unresolved assessments and litigations. In many cases:
- appeals are pending for years,
- recovery notices are still active,
- bank accounts remain under attachment,
- and interest liability continues to increase.
For businesses, continuing litigation often means:
- blockage of working capital,
- compliance burden,
- uncertainty in books of accounts,
- and regular departmental follow-up.
The Haryana OTS Scheme, 2026 provides a practical exit route from these long-standing disputes.
Practical Analysis – Who Should Immediately Review This Scheme?
Businesses should urgently evaluate the scheme if they have:
- pending VAT/CST assessments,
- old demand notices,
- recovery proceedings,
- pending appeals before appellate authorities,
- not submitted statutory forms,
- disputed interest and penalty demand,
- or dormant legacy tax matters.
Even businesses that have ignored old demands due to high litigation cost should revisit their cases now because the waiver structure may substantially reduce exposure.
Important Points Businesses Must Analyze Before Applying
Before opting for settlement, taxpayers should carefully review:
1. Eligibility under the Scheme
Whether the nature of demand/dispute qualifies for settlement.
2. Status of Appeals
Whether appeals are pending before any authority and whether withdrawal conditions apply.
3. Availability of Statutory Forms
Businesses should identify Forms or other declarations not submitted earlier that can reduce tax liability.
A Practical & Balanced Move by Haryana Government
The Haryana Government’s approach appears practical and business-friendly because:
Government Benefits
- Faster recovery of stuck revenue
- Reduction in old litigation backlog
- Administrative efficiency
Business Benefits
- Closure of legacy disputes
- Reduction in financial burden
- Peace of mind from old tax matters
- Better compliance position
Professional Suggestion
Businesses should avoid treating this scheme as merely another government notification. In many cases, unresolved VAT/CST disputes have remained unattended for years and continue to create hidden risks.
A timely review can help businesses:
- clean up old tax exposures,
- avoid future recovery complications,
- and improve financial clarity before expansion, funding, or restructuring activities.
Conclusion
The Haryana One Time Settlement Scheme, 2026 is a significant relief measure for businesses burdened with old pre-GST disputes. With substantial waiver benefits and a limited application window, taxpayers should proactively review their pending matters and evaluate the possibility of settlement.
*******
For many businesses, this may be the best opportunity to finally close legacy VAT/CST litigations and move forward with a clean slate.
Disclaimer: The above article is for educational and informational purposes only. Readers are advised to examine the official scheme notification and seek professional advice before taking any decision.
Author Bio
