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There are many similarities: Haroun takes a journey to a dream world where he needs to meet with one of the "heads" of the city (The Walrus in Haroun and The Wizard in Oz). There is a mechanical creature, Butt the Hoopoe, who emulates the Tin-Man in Oz and the Floating Gardner who mimics the Scarecrow from Oz.
In addition, many of the personalities Haroun sees in his "real" world are in Kahani as he goes on his heroic journey, very similar to to Dorothy from Oz.
Those are just a few.