The Haryana government has introduced a new initiative called the Haryana One Time Settlement Scheme for Recovery of Outstanding Dues, 2025, aimed at helping businesses and individuals clear their pending tax dues in a simplified way. Published in the Haryana Government Gazette on March 27, 2025, this scheme allows taxpayer to settle their outstanding taxes, interest, or penalties under various tax laws by paying a reduced amount without any interest and penalty. This article discusses the Haryana One Time Settlement Scheme, 2025.
1. Background and Objective
The Goods and Services Tax (GST), introduced on July 1, 2017, replaced several indirect taxes such as the Haryana Value Added Tax (VAT) Act, 2003, CST Act, Entry tax, etc. This left many businesses with unresolved tax disputes for indirect taxes applicable under the pre-GST regime, and which are often stuck in legal battles, creating problems for both businesses and the state’s court system.
Therefore, considering the success of the One Time Settlement Scheme, 2023, the Haryana Government has come up with a 2.0 version of the same with more benefits. The scheme aims to:
- Minimize Litigation: Streamline the resolution of tax disputes to reduce the burden on courts and tribunals.
- Ease Financial Burdens: Offer waivers on interest and penalties, along with a potential tax rebate, to provide relief to taxpayers.
- Boost State Revenue: Encourage prompt settlements to recover outstanding dues, contributing to Haryana’s economic growth.
- Promote Compliance: Foster a transparent and equitable taxation system by enabling businesses to clear past dues and start afresh.
2. Applicability of Haryana OTS Scheme?
The Haryana One Time Settlement Scheme, 2025, is a government program that helps people or businesses settle their unpaid taxes, interest, or penalties with respect to Taxes applicable prior to 1st July, 2017.
The OTS-2025 scheme is applicable to quantifiable tax demand outstanding under the following laws:
- The Haryana Value Added Tax Act, 2003
- The Central Sales Tax Act, 1956
- The Haryana Tax on Luxuries Act, 2007
- The Haryana Entertainment Duty Act, 1955
- The Haryana General Sales Tax Act, 1973
- The Haryana Local Area Development Tax Act, 2000
- The Haryana Tax on Entry of Goods into Local Areas Act, 2008
Under the OTS, 2025, the applicants can pay a reduced "settlement amount" instead of the full dues with a waiver of interest and penalty.
3. Who is eligible to apply under OTS, 2025?
Any person, whether registered or not, who has Quantified Outstanding Dues for the period up to 30.06.2017, can opt to avail the benefits of the OTS Scheme, 2025. It is pertinent to note that the quantified outstanding dues must be for the period up to 30.06.2017, but may have been decided at any time as on the date of filing the application, OTS-1.
Accordingly, the following taxpayers are allowed to opt for OTS, 2025:
- Taxpayer with Quantifiable outstanding Dues for the period up to 30.06.2017;
- The demand amount is ascertained up to the date of filing of an application under OTS, 2025;
- Taxpayers who have filed an appeal before the courts or tribunals (like the Haryana Tax Tribunal, Punjab and Haryana High Court, or Supreme Court) but intend to withdraw the same before applying to OTS, 2025.
4. Who is not eligible to opt for OTS, 2025?
The following applicants shall not be eligible to opt for the scheme:
- against whom criminal proceedings have been initiated under the relevant Acts;
- where the demand relates to erroneous refund(s) under the relevant Act.
- whose application under the OTS Scheme 2023 has not been rejected till the appointed day of this scheme.
Such applicants shall not be eligible to opt under this scheme only for that particular year under that relevant Act, wherein such proceedings are initiated.
5. Whether a taxpayer with an outstanding demand is bound to opt for OTS, 2025?
- No, a person may opt for the OTS Scheme under all the relevant Acts or any of the Relevant Acts.
- He has to opt for all the years under a relevant Act wherein he has the Quantified Outstanding Dues.
- The cumulative amount of the quantified outstanding dues is to be taken into account under the scheme.
6. Process of filing application under OTS, 2025
A taxpayer shall follow the following process of filing an application under Haryana OTS, 2025:
- Application Process
- Applicants must fill the application in Form OTS-1 online within 180 days from 1st April, 2025;
- The settled amount can be paid either at one go or in installments.
- Along with the application, A declaration must be submitted stating that all information provided is true. If any information is false or incomplete, the application can be rejected.
- The taxpayer is required to file a separate application under each Act.
- However, a single application is to be filed for all years under a relevant Act.
- Manner of Making Payment:
- The Applicant may opt to make payment of the settlement amount in a lump sum or in installments.
- Where the payment is made in a lump sum, the amount due as per OTS, 2025 shall be paid before filing of the application in Form OTS-1.
- However, where the payment is to be made in installments, the first instalment is to be made with the OTS-1 application, and the second instalment within 60 days from the issuance of the interim order in FORM OTS-4A.
- Processing :
- The local tax authority shall check the application for correctness within 45 days.
- If everything is in order, a final settlement order shall be issued in Form OTS-4. However, in case of any issue, a deficiency notice shall be issued in Form OTS-3, and the applicant is required to furnish the information within 15 days.
- If the applicant fails to fix issues or doesn’t withdraw appeals, the application shall be rejected in Form OTS-5, and legal proceedings may continue against the taxpayer.
7. Whether a person or assessee whose appeal is pending before the appellate authority under the relevant Act, High Court, or Supreme Court applies for the Scheme?
Ans: Yes. A person or assessee with a pending appeal can apply for the Scheme provided he is required to withdraw the appeal fully and unconditionally within 60 days from the date of issuance of the provisional order OTS-4A and submit the proof of such withdrawal of appeal before the jurisdictional authority.
8. Tax payment under OTS-2025
The Taxpayer is required to make the following payment for the settlement of dues under OTS-2025;
Outstanding Tax Demand
Waiver of Tax Amount
The settlement amount of the Tax dues as in the column
An interesting amount of payable under OTS, 2025
Penalty amount payable under OTS, 2025
Up to Rs. 10,00,000
1,00,000
40% of the Balance tax Amount
0%
0%
Above Rs. 10,00,000 to Rs. 10,00,00,000
0
50% of the Tax Amount
0%
0%
Above Rs. 10,00,00,000
0
100% of Tax Amount
0%
0%
9. Payment Options under OTS
To accommodate businesses of varying financial capacities, the OTS-2025 scheme offers flexible payment options:
- Lump Sum Payment: Applicants can pay the entire settlement amount in a single payment.
- Installment Payments: For larger dues, payments can be spread over installments as per Schedule II of the scheme. For example:
- Dues between *Rs 10 lakh and Rs 25 lakh* can be paid in two installments of 50% each.
- Dues above *Rs 25 lakh* can be paid in three installments: 40% in the first 90 days, 30% in the next 90 days, and 30% in the final 90 days.
- Payment Deadline: Payments must be completed within the 180-day operational period (by September 30, 2025). Failure to adhere to the payment schedule results in the withdrawal of the provisional settlement order.
10. Whether any payment made before the appointed day be adjusted under the Scheme?
No, any amount of tax, interest, or penalty, or any other sum paid by the applicant before the appointed day shall not be adjusted out of the settlement amount under this scheme, nor be refunded under the scheme
11. Comparison with OTS-2023 Scheme
The OTS-2025 scheme improves upon the OTS-2023 scheme in several ways:
- Simplified Structure: Unlike OTS-2023, which categorized dues into four groups (undisputed, disputed, assessed, and rate disparities) with varying payment percentages (30% to 100%), OTS-2025 uses a single, unified approach based on Schedule A, reducing complexity.
- Single Application: OTS-2025 requires only one application for all years under a relevant act, unlike OTS-2023’s requirement for separate applications per year.
- Additional Waiver: The Rs 1 lakh waiver for dues up to Rs 10 lakh is a new feature, making the scheme more attractive for small businesses.
Extended Timeline: OTS-2025 offers a 180-day window (April 1 to September 30, 2025), compared to OTS-2023’s 90-day period (January 1 to March 30, 2024).
