17283final Report VCF Raigarh With Summary

Final Report
Technical Assistance in Generating Revenue through Value Capture Financing Tools for Raigarh
FINAL REPORT
TECHNICAL ASSISTANCE IN GENERATING REVENUE
THORUGH VALUE CAPTURE FINANCING TOOLS FOR
RAIGARH
Client: State Urban Development Agency, Government of Chhattisgarh
Final Report
Table of Contents
TABLE OF CONTENTS ....................................................................................................................................... 2
LIST OF FIGURES .............................................................................................................................................. 6
LIST OF TABLES ............................................................................................................................................... 7
LIST OF ABBREVIATIONS .................................................................................................................................. 8
EXECUTIVE SUMMARY .................................................................................................................................... 10
1 BACKGROUND ....................................................................................................................................... 17
1.1 INTRODUCTION TO VALUE CAPTURE FINANCE ................................................................................................ 18

1.2 OBJECTIVE OF STUDY ............................................................................................................................... 20
1.3 SCOPE OF THE ASSIGNMENT ...................................................................................................................... 20
1.4 NEED OF VCF FOR RAIGARH ................................................................................................................ 21
2 VCF TOOLS ............................................................................................................................................ 23
2.1 STANDARD LAND BASED FISCAL TOOLS IN INDIA ................................................................................ 23

2.1.1 Land Value Tax ................................................................................................................................ 23
2.1.2 Development Charges (Impact Fee) ................................................................................................ 24
2.1.3 Betterment Levy .............................................................................................................................. 25
2.1.4 Vacant Land Tax.............................................................................................................................. 26
2.1.5 Fee for Changing Land Use ............................................................................................................. 26
2.1.6 Transfer of Development Rights (TDR) ............................................................................................ 27
2.1.7 Premium on Additional FSI/FAR ...................................................................................................... 28
2.1.8 Land Pooling System ....................................................................................................................... 28
2.1.9 Land Acquisition and Development ................................................................................................ 29
2.1.10 Tax Incremental Financing (TIF) ................................................................................................. 29
2.2 ADDITIONAL LAND BASED FISCAL TOOLS IN INDIA............................................................................... 32
2.2.1 Regularization of Unauthorized Development ................................................................................ 32
2.2.2 Property Development for Leasing ................................................................................................. 32
2.2.3 Charging Extra Stamp Duty ............................................................................................................. 32
2.2.4 Purchasable Development Control Regulations .............................................................................. 33
3 CITY PROFILE......................................................................................................................................... 35
3.1 ADMINISTRATIVE PROFILE ............................................................................................................... 35

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3.2 DEMOGRAPHIC PROFILE ............................................................................................................................ 35

3.3 CITY GROWTH ......................................................................................................................................... 38
3.4 ECONOMIC PROFILE ................................................................................................................................. 39
3.5 ASSESSED PROPERTIES............................................................................................................................. 41
3.6 DLC RATES .......................................................................................................................................... 42
3.7 AMRUT ................................................................................................................................................. 43
3.8 IMMOVABLE PROPERTIES UNDER RMC ................................................................................................... 45
4 EXISTING LAND BASED FISCAL TOOLS IN RAIGARH ............................................................................... 49
4.1 FINANCIAL POSITION OF RAIGARH MUNICIPAL CORPORATION ........................................................................... 49

4.2 LEGISLATIVE BACKING ............................................................................................................................... 54
4.2.1 The Chhattisgarh Municipal Corporation Act, 1956 ....................................................................... 54
4.2.2 The Chhattisgarh Municipal Corporation and Municipalities (Registration of Colonizer, Term and
Conditions) Rules, 2013. ............................................................................................................................... 56
4.2.3 Notification No. F 7-8/2011/18 Dated 5th January 2016 ............................................................... 57
4.2.4 The Chhattisgarh Nagar Tatha Gram Nivesh Adhiniyam, 1973 ...................................................... 59
4.2.5 The Chhattisgarh Nagar Tatha Gram Nivesh Niyam, 1975. ............................................................ 62
4.2.6 The Chhattisgarh Bhumi Vikas Rules, 1984 ..................................................................................... 63
4.2.7 The Chhattisgarh Land Revenue Code, 1959 .................................................................................. 66
4.2.8 Rules regarding Alteration of Assessment and Imposition of premium for the purpose of levy of
premium on Agricultural land ...................................................................................................................... 67
4.2.9 Chhattisgarh Griha Nirman Mandal Adhiniyam, 1972 ................................................................... 67
4.2.10 Chhattisgarh Anadhikrit Vikas Ka Niyamitikaran Adhiniyam, 2002. .......................................... 68
4.2.11 Chhattisgarh Anadhikrit Vikas Ka Niyamitikaran (Sanshodhan) Adhiniyam, 2003. ................... 68
4.2.12 The Chhattisgarh Anadhikrit Vikas Ka Niyamitikaran Niyam, 2002 ........................................... 69
4.2.13 Chhattisgarh Anadhikrlt Vikas Ka Niyamltikaran (Sanshodhan) Adhiniyam, 2016 .................... 70
4.3 VCF TOOLS IN PRACTICE IN CHHATTISGARH / RAIGARH ................................................................................... 71
4.3.1 Property tax .................................................................................................................................... 71
4.3.2 Building Permission Fee (Bhawan Anugya Shulk) ........................................................................... 75
4.3.3 Development Charges (Vikas Shulk)................................................................................................ 78
4.3.4 Regularisation Charges (Samjhota / Rajinama Shulk) .................................................................... 79
4.3.5 Property Development and Leasing ................................................................................................ 81
5 IDENTIFICATION OF APPLICABLE VCF TOOLS FOR RAIGARH .................................................................. 84
5.1 PROPERTY TAX........................................................................................................................................ 84

5.1.1 Revenue Potential from Property Tax/ Fee ..................................................................................... 84
5.1.2 Cost-Benefit Analysis....................................................................................................................... 87
5.2 REVENUE POTENTIAL FROM IMMOVABLE PROPERTIES UNDER RMC ...................................... 89
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5.3 BUILDING PERMISSION FEE ......................................................................................................................... 91
5.4 DEVELOPMENT CHARGES .......................................................................................................................... 93
5.5 PREMIUM ON RELAXTION OF RULES OR ADDITIONAL FSI/FAR .......................................................................... 96
5.5.1 Revenue Potential from Premium on relaxation of rules or additional FSI/FAR ............................. 97
5.6 STAKEHOLDER CONSULTATIONS ................................................................................................................. 98
6 IMPLEMENTATION FRAMEWORK .......................................................................................................... 100
6.1 IDENTIFICATION OF CLAUSES TO BE AMENDED ................................................................................ 100

6.1.1 Rationale for Change in Area Based Rates of Building Related Fee .............................................. 100
6.1.2 Power of Government to abolish, suspend or reduce the amount or rate of any tax under the
Chhattisgarh Municipalities Act, 1961. ...................................................................................................... 101
6.1.3 Rationale for change in Rates of Premium on diversion of land use under The Chhattisgarh Land
Revenue code, 1959 (Rules regarding Alteration of Assessment and Imposition of premium for the
purpose of levy of premium on Agricultural land) ..................................................................................... 102
6.1.4 Rationale for enacting Law/Rules for levy of Conversion charges on change of land use in urban
areas from residential to commercial / industrial use and for sub-division, and amalgamation of plots: 104
6.1.5 Rationale for change in Rates of Betterment Charges under the Chhattisgarh Griha Nirman
Mandal Adhiniyam, 1972 ........................................................................................................................... 107
6.1.6 Rationale for enacting new provisions for levy of Infrastructure development tax on big residential
properties/complexes and on non-residential properties. ......................................................................... 109
6.1.7 Rationale for levy of Infrastructure Development Charge as well as of Infrastructure
Augmentation Charge on change of land use/diversion of land use: ........................................................ 111
6.1.8 Rationale for making provision in law for charging Premium on Additional FAR/FSI: .................. 113
6.1.9 Rationale for levy of Certain Fee/Charges in Chhattisgarh levied by the State Government in
Rajasthan ................................................................................................................................................... 117
6.1.10 Rationale for levy of Land and Building Tax on the market value of lands and buildings in
Chhattisgarh as levied by the Municipal Corporations in Rajasthan. ........................................................ 120
6.2 PROPOSED AMENDMENTS ........................................................................................................................ 121
6.3 ACTS/SECTIONS/RULES/BYE-LAWS /NOTIFICATIONS TO BE AMENDED ............................................................... 122
6.3.1 Amendment of Section 187A of The Chhattisgarh Municipalities Act. 1961- ............................... 122
6.3.2 Amendment of Section 339B of the Chhattisgarh Municipalities Act. 1961 ................................. 122
6.3.3 Amendment of Rule 8 of The Chhattisgarh Municipal Corporation and Municipalities (Registration
of colonizer, term and conditions) Rules, 2013. ......................................................................................... 123
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6.3.4 Amendment of Rule 11 of The Chhattisgarh Municipal Corporation and Municipalities

(Registration of colonizer, term and conditions) Rules, 2013 .................................................................... 124
6.3.5 Amendment in section 349 of the Chhattisgarh Municipalities Act, 1961 .................................... 124
6.3.6 Amendment of Section 163-A of The Chhattisgarh Municipal Corporation Act, 1956. ................ 125
6.3.7 Amendment of Section 308-B of the Chhattisgarh Municipal Corporation Act, 1956. ................. 125
6.3.8 Amendment of Rule 12 of The Chhattisgarh Nagar Tatha Gram Nivesh, Niyam, 1975. ............... 125
6.3.9 Amendment of Section 59 of The Chhattisgarh Nagar Tatha Gram Nivesh Adhiniyam, 1973 ..... 126
6.3.10 Amendment of Rule 21(3) of The Chhattisgarh Bhumi Vikas Rule, 1984 ................................. 127
6.3.11 Amendment of Rule 95 of The Chhattisgarh Bhumi Vikas Rules, 1984 .................................... 130
6.3.12 Amendment of section 258 of The Chhattisgarh Land Revenue Code, 1959 regarding premium
on diversion of land use. ............................................................................................................................ 130
6.3.13 Amendment of Rule 14 of the Rules regarding Alteration of Assessment and Imposition of
premium for the purpose of levy of premium on Agricultural land............................................................ 131
6.3.14 Amendment of Section 51 of the Chhattisgarh Griha Nirman Mandal Adhiniyam, 1972 relating
to Betterment charges. .............................................................................................................................. 131
6.4 NEED FOR SEPARATE ACCOUNTING FOR DIVERSION CHARGES, CONVERSION CHARGES, BETTERMENT CHARGES AND
BETTERMENT LEVY: ............................................................................................................................................. 132
6.5 TIMELINE FOR IMPLEMENTATION ................................................................................................................ 133
6.5.1 Short term action (less than 1 year):............................................................................................. 133
6.5.2 Medium term action plan (1 to 3 years): ...................................................................................... 133
6.5.3 Long term actions (more than 3 years): ........................................................................................ 135
6.6 RECOMMENDATIONS: ............................................................................................................................. 135
6.7 CONTRACTUAL AGREEMENTS/ MOU ETC. (TO BE ADDRESSED DURING HANDHOLDING PHASE IN CONSULTATION WITH
STAKEHOLDERS) ................................................................................................................................................. 137
ANNEXURE A – DRAFT MOU FOR GENERATION AND COLLECTION OF COMBINED UTILITY BILL ..................... 139
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List of Figures
Figure 1 : Diagrammatic Presentation of the Concept of VCF .............................................................................. 19

Figure 2: Diagrammatic Presentation of the Concept of VCF ............................................................................... 20
Figure 3: Regional Setting Raigarh ....................................................................................................................... 36
Figure 4: Administrative Boundaries of Raigarh .................................................................................................... 37
Figure 5: Spatial Growth of Raigarh ...................................................................................................................... 38
Figure 6: Distribution of Workers in Raigarh ......................................................................................................... 40
Figure 7: YOY increased in number of Industries vis-a-vi increase in the employment ........................................ 40
Figure 8: DLC land Rate for Raigarh..................................................................................................................... 42
Figure 9: Sector-wise investment in Raigarh under AMRUT................................................................................. 44
Figure 10: Phase-wise Distribution of Funds under AMRUT for Raigarh .............................................................. 44
Figure 11: Source-wise Funding of AMRUT.......................................................................................................... 45
Figure 12: Revenue Income - Raigarh Municipal Corporation .............................................................................. 51
Figure 13: Tax Revenue Income - Raigarh Municipal Corporation ....................................................................... 52
Figure 14: Non-Tax Revenue Income - Raigarh Municipal Corporation................................................................ 52
Figure 15: Rental Income from Municipal Properties - Raigarh Municipal Corporation ......................................... 53
Figure 16: Revenue Expenditure - Raigarh Municipal Corporation ....................................................................... 54
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List of Tables
Table 2-1- Summary of Provision of Standard VCF Tools in various States in India ............................................ 30
Table 3-1: Ward-wise Distribution of Population in Raigarh .................................................................................. 39
Table 3-2: Ward-wise Distribution of Properties in Raigarh .................................................................................. 41
Table 3-3: Immovable Properties Owned By RMC ............................................................................................... 45
Table 4-1: Revenue Income Status at a Glance –Raigarh Municipal Corporation (in INR Lakhs) ........................ 50
Table 4-2: Expenditure Status at a Glance –Raigarh Municipal Corporation (in INR Lakhs) ................................ 53
Table 4-3: Property tax revenue (in Rs. lakhs) ...................................................................................................... 72
Table 4-4 : Annual letting value for land (Rs. per sqft) .......................................................................................... 72
Table 4-5: Zone wise annual letting value for (per sqft) for building on built up area ............................................ 72
Table 4-6: The property tax rate is defined as under (applicable since 30.03.2016)............................................. 73
Table 4-7: Revenue from building permission charges (In Rs. lakhs) ................................................................... 75
Table 4-8: Revenue from Renting of Municipal Properties (In Rs. lakhs).............................................................. 81
Table 5-1 : Annual Letting Value vis-à-vis Computation of Property Tax for various sizes of Commercial Properties
.............................................................................................................................................................................. 84
Table 5-2 :Annual Letting Value vis-à-vis Computation of Property Tax for various sizes of Residential Properties
.............................................................................................................................................................................. 85
Table 5-3: Property Tax amount as percentage of Land Values for Commercial properties ................................. 85
Table 5-4: Property Tax amount as percentage of Land Values for Residential properties .................................. 86
Table 5-5: Property Tax rate comparison – Raigarh & Korba ............................................................................... 87
Table 5-6: Cost – Benefit Analysis for Property Tax/ Fee ..................................................................................... 87
Table 5-7: Monthly Lease Rent viz-a-viz Prevailing Market Rent of Shops owned by RMC ................................. 89
Table 5-8: Potential Revenue from Shops under RMC ......................................................................................... 90
Table 5-9 : Cost – Benefit Analysis for Leasing of Immovable Properties of RMC ............................................... 91
Table 5-10: Building Permission Fee amount as percentage of Land Values ....................................................... 92
Table 5-11: Cost – Benefit Analysis for Building Permission Fee ......................................................................... 93
Table 5-12: Analysis of currently charged Development charges as a percentage of value of underlying asset .. 94
Table 5-13: Cost – Benefit Analysis for development charges .............................................................................. 95
Table 5-14: Cost – Benefit Analysis for purchasable FAR .................................................................................... 97
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List of Abbreviations
AMRUT Atal Mission for Rejuvenation and Urban Transformation

CAGR Compound Annual Growth Rate
CBUD Capacity Building for Urban Development
CIL Community Infrastructure Levy
CLU Change of Land Use
CSR Corporate Social Responsibility
EDC External Development Charges
FAR Floor Area Ratio
FSI Floor Space Index
GDP Gross Domestic Product
GHMC Greater Hyderabad Municipal Corporation
GIS Geographic Information System
GoI Government of India
GST Goods and Service Tax
HPEC High Powered Expert Committee
JnNURM Jawaharlal Nehru National Urban Renewal Mission
LBFT Land Based Fiscal Tools
Lpcd Litres per capita per day
MC Municipal Corporation
MMRDA Mumbai Metropolitan Region Development Authority
MoUD Ministry of Urban Development
NH National Highway
PPP Public Private Partnership
PSM Per square metre
RMC Raigarh Municipal Corporation
SADA Special Area Development Authority
SBA Swachh Bharat Abhiyan
SBM Swachh Bharat Mission
SH State Highway
TDR Transferable Development Rights
TIF Tax Increment Financing
UIBT Urban Infrastructure Benefit Tax
ULB Urban Local Body
VAT Value Added Tax
VCF Value Capture Financing
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EXECUTIVE SUMMARY
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EXECUTIVE SUMMARY
BACKGROUND
The total revenue and expenditure of Raigarh Municipal Corporation (RMC) for the FY 2015-16 was Rs. 26.24
crore and Rs. 26.04 crore respectively, while the revenue and expenditure figure for FY 2014-15 was Rs. 23.61
crore and Rs. 25.36 crore respectively. The Raigarh Municipal Corporation had registered negative income over
expenditure of (-) Rs. 1.74 crore in 2014-15 but in 2015-16 there is surplus of Rs. 0.20 crore.
Since 2015, infrastructure components such as water supply, sewerage and development of parks & green spaces
are being implemented under AMRUT in Raigarh with a budgetary provision of Rs. 161.20 crore out of which Rs.
32.24 crore are to be funded by the ULB. To keep up with the ever increasing financial pressure towards provision
and maintenance of urban infrastructure the ULB has to depend on either grants or look for avenues for alternate
sources of income. This necessitates development of Value Capture Financing Framework so that dependence of
ULB on grants can be reduced.
OBJECTIVE OF ASSIGNMENT
The key objective for this study is to conceptualize and develop a framework (including procedural, legal and
institutional aspects) to generate revenue through VCF tools for Raigarh, to effectively capture the additional land/
property value generated through public investments made as part of the implementation of the AMRUT Mission.
ACTIVITIES UNDERTAKEN
To achieve the above stated objective of the assignment, the following activities / tasks were undertaken in
accordance with the terms of reference:
• Plan work for the assignment
• Study of reports viz. Land Based Fiscal Tools and Practices for Generating Additional Financial Resources,
August 2013 supported under Capacity Building for Urban Development project (CBUD) - A partnership
program between Ministry of Urban Development, Government of India & The World Bank; Value Capture
Financing Policy Framework, Ministry of Urban Development, Government of India, February 2017 and material
published in various workshops and seminars.
Deliverable – Inception Report
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• Analysis of various VCF tools available and practices of the same within India and abroad.
• Collection of relevant data for Raigarh City.
• Assessment of land based fiscal tools in Chhattisgarh / Raigarh and their legislative backing
• Efficacy of existing land based fiscal tools
• Stakeholder consultations
• Identification of appropriate VCF tools for the State / ULB including their cost benefit analysis and development
of VCF framework.
• Short, medium and long term implementation plan
• Identification of clauses to be amended at State/ ULB level, rationale behind the same and suggested
amendments.
Deliverable – Draft Report 1
• Presentation of ULB officials
• Incorporation of changes suggested indicated by the ULB officials.
Deliverable – Draft Report 2
• Presentation of ULB officials
• Incorporation of changes suggested indicated by the ULB officials.
Deliverable – Final Report
IDENTIFICATION OF APPROPRIATE VCF TOOLS FOR RAIGARH
Property Tax
During 2016-17, Raigarh Municipal Corporation has raised a demand of Rs. 8.40 crore towards property tax. For
the purpose of property tax Raigarh Municipal Corporation area is divided into 4 zones. The property tax is charged
as a percentage of the annual letting value of the property. The letting values defined are constant across the 4
zones and hence fail to distinguish between high value and low value properties.
An analysis of property tax based on annual letting value vis-à-vis the land values based on Collector Rates reveals
that when the existing property tax on annual letting value for commercial properties is translated to land value,
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the properties with lowest land value of Rs. 6600 per sqm is paying property tax @ 0.15% of the land value whereas
the properties with highest land value of Rs. 54000 per sqm is paying property tax @ 0.03% of the land value.
Similarly, when the existing property tax on annual letting value for residential properties is translated to land value,
it is seen that the properties with lowest land value of Rs. 6600 per sqm is paying property tax @ 0.13% of the land
value whereas the properties with highest land value of Rs. 54000 per sqm is paying property tax @ 0.02% of the
land value.
The total number of properties (residential, commercial, and mixed-use properties) in Raigarh are around 30000.
If the smaller plots, say, smaller than 200 square meters estimated to be 6000 (@20%) are excluded, from the
levy of Land and Building Tax and estimate average size of the balance taxable plots numbering 24000 to be 200
square meters each and the average market price of land to be Rs. 15000/- per square meter (the minimum being
Rs.6600/- per square meter and going up to Rs.54000/- per square meter) an average plot of 200 square meters
would be values at Rs.30,00,000/- and the annual Land and Building Tax for each property @ 1% of the market
value would come to Rs 30000/-. Thus collection of Rs. 72 crores from the levy of Land and Building Tax from
24000 properties can be envisaged.
Recommendations:
• All the properties to be mapped and linked to GIS.
• Any new building to be added to the GIS data base before giving the completion certificate.
• Online system of demand and collection to be introduced.
• Concept of common bill for all utilities like water supply, electricity, property tax etc. may be introduced. Non-
payment or partial payment of utility bill may attract disconnection of electricity.
• An independent third party may be engaged for demand and collection of utility bill.
Time Lines:
• GIS Mapping of all properties – A Short Term Measure (0-1 year).
• Move from area-based method to value based method will need amendment in Act – A Short Term Measure
(0-1 year).
• Introduction of on-line system for demand and collection of property tax may be targeted in Medium Term (1-3
years).
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Rental Income from Immovable Properties

Rental income from municipal properties is through leasing of shops/properties owned by RMC. During FYs 2015-
16, RMC has collected Rs. 80.54 lakh as rental from municipal properties. The shops are auctioned at a minimum
reserved price which is sum of cost of land based on Collector Rate and cost of construction. The lessee also pays
a monthly rent for the lease period. It is observed that the charged monthly rent in most of the cases is as low as
one-tenth of the prevailing market rentals. The monthly rental is not enough even to offset the interest on the cost
of construction which the ULB has incurred. It is therefore suggested that monthly rentals should be rationalized
in-line with the prevailing market rentals. On the expiry of the lease period (to be kept at 3 to 5 years) the reserve
price should again be looked at for necessary corrections in comparison to the prevailing market prices. In the re-
auction, the out-going lessee may be provided with the first right of refusal on the lease amount offered during the
re-auction. This process will ensure bouyancy in the lease rents. Following this line of approach, the yearly revenue
of MC may increase from the current level of Rs. 0.80 crore per year to Rs. 7.0 – 8.0 crore per year.
Recommendations:
• Rationalization of lease rent of Municipal shops in line with the prevailing market rentals.
Time Lines:
• Revision in leasing method should be worked out based on prevailing market rents – A Medium Term Measure
(1-3 years).
• Introduction of on-line system for collection of lease rent may be targeted in Medium Term (1-3 years).
Building Permission Fee
The building permission fee in Raigarh is area based and does not take into account the market value (Collector
Rate) of the underlying asset, hence fails to capture value. An analysis of the Building Permission Fee reveals that
the Building Fee on low valued plots is 8 times higher than the plots which are high valued. Therefore, the area
based rates are iniquitous and results in loss of substantial revenue. It is therefore suggested to charge the Building
Fees based on the land value without increasing the total liability for the citizen who holds plots with lesser market
value. This can be done by applying the effective rate of Building Fee as a percent @ 0.3% of notified land rate
applicable to the lowest land rate (Rs. 6,600/- per sqm) to all land parcels. During the FY 2015-16, RMC collected
INR 82.92 lakh from building fee. If the Building Permission Fee is charged @ 0.3% of the notified Collector Rate,
the potential revenue can be enhanced by 4 to 5 times thereby resulting in potential revenue of about INR 250 lakh
to INR 300 lakh per annum from Building Fee.
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Recommendations:
• Rationalization of Building Permission Fee based on the Collector Rate of land.
Time Lines:
• Move from area-based method to value based method will need amendment in Act – A Medium Term Measure
(1-3 years).
• Introduction of on-line system for collection of building construction fee may be targeted in Medium Term (1-3
years).
Development Charges
The Development Charges in Raigarh are currently levied at INR 134 per sqm on plot area for all type of
developments / properties. The method of calculation of development charges does not take into account the
market value of the underlying asset, hence fails to capture value. The method also lacks buoyancy.
An analysis of Development Charges reveals that the development charges when translated to the land value
(Collector Rate) on low valued plots works out at around 2.0% of the land value (Collector Rate) and around 0.25%
of the land value for highest valued plots. Therefore, the prevailing area-based rates are iniquitous and results in
loss of substantial revenue. It is therefore suggested to levy the Development Charges based on the land value
without increasing the total liability for the citizen who holds plots with lesser market value. This can be done by
applying the effective rate of Development Charges @ 2.0% of notified land rate applicable at present to the lowest
land rate (Rs. 6,600/- per sqm) to all land parcels. If the development charge is levied @ 2.0% (the rate which
currently is levied on the land parcels with least value) of the land value, the current average rate of Rs. 134 per
sqft will increase to Rs. 200 per sqft to Rs. 300 per sqft (assuming that the average land price in the city is Rs.
10000 to Rs 15000 per sqft.). This will result in an increase in revenue of the ULB under this head by almost 50%
to 100%.
Recommendations:
• Rationalization of Development Charges based on the Collector Rate of land.
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Time Lines:
• Move from area-based method to value based method – A Short Term Measure (0-1 years).
• Introduction of on-line system for collection of development charges may be targeted in Medium Term (1-3
years).
Premium on Relaxation of Rules or Additional FSI/FAR
The instances of unauthorised construction are high in Raigarh. It represents the need for regulating and
institutionalizing value capture tool of charging a premium on additional FAR. The base FAR in Raigarh is 1.5. It is
suggested to provide for a sell-able FAR up to additional 0.25. There are approximately 30000 houses in Raigarh.
The total area under the houses @ 200 sqm per house works out at 6 million sqm. If 5% house owners go for
purchase-able FAR of 0.25, this would result in selling of 75000 sqm of area under additional FAR. The average
circle rate for plots in Raigarh works out at Rs. 10000 to Rs. 15000 per sqm and if the purchasable FAR is charged
at 50% of prevailing circle rate this would result in potential revenue of Rs. 37.50 crore to Rs. 56.25 crore.
Recommendations:
• Introduction of provision of sell-able FAR in the Act.
Time Lines:
• Require concurrence from State Legislative Assembly – A Medium Term Measure (1-3 years).
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CHAPTER 1 :
BACKGROUND
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1 BACKGROUND
Rapid urbanization in India has led to increased demand for providing state-of-art infrastructure in Urban Local
Bodies (ULBs) and the ULBs are continually looking for new sources of funds in order to meet the requirements of
creating and upgrading infrastructure. In view of the challenges faced by the ULBs in making investments towards
infrastructure, the Ministries and Departments of the Government of India have to make lumpy investments for
infrastructure development at various levels.
As part of the systematic efforts to improve the urban infrastructure Swachh Bharat Abhiyan (SBA) or Swachh
Bharat Mission (SBM) or Clean India Mission was launched in October 2014. SBM is a campaign that aims to
clean up the streets, roads and infrastructure of India's cities, smaller towns, and rural areas. National Heritage
City Development and Augmentation Yojana (HRIDAY) was launched in January 2015 with the aim of bringing
together urban planning, economic growth and heritage conservation in an inclusive manner to preserve the
heritage character of each Heritage City. The Smart Cities Mission launched in June 2015 is an urban renewal and
retrofitting program with a mission to develop 100 cities all over the country making them citizen friendly and
sustainable. Atal Mission for Rejuvenation and Urban Transformation (AMRUT) was also launched in June 2015
and aims to establish infrastructure that could ensure adequate robust sewage networks and water supply for
urban transformation.
Several reports such as India Infrastructure Report 2009, High Powered Expert Committee (HPEC) Report 2011
and Working Group for the Twelfth Five Year Plan (2012-2017) have identified the significance of Land Based
Fiscal Tools (LBFTs) in the management of India’s urbanization, thereby providing the necessary impetus for
concentrated efforts in this direction.
A report prepared by McKinsey has estimated that in order to keep infrastructure at pace with development and
requirements of the cities in India, an annual investment of Rs. 3,25,000 crore in urban infrastructure is required.
The High Powered Expert Committee (HPEC) Report 2011 projects urban infrastructure requirement to increase
from the current 0.75% of Gross Domestic Product (GDP) to 1.5% by 2031, i.e. Rs. 97,500 crore to Rs. 195,000
crore annually. However, at present the National Urban Missions are investing approximately Rs. 32,500 crore
annually, leading to an investment gap of Rs. 65,000 crore every year.
About Rupees One Lakh Crore investment on urban development under Smart Cities Mission (covering 100 cities)
and the Atal Mission for Rejuvenation and Urban Transformation (covering 500 cities) has already been approved
by the central government. The 99 cities selected so far in the Smart City Challenge competition have proposed
an investment of over Rs 2,01,979 crore impacting an urban population of over 9.95 crore. In the Smart City
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Challenge Proposals, apart from mission grants, cities have identified multiple other sources of revenue such as
Public Private Partnership (PPP), Convergence with other schemes of Government of India, Corporate Social
Responsibility (CSR), Market Borrowings, Own Sources, etc. to finance the identified infrastructure investments.
Hence, strengthening the fiscal position of the ULB is necessary.
The State Governments generally fixes the rate for services being provided by ULBs, even though these functions
are mandated to be performed by ULBs under the 74th Constitutional Amendment. Overall, this has led to
increased dependency on State Governments and reduction in efforts made by ULBs to mobilize resources. In
order to address this situation and make ULBs more independent, Value Capture Finance (VCF) aims to identify
other sources of revenue, with special emphasis on land.
Own sources of revenue in ULBs can be classified into three categories, (i) taxes levied by the ULB, (ii) user
charges levied for provision of civic services, and (iii) fees and fines levied for performance of regulatory and other
statutory functions. At present the main source of revenue for any ULB is property tax, which has issues related to
its narrow tax base, exemptions, etc.
Land is the most fundamental asset that is owned and managed by the ULBs and is a resource to generate
revenues. The ULBs in past have tried to capture the value of land. However, for various reasons the concentrated
efforts did not result into desired objectives. The ULB cannot depend endlessly either to Centre or the State to
provide them with the “Grant” for creation and up-keeping of the infrastructure. The ULBs should therefore look at
alternate sources of revenue – Land Based Fiscal Tools (LBFT) is one of them.
1.1 INTRODUCTION TO VALUE CAPTURE FINANCE
Value Capture as practiced widely in the world is based on the principle that private land and buildings benefit from
public investments in infrastructure and policy decisions of Governments. Value capture is a type of public
financing tool to realize some or all of the value that public infrastructure and/or policy decisions of government
generates for private landowners. It refers to recovery of a share of the increment in land/property value, because
of actions other than the land/property owner’s investments. Appropriate Value Capture Financing (VCF) tools can
be deployed to capture a part of the increment in value of land and buildings. These can be used to fund projects
being set up for the public by the Central/State Governments and ULBs. This generates a virtuous cycle in which
value is created, realized, captured, and recycled again for project investment (Refer Figure 1).
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Figure 1 : Diagrammatic Presentation of the Concept of VCF
Source: Knight Frank Research
Public regulations, policies and investments are the starting point for a VCF process, resulting in value creation.
Private owners start realizing the value created on account of implementation of such policies, investments and
regulations.
The concept of VCF dates back to 1976. In the Vancouver Action Plan of the United Nations, it was proclaimed
that “the unearned increment resulting from the rise in land values resulting from changes in use of land, from
public investments or decisions, or due to the general growth of the community must be subject to appropriate
recapture by public bodies”. The basic principle is that creation of infrastructure or facilities result in positive
externalities which drive up the value of the land privately held by communities. Although, the increase may not be
realized (in the short, medium or long term) by the owner1, there is a need to capture this incremental value. It is
important to note that the concept of value here is implicit in nature. Figure 2 depicts this concept of VCF.
1 The increased value will be realized only when the land is offered for sale or is redeveloped. This may happen for some
members of the community, but many may not embark upon selling / redeveloping their land in their lifetime.
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Net Increase in value after public investments and

externalities, thereof
Implicit value of land
Value without public investments

around the land
Time
Figure 2: Diagrammatic Presentation of the Concept of VCF
1.2 OBJECTIVE OF STUDY
The key objectives for this study is to conceptualize and develop a framework (including procedural, legal and
institutional aspects) to generate revenue through VCF tools for Raigarh, so as to effectively capture the additional
land/ property value generated through public investments made as part of the implementation of the AMRUT.
1.3 SCOPE OF THE ASSIGNMENT
The scope of the assignment covers:
1) Study of the MoUD report on land based fiscal tools and other reports.
2) Assessment of the existing VCF tools in the State and identification of areas where VCF can be applied in
following scenarios:
a) Coverage: Extending existing value capture tool from other parts of the State to the projects covered
under AMRUT.
b) Maximize Revenues: By changing existing rate structure in value capture tools of the State to enhance
revenues.
c) Scope: Compare with other States/Countries. Examine their relevance and appropriateness to the
State.
• Apply minimal changes to existing VCF methods leading to big increase in revenues;
• Identify new VCF tools leading to large revenue enhancement in the State in short term and long
term.
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• Provide any other suggestions for effective use of VCF Tools
3) For each of the selected methods technical assistance is to be provided to customize the VCF methods for
the State and its Urban Local Bodies (ULBs). This will include preparation of legal/executive orders,
amendments to regulations/rules, contract agreement etc. to enable quick roll-out of VCF methods.
4) For each of these suggested VCF tools, a Cost Benefit Analysis will be provided. The analysis would give
existing status, potential value, efficiency, equity, adequacy, manageability, legal feasibility, timelines (short,
medium, long) and general remarks
5) For each of these suggested VCF tools, draft contract agreements, draft government orders etc. for
implementing the proposed VCF tools will be developed.
6) For each of the suggested VCF tools, a standard contractual agreement/Memorandum of understanding will
be developed between the State, ULB and parastatals involved in order to have stability in revenue sharing
arrangements.
7) The Consulting Firm will also broadly study projects/modules/packages in the Smart City Proposals and
recommend most appropriate VCF method(s) for the project which may be incorporated in the Detailed
Project Reports and Financial Operation Plan of that project by the Smart City SPV.
8) For each of the suggested VCF tools, handholding support will be provided for implementation of the
interventions, and also support will be rendered in implementing changes in laws, government orders, bye
laws, etc.
1.4 NEED OF VCF FOR RAIGARH
The total revenue and expenditure of Raigarh Municipal Corporation (RMC) for the FY 2015-16 was Rs. 26.24
crore and Rs. 26.04 crore respectively, while the revenue and expenditure figure for FY 2014-15 was Rs. 23.61
crore and Rs. 25.36 crore respectively. The Raigarh Municipal Corporation had registered negative income over
expenditure of (-) Rs. 1.74 crore in 2014-15 but in 2015-16 there is surplus of Rs. 0.20 crore. Analysis of last two
financial years shows that the revenue and expenditure of Raigarh Municipal Corporation are just equal.
Since 2015, infrastructure components such as water supply, sewerage and development of parks & green spaces
are being implemented under AMRUT with a budgetary provision of Rs. 161.20 crore out of which Rs. 32.24 crore
are to be funded by the ULB. To keep up with the ever increasing financial pressure towards provision and
maintenance of urban infrastructure the ULB has to depend on either grants or look for avenues for alternate
sources of income. This necessitates development of Value Capture Financing Framework so that dependence of
ULB on grants can be reduced.
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CHAPTER 2 :
VALUE CAPTURE FINANCE TOOLS
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2 VCF TOOLS
Ministry of Housing & Urban Affairs, (formerly Ministry of Urban Development), Government of India under the
aegis of Capacity Building for Urban Development (CBUD) Project - A partnership program between Ministry of
Urban Development, Government of India & The World Bank released a Report on Land Based Fiscal Tools
(LBFTs) and Practices for Generating Additional Financial Resources in August 2013. The report examines the
LBFTs being used in different states in India and also in other countries. The report further proposes an LBFT that
could be devolved to ULBs to augment their revenue.
Government of India announced its first draft policy framework on VCF in July 2016, and revised policy framework
in June 2017. The VCF policy framework has been developed as an essential document to inform States and
Union Territories with concepts and key idea behind introducing VCF mechanisms at the local level to enhance
financial strength, and thereby provide better infrastructure. Two key points summarize the rationale for the VCF
policy for India – (1) direct sale of land to raise funds, which is prevalent in many urban areas in the country, has
been observed to be a less efficient way of value capture; (2) there are many value capture instruments in India
however, these are not applied comprehensively across ULBs and as a result, value realization potential is not
maximized.
2.1 STANDARD LAND BASED FISCAL TOOLS IN INDIA
Value capture is based on the principle that private land and buildings benefit from public investments in
infrastructure and policy decisions of governments. Appropriate VCF tools can be deployed to capture part of the
increment in value of land and buildings. In turn, these can be used to fund projects being set up for the public by
the central/state governments and ULBs. This generates a virtuous cycle in which value is created, realized and
captured, and used again for project investment. Various VCF instruments are practiced across the world. Some
of them are also in practice across different states of India.
Ministry of Housing & Urban Affairs, Government of India in their VCF Framework has identified the following
LBFTs tools:
2.1.1 Land Value Tax
Land Value Tax (LVT) is a tax whose amount is based on the value of property. A land value tax is a progressive
tax, in which the heaviest tax burden fall on the owners of valuable land. Land Value Tax is considered the most
ideal Value Capture tool which apart from capturing any value increment, helps stabilize property prices,
discourage speculative investments and it does not cause economic inefficiency, and also tends to
reduce inequality.
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In India, land value tax is levied by Tamil Nadu and Maharashtra. It is used for capturing value increment of the
land, other than agricultural land. In Tamil Nadu, the tax has a legal backing from the Tamil Nadu Urban Land Tax
Act, 1966. Under this Act all the urban lands were assessed to urban land tax, at a flat rate of 0.4 per cent on the
market value of each urban land. This market value of each urban land is determined, with reference to the sales
statistics of the land in and around the area where the urban land under reference is located. This Act provided for
the Valuation of each Urban Land for the purpose of Urban Land Tax.
Significant variations are observed over the rate structure provisions in different states. Some statutes stipulate
the maximum and/or minimum of the rates of the tax, as percentage of the annual rental. Where as in some other
cases no limit is indicated. Under the Bihar and Orrisa Municipalities Act, 1992, the maximum ceiling on the rates
of tax are fixed at 12.5 per cent of the annual rental value. The Himachal Pradesh Municipal Act, 1968 limits the
rate of general tax on buildings and land to 12.5 percent. The Karnataka Municipal Act, 1964, while fixing the
maximum ceilings on the rates of component taxes has also fixed the minimum limit on the rate of the aggregate
of all those taxes. In Karnataka the maximum limits for the tax on buildings and land is 10 percent. Under Kerala
Municipal Act, 1960, the minimum limits on general purposes tax is fixed at 5 per cent. The M.P. Municipal Act,
1961, fixed the maximum and minimum rates of general purpose tax at 12.5 and 5 percent of the annual value. In
the case of Haryana Municipal Act, 1973, where only a general tax on buildings and lands is allowed, the maximum
and minimum in respect of it are fixed respectively at 15 and 7.5 percent. Similar is the provision under Punjab
municipal Act, 1911.
Globally, land value tax is widely used in Denmark, Australia, and New Zealand. In New South Wales, the state
land tax exempts farmland and principal residences and there is a tax threshold. Determination of land value for
tax purposes is the responsibility of the Valuer-General. In Victoria, the land tax threshold is $250,000 on the total
value of all Victorian property owned by a person as at 31 December of each year, and taxed at a progressive rate.
In Tasmania the threshold is $25,000 and the audit date is 1 July every year. Properties with value between
$25,000 and $350,000 are taxed at 0.55% and over $350,000 they are taxed at 1.5%. Denmark, taxes the base
value of the land according to either (a) the total value of the property minus the value of improvements; or (b) the
value of the property last tax year, altered by a growth/decline percentage. Whichever of those two assessments
is lower results in the base land value. This base land value is taxed at between 1.6% and 3.4%.
2.1.2 Development Charges (Impact Fee)
Development Charges (Impact Fee) is imposed by a local government on a new or proposed development project
to pay for all or a portion of the costs of providing public services to the new development. Impact fees are
considered to be a charge on new development to help fund and pay for the construction or needed expansion of
offsite capital improvements. Development charges (Impact fee) are area based and link the development charge
to the market value of land by carrying out periodic revisions.
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States like Andhra Pradesh, Gujarat, Maharashtra, Tamil Nadu and Madhya Pradesh levy Impact Fee and collect
it upfront while granting development permissions. In Hyderabad, the Impact Fee is charged based on the width
of the road abutting the property and it varies from Rs. 200/- to Rs. 400 per sq ft on total built up area. It is legally
backed by Andhra Pradesh Urban Areas (Development) Act, 1975 and under Special Development Regulations.
Development charges are levied in Punjab, backed by Punjab Municipal Corporation Act, 1976
Impact fee was introduced in USA in the year 1970 and became increasingly popular by the 1980s. The rise of
impact fees in the USA may be attributed to shrinking federal funding to the states and local governments,
increasing suburbanization, difficulties faced by the government in meeting the demands for new services, and
reluctance of existing taxpayers to contribute to providing services to new development through property taxes.
The American Planning Association (1997) issued policy guidelines for the use of impact fees. The guidelines
expressly state that impact fees are levied to finance only the new infrastructure services related to the needs of
new development; they cannot be used to fund any infrastructure backlog or for the operation and maintenance of
infrastructure services.
2.1.3 Betterment Levy
Betterment levy is a one-time upfront charge on the land value gain because of public infrastructure investments.
It could be as a result of area or project based intervention. It is considered the most direct form of value capture.
Whereas development charges (impact fees) work from the cost side of budgets, betterment levies try to capture
part of the infrastructure investment already incurred by the government.
In India, the Mumbai Metropolitan Regional Development Authority (MMRDA) Act, 1974 provides for levying
betterment charges for specific projects. The Hyderabad Municipal Corporation Act, 1955 originally provided for
the levy of betterment charges to meet the costs of internal infrastructure and services in the case of development
projects. In the late nineties, the Government of Andhra Pradesh amended the Act to enhance the scope of such
levy to include external betterment. Uttar Pradesh has provision of imposing betterment levy in Uttar Pradesh
Urban Planning & Development Act, 1973. Ghaziabad is already imposing betterment levy on approvals along the
500m buffer of the metro line. Gujarat levies betterment fees under all town planning schemes. Bengaluru levies
betterment fees on properties registering under the Bruhat Bengaluru Mahanagara Palike (BBMP) region.
Internationally, the UK imposes betterment levy equal to 40% of the land value gain attributed to public
investments. In United States, the betterment levy or special assessment is a compulsory charge imposed by a
government on the owners of a selected group of properties to defray, in whole or in part, the cost of a specific
improvement or services that is presumed to be of general benefit to the public and of special benefit to the owners
of such properties. In Colombia this levy, called Contribución de Valorización (CV), has been collected since 1921.
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2.1.4 Vacant Land Tax
Vacant land tax is levied annually until the building is constructed on the plot. It is applicable on those landowners
who have not yet initiated construction on their lands. It is an area-based intervention. The objective to levy the tax
is to discourage owners to keep the land vacant in urban areas and to prevent hoarding.
The Greater Hyderabad Municipal Corporation (GHMC) under the Hyderabad Municipal Corporation Act, 1987
imposes an annual tax of 0.5% of the registration value of the land if not used exclusively for agriculture purpose
or is vacant without a building. In Tamil Nadu, vacant land tax is charged under provisions of Tamil Nadu District
Municipalities Act, 1920 and it varies from Rs. 0.20 to 0.60 per sq. ft. depending on the location of the plot. The
Karnataka Municipalities (Amendment) Ordinance, 2003, provides for tax on vacant land measuring not above one
thousand square meters, at not less than 0.1 per cent and not more than 0.2 per cent of taxable capital value of
land; tax on vacant land measuring above one thousand square meters but not above four thousand square meters
at not less than 0.025 per cent and not more than 0.05 of taxable capital value of land; and tax on vacant land
measuring above four thousand square meters at not less than 0.01 per cent and not more than 0.02 per cent of
taxable capital value of land. In Delhi the Vacant Land Tax on residential properties is charged at 7% to 12% of
the annual ratable value.
Internationally, Bolivia levies a surcharge of 2 percent on the ideal land that has access to public utilities and 1
percent on the ideal land that does not have access, above the basic rate of 0.4 percent of market value. In
Honduras, the basic property tax rate is 0.5 percent, but the vacant land is subject to a 1 percent rate.
2.1.5 Fee for Changing Land Use
Fees for changing land use is levied once by the Development Authority/Town & Country Planning Department at
the time of giving permission for change of land use. Development Control Regulations/ Building Bye-Laws
provides for procedure to obtain permission for change of land use. It as an area based intervention.
Almost all states in India have such provisions in their Town and Country Planning Acts e.g. in Punjab, Maharashtra
and Andhra Pradesh the change of land use is backed by Punjab Regional & Town Planning & Development Act,
1995; Maharashtra Regional Town Planning Act, 1966; and Andhra Pradesh Urban Area (Development) Act, 1975
respectively.
Internationally United Kingdom, France, Singapore, China and many other countries permit change of land use
against a charge/ fee by following a process.
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2.1.6 Transfer of Development Rights (TDR)
Transfer of Development Rights (TDR) is a process of making available certain amount of additional built up area
in lieu of the area relinquished or surrendered by the owner of the land, so that the owner can use the extra built
up area either for himself or transfer it to another in need of the extra built up area for an agreed sum of money. It
is an area/project-based intervention, and is levied one-time while taking permission for TDR. It is used for trading
development rights. TDR is granted only for prospective development and not for past developments. The essential
elements for success of TDR are (a) demand for bonus development in the receiving area; (b) receiving areas
customized for the community; (c) strict sending area development regulations; (d) few or no alternatives to TDRs
for achieving additional development; (e) market incentives; (f) ensuring use of TDRs; (g) TDRs banks; etc.
Maharashtra, Karnataka and Gujarat have enabling laws for using TDRs for developing open spaces, promoting
affordable housing, etc. Ahmedabad uses TDRs for preservation of heritage open spaces or cultural resources,
and is a way to compensate property owners for loss in revenue on their properties. In Mumbai, it is used for slum
rehabilitation schemes, where a minimum of 70% of eligible slum dwellers in a pocket have come together to form
a cooperative housing society for implementing the scheme. It is backed by the development control regulation
(DCR) norms of the area.
The concept of transferring development rights between properties was first introduced in New York City with the
passage of the first American Zoning Ordinance in 1916. In a rural/regional setting, the South Australian
Government introduced TDRs in the Mount Lofty Ranges near Adelaide in 1992. The scheme proposed to allow
the transfer of development rights from a water protection area where existing zoning did not allow additional
housing and land subdivision, to areas more appropriate for urban expansion and infrastructure provision. It was
abandoned and generally considered a failure. A key reason for the failure was that planning authorities did not
identify and resolve clear sending and receiving areas (Industry Commission 1998, Williams 2004). TDRs, and/or
instruments with similar features, have also been used in more urban settings to preserve heritage buildings in
Adelaide, Brisbane, Melbourne and Sydney. The owners of historic buildings can transfer unused development
rights from a heritage site to a development site, which can then be developed to greater intensity than would
otherwise be allowed. The owner of the heritage site then enters a binding agreement with the relevant planning
authority to preserve the heritage building. They also receive compensation for the loss of development rights that
can facilitate the refurbishment and rehabilitation of historic buildings. Additionally, TDRs have been introduced for
urban growth management objectives in Wellington Shire in New South Wales, and open space conservation on
the New South Wales central coast and south coast.
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2.1.7 Premium on Additional FSI/FAR
Premium on additional FSI/FAR is one-time charge levied to provide permission for using additional FSI/FAR
beyond permissible limits on any parcel of land. It is a project-based intervention. Often such developments are
justified by infrastructure augmentation resulting in higher carrying capacity of the neighborhood. Transit oriented
development policies often permit denser development along the augmented transport corridors. Such high density
development relaxations are supported by purchasable FARs
More and more States are coming with the policy of saleable FSI/FAR. It is widely used in Maharashtra, Karnataka,
Gujarat and Tamil Nadu to allow for additional development rights beyond the permissible limits in the state town
planning laws and regulations. Nagpur Municipal Corporation (NMC) has adopted a policy of increasing FSI/FAR
by 0.3 by paying premium to it. The premium will be charged at the rate of 60% of ready reckoner value for
residential constructions and at the rate of 90% for commercial constructions. Half of the premium collected by
NMC will go to the state government. This policy is only applicable for non-congested areas.
New Delhi, Nagpur, Pune, Ahmedabad, Faridabad are amongst some of the cities where Transit Oriented
Development Policies have been notified.
Internationally sale of additional FAR is an important value capture tool in Brazil and France. The French land-use
policy restricts landowner’s building right to a low baseline FAR and additional FAR has to be purchased.
2.1.8 Land Pooling System
Land pooling system is a form of land procurement where all land parcels in an area are pooled, converted into a
layout, infrastructure developed, and a share of the land, in proportion to original ownership, returned as
reconstituted parcels. It is an area-based intervention and is used one-time for planned development purposes.
The land owners contribute their land voluntarily and are made stakeholders in the process of the development.
In India, Gujarat and Haryana have used land assembly programmes, where the owners agree to exchange their
barren lands for infrastructure-serviced smaller plots. Gujarat has used these tools to guide the development of
Ahmedabad city and its surrounding infrastructure. Andhra Pradesh has used it to acquire land for Amravati, its
new capital city. In view of the challenges faced for land acquisition and development, more and more states in
India are coming up with the policy of Land Pooling. The usual ratio of land acquired to land returned in Gujarat is
40:60, with the landowner getting back 60% of land. The ratio in Amaravati is closer to 70:30, with the landowner
getting back only 30% of land. Delhi also introduced the land pooling policy in the year 2017.
Internationally, it is a common feature in Germany and Japan.
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2.1.9 Land Acquisition and Development
Land acquisition refers to the process by which the Union or a State Government acquires private land for the
purpose of development of infrastructure facilities or urbanization of the private land, and provides compensation
to the affected land owners and address their need for resettlement and rehabilitation. It is an area-based
intervention, and is used one-time for acquisition and developing the land.
Land acquisition in India is governed by the Right to Fair Compensation and Transparency in Land Acquisition,
Rehabilitation and Resettlement Act, 2013 (LARR) and which came into force from 1 January 2014. This Act
superseded the Land Acquisition Act of 1894. In view of the challenges faced in acquisition of land due to high
initial costs, resistance from the land owners, displacement of host community, etc., land acquisition has paved
way to land pooling mechanism.
2.1.10 Tax Incremental Financing (TIF)
In Tax Increment Financing (TIF), the incremental revenue from future increase in property tax or a surcharge on
existing property tax rate is ring-fenced for a defined period to finance new investments in the designated area. It
is a project-based intervention, and is levied annually for a fixed period of time.
In India, Hyderabad has used TIF for funding the development in 800 peripheral neighbourhoods under the purview
of Hyderabad Municipal Corporation Act, 1987.
Internationally, thousands of TIF districts currently operate nationwide in the U.S. With the exception of Arizona,
every state and the District of Columbia has enabled legislation for tax increment financing. Some states, such
as Illinois, have used TIF for decades, but others have only recently embraced TIF.
Summary of provision of Standard VCF Tools in various states in India is presented in Table 2.1.
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Table 2-1- Summary of Provision of Standard VCF Tools in various States in India
State Urban Land Conversion Betterment Development TDR Sellable FSI Vacant Land TP Scheme
Tax Charges Levy Charges/ Tax
Impact Fee
Andhra Pradesh √ √ √ √ Φ Φ √ √
Arunachal Φ √ √ √ Φ Φ Φ Φ
Assam √ √ √ Φ Φ Φ Φ Φ
Bihar Φ √ √ √ Φ Φ √ Φ
Chhattisgarh Φ Φ √ √ Φ Φ √ √
Goa √ √ √ √ Φ Φ Φ √
Gujarat √ √ √ √ √ √ Φ √
Haryana Φ √ √ √ Φ Φ Φ Φ
Himachal Φ Φ Φ √ Φ Φ √ Φ
Karnataka √ √ √ √ √ √ Φ √
Kerala Φ √ √ √ √ √ Φ √
Madhya Pradesh Φ Φ √ √ Φ Φ Φ √
Maharashtra √ √ √ √ √ √ √ √
Meghalaya Φ Φ √ Φ √ Φ √ Φ
Mizoram Φ √ √ √ √ Φ √ Φ
Nagaland Φ Φ √ √ Φ Φ Φ √
Orissa Φ Φ √ √ √ √ Φ √
Punjab Φ √ √ √ Φ √ Φ √
Rajasthan √ √ Φ √ √ √ √ √
Sikkim Φ Φ Φ √ Φ Φ Φ Φ
Tamil Nadu √ √ √ √ √ √ √ √
Tripura Φ √ Φ √ Φ Φ √ Φ
Uttar Pradesh Φ √ √ √ √ √ Φ Φ
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State Urban Land Conversion Betterment Development TDR Sellable FSI Vacant Land TP Scheme
Tax Charges Levy Charges/ Tax
Impact Fee
Uttarakhand Φ √ √ √ Φ Φ √ Φ
West Bengal √ √ Φ √ √ √ Φ Φ
√ Provision Exists: Φ No Clear Provision
Source: Value Capture Financing Policy Framework, Ministry of Urban Development, Government of India, February 2017
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2.2 ADDITIONAL LAND BASED FISCAL TOOLS IN INDIA
Apart from the tools mentioned in the previous section, ULBs have been using other methods to capture value
from the land. Some of them are:
2.2.1 Regularization of Unauthorized Development
Supply of affordable housing in Indian cities is a very big challenge and the resultant is upsurge of unauthorized
developments in all the ULBs. The ULBs / Development Authorities from time to time under socio-political
pressures have been regularizing these unauthorized developments making them integral part of the planning.
This result in manifold increase of land/property values which in most the cases is not captured and remains with
the private owners.
Many of the Indian States have legal backing in form of Acts for regularization of unauthorized development. Some
of the examples are: Gujarat Regularization of Unauthorized Development Act, 2011; Guidelines for regularization
of unauthorized development in Delhi, 2007 prepared by Ministry of Urban Development, Government of India;
The Regularization of Unauthorized Developments in the City of Ulhasnagar Act, 2006; The Chhattisgarh
Regularization of Unauthorized Development Act, 2002; Tamil Nadu Town and Country Planning Act,1971; etc.
2.2.2 Property Development for Leasing
Most of the Urban Local Bodies / Development Authorities in India hold some land bank. This land either have
government offices or residences for government employees or utilities/ facilities or are used for generating
revenues through leasing or out-right sale. The utilization of land however in all the cases is not optimum.
Traditionally, States/ULBs have relied on direct sale of lands to raise funds, which is a less efficient form of resource
mobilization, as compared to value capture. The State/ULB should shift their paradigm to property development
linked short-term leases on such properties, rather than out-right sale or perpetual lease to ensure that they keep
on harvesting the benefits of value capture on the land for which they have invested in creating the infrastructure.
2.2.3 Charging Extra Stamp Duty
Stamp duty is charged by the revenue department on all property transactions. A surcharge on stamp duty is often
utilized by the government to finance major infrastructure developments in a city. This is an effective value capture
tool as it is linked to market value of the property. Also the tool is used when a property owner exercises the sale
option of the property, thus realizing the gains on property price appreciation.
Government of Maharashtra has implemented a 1% surcharge on all property transactions within the Nagpur
Final Report
Municipal Corporation limits to fund Nagpur Metro Development. Money so collected are shared between Nagpur
Municipal Corporation and Nagpur Metro Development Authority, and are redeployed for infrastructure
augmentation in the city.
2.2.4 Purchasable Development Control Regulations
Enforcement of rigid building control regulations has traditionally been a weak link with ULBs. Building violations
are rampant across the country. The nature of these violations vary on criticality from lower scale involving balcony
/ terrace coverage, construction in set-backs, to highly critical ones involving encroachments. The less critical
construction violations are often regularized / compounded after collection of a fee. Such regularization is usually
allowed after the construction has been completed.
Often some development control regulations are considered relaxable, and hence are quite common. Such
development control deviations can also be made into purchasable development control relaxations. Since such
relaxations come with benefits to property owners, they can also be charged linked with the value increments
involved. Examples of some such chargeable relaxations include:
1. Relaxation on density norms, while maintaining the FSI. Such relaxations facilitate a developer to
construct smaller units resulting in greater efficiency of his product design.
2. Greater ground coverage for retail property developments. The resultant higher floor plate significantly
improves the value of retail development.
3. Balcony / terrace coverage, setback relaxations, and many other similar relaxations can also be made
chargeable
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CHAPTER 3 :
CITY PROFILE
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3 CITY PROFILE
3.1 ADMINISTRATIVE PROFILE
Raigarh District which falls under Bilaspur Division is divided into 9 tahsils viz. Udaipur (Dharamjaigarh), Lailunga,
Gharghoda, Tamnar, Raigarh, Pusour, Kharsia, Sarangarh and Baramkela. Raigarh the erstwhile princely estate
is located at 21.9°N 83.4°E and is spread across an area of 33.73 sq km (area within Municipal Corporation and
Out-Growths). It is bounded by Surguja and Jashpur districts in the north, State of Orissa in the east, Mahasamund
district in the south and Korba and Janjgir-Champa districts in the west. It is located at a distance of 250 km north-
east of Raipur, 166 km east of Bilaspur and 90 km south-east of Korba. In the year 2002, Raigarh was upgraded
as Municipal Corporation. Raigarh Development Plan 2021 guides the development for the entire planning area.
The city is well connected to the rest of country through road and rail. NH-200 (Kharsiya – Raigarh) and NH-216
(Raigarh – Sarangarh) provides the road based linkages to the city. Raigarh railway station lies on the Mumbai-
Howrah line of the South Eastern Railways. The nearest commercial airport is at Raipur however Raigarh has a
private airport owned by the Jindal Steel and Power Limited, located 10 km north-west of the city. The city is known
for its coal reserves and power generation for the state as well as the country. Raigarh is also a major producer of
steel and iron ore as well as the cultural and industrial capital of Chhattisgarh.
Figure 3 gives an illustration of Raigarh’s Regional Setting and the administrative boundaries of Planning area and
Municipal Corporation area are shown in Figure 4.
3.2 DEMOGRAPHIC PROFILE
The area under Raigarh (Municipal Corporation + Out-growth is divided in 48 wards with the total population of
1,66,460. The decadal growth rate during 2001 – 2011 has been 29.43%. The sex ratio within the city works out
to 951 which is much lower than the sex ratio of 991 in the Chhattisgarh State. The sex ratio in Raigarh city however
has improved significantly between 2001 and 2011. Child population (0-6 age group) in the municipal limits stood
at 18804 in 2011 constituting about 12% of the population. The total share of Schedule Caste (SC) and Schedule
Tribe (ST) population within RMC limits (including outgrowths) is 17 per cent and 9 per cent respectively. The city
has 32658 households and the average household size works out to 4.59. The gross population density works out
4448 persons per sq. km. The average literacy rate of 86.77 per cent within municipal limits is higher than the
literacy rate in the country (74.04%).
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Figure 3: Regional Setting Raigarh
Source: District Census Handbook
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Figure 4: Administrative Boundaries of Raigarh
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Final Report
3.3 CITY GROWTH
Raigarh, the erstwhile princely estate developed on the western bank of Kelo River. The growth of town till 1991
was limited to the area along the Bilaspur Road between Kelo River and Railway line connecting Raigarh to
Bilaspur. Post 1991, the Raigarh city started extending beyond the Bilaspur Railway line. During 2001 – 2011 the
city expanded southward and eastward along the road network. The spatial growth of Raigarh city during last two
decades is shown in Figure 5.
Figure 5: Spatial Growth of Raigarh

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Ward-wise population in Raigarh is presented in Table 3-1.
Table 3-1: Ward-wise Distribution of Population in Raigarh
Ward No. Population Ward No. Population

1 3005 25 3321
2 4225 26 3818
3 3015 27 2731
4 3968 28 3411
5 3381 29 3786
6 3685 30 3586
7 2920 31 3282
8 3456 32 2985
9 3171 33 2845
10 3060 34 4041
11 3479 35 4159
12 3491 36 3931
13 3045 37 4220
14 3011 38 3542
15 3833 39 3332
16 3200 40 3516
17 3113 41 3759
18 3246 42 3310
19 3414 43 4683
20 2972 44 4166
21 3673 45 3710
22 2995 46 2925
23 3487 47 3283
24 3349 48 3924
Total 1,66,460
Source: District Census Handbook
3.4 ECONOMIC PROFILE
The Work Force Participation Rate in Raigarh is 37.73%. Out of the total workforce of 49516, the Other Workers
(includes government servants; factory workers; those engaged in trade, commerce, business, transport, banking,
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Final Report
mining, construction, etc.) are about 96%. A sector-wise bifurcation of work-force as per Census 2011 is given
below:
Figure 6: Distribution of Workers in Raigarh
Source: Census of India
Raigarh is known for steel production, with presence of major players like Jindal Steel & Powers Ltd. As per report
prepared by MSME Development Institute, Raipur, Raigarh District is industrially developed. There were 35 large
scale industries and 8 Medium scale enterprises exist in the district up to year 2011. The MSME’s in Raigarh
District have grown from 611 in 1984-85 to 10304 in 2015-16. The growth trend in number and employees in
MSME for the period 2011 – 2016 is presented in graph below.
Figure 7: YOY increased in number of Industries vis-a-vi increase in the employment
Source: DIC Raigarh

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3.5 ASSESSED PROPERTIES
For the purpose of property taxation, Raigarh (Municipal Corporation + Out-growth) is divided into 48 wards. The
ward-wise distribution of residential, commercial and mixed use properties is given in Table 3-2.
Table 3-2: Ward-wise Distribution of Properties in Raigarh
Ward Residential Commercial Mixed Use Ward Residential Commercial Mixed Use
No. No.
1 569 12 8 25 838 7 9
2 658 1 10 26 629 1 20
3 542 - 6 27 250 2 40
4 859 30 26 28 668 - -
5 668 296 4 29 591 2 10
6 832 - - 30 551 3 26
7 575 - - 31 540 10 11
8 848 - - 32 543 17 8
9 688 - - 33 354 2 18
10 501 - 10 34 906 16 55
11 674 - - 35 549 26 16
12 100 163 79 36 684 19 12
13 145 75 131 37 961 17 14
14 457 15 30 38 528 7 15
15 470 67 114 39 502 19 14
16 465 18 23 40 831 21 14
17 100 159 205 41 806 21 10
18 266 5 - 42 590 4 4
19 231 111 188 43 722 23 25
20 486 65 15 44 320 0 18
21 819 33 18 45 481 56 0
22 589 1 20 46 697 12 13
23 603 54 14 47 603 8 9
24 688 31 11 48 707 13 15
TOTAL 27684 1442 1288
Source: Municipal Corporation Raigarh
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Final Report
3.6 DLC RATES
The fundamental characteristic of urban land markets is that land is more expensive at better locations. The
locational advantages are more often man-made, such as distance to employment centres, access to better urban
amenities etc. Analyses of Raigarh District Leasing Committee (DLC) land rate as well as market rates reveal that
it is having varied emphasis and focal points. Land price contour (refer Figure 8) reveal that peak values of Rs.
83500 per sqm in in Junabarr Para whereas land values in Laxmipur Chowk-Indira Chowk are only Rs. 6600 per
sqm.
Figure 8: DLC land Rate for Raigarh
Source: District Revenue Office, Raigarh

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3.7 AMRUT
Water Supply
The status of water supply as per Service Level Improvement Plan (SLIP) is as under:
Description Service Level
Coverage of water supply connections 38.4%
Per capita supply of water (in LPCD) 103.7
Extent of metering of water connections 0%
Extent of non-revenue water 21.30%
Quality of water supplied 86.9%
Cost recovery in water supply services 38.4%
Efficiency in collection of water supply related charges 40.2%
Source: SLIP Report
The existing water sources in surface water from Dam on Kelo river which is 10.5 km away from the city. In addition
underground water is sourced through 520 tube wells with power pump and 395 hand pump. Total capacity of
these sources is approximately 17.85 MLD.
Sewerage
The status of sewerage as per Service Level Improvement Plan (SLIP) is as under:
Description Service Level
Coverage of latrines (individual or community) 82.4%
Coverage of sewerage network services 0%
Efficiency of collection of sewerage 0%
Efficiency in Treatment: Adequacy of sewerage treatment capacity 0%
Source: SLIP Report
The city does not have a separate sewerage or drainage system for storm water. The city only has open drains to
carry the storm water. However, in some areas of the city these drains also carry sewage as sewage is discharged
in the drains in absence of a sewerage system. The carrying capacity of these drains have been adversely affected
due to siltation and physical damages with the time.
AMRUT Provisions
Raigarh is projected to witness a total investment of INR 161.20 crores under the AMRUT mission. This is 7.35
per cent of the total investment done in the state under Chhattisgarh AMRUT mission.
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In terms of sector, the maximum allotment has been done to water projects (approximately 92 per cent) as the
current coverage of the water supply is merely 38.4%, followed by sewerage and open space projects. Sector-
wise allotments of funds under AMRUT for a period of 2015-2020 are given below:
160 148
140
120
INR (In Crores)
100
80
60
40
20 10
3.2
0
Water Supply Sewerage and Septage Others (Green Spaces &
Management Parks)
Figure 9: Sector-wise investment in Raigarh under AMRUT
Source: State Annual Action Plan 2017-2020
The distribution of funds and investments in all the phases of the SAAP for Raigarh is presented in the figure
below. The maximum instalement for water supply is proposed in the third phase of SAAP FY 2017-20.
90
80
70
60
INR (In Crores)
50
40
30
20
10
0
FY 2015-16 FY 2016-17 FY 2017-20
Others 0.86 1.72 0.62
Sewerage 10 0 0
Water Supply 32.15 32.15 83.7
Figure 10: Phase-wise Distribution of Funds under AMRUT for Raigarh
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It may be noted that Raigarh has received 47 per cent of funds reserved for the city under AMRUT mission. A
break-up of source wise investment is given below:
100
80 ULB
INR (In Crores)
20%
60 42.16
40 Centre
25.3
50%
20 16.86
38.44 State
23.06 15.38 30%
0
Centre State ULB
FY 2015-17 FY 2017-20
Figure 11: Source-wise Funding of AMRUT
While centre and state do contribute in funding of the project, ULBs also have to bring in their own funds (20 per
cent in this case). The urban local bodies are struggling to source their share of funds. Value capture financing can
play a major role in helping ULBs with the required funds to implement the projects.
3.8 IMMOVABLE PROPERTIES UNDER RMC
There are 914 municipal properties owned by RMC which has been leased/ rented out. In addition, there are 330
properties that have been developed under Mukhyamatri Swalamban Yojna. The details are presented in Table 3-
3.
Table 3-3: Immovable Properties Owned By RMC
Ward No. Area No. of Shops

10 Kewdabadi 169
10 Chandni Chowk 10
10 Subhash Chandra Bose Complex 13
12 Lal Tanki 5
16 Ramilia Maidan 27
18 Shyam Towlkiz 31
18 Sadar Hatri 101
18 Sanjay Complex 103
19 Gandhi Ganj 36
21 Sanskrit Pathsala 9
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Final Report
Ward No. Area No. of Shops

21 Town Hall Hata Prangan 30
21 Ravishankar Market 22
21 Addward Hata 20
21 New Market 37
22 Chakrdharnagar Homyopathik 5
22 Kelo Chakrpath 7
29 Sahid Bhagat Sing Complex 22
29 Jel Parisar 100
46 Transport Nagar 123
1 and 29 Mini Stadium, Kotra Road 44
Total 914
Under Mukhyamatri Swalamban Yojna
1 Kotra Road 36
5 Rambhatha 6
6 Laxmipur 12
9 Riya Para 13
17 Mahila Samridhhl 22
24 Chakrdharnagar 1
24 ITI 49
29 Jel Parisar 133
29 Kelo Vihar 19
29 Collector Parisar 6
34 Dipapara 13
35 Kabir Chowk 20
- Total 330
As per details obtained from RMC, these shops have been leased on variable monthly rentals based on the area
of the shop and its location. The monthly rental is as low as Rs. 87 for a 228 sqft shop and is as high as Rs. 2268
for 525 sqft shop. These rents are increased by 10% to 30% after interval of every three years. Urban
Administration and Development Department, Government of Chhattisgarh have issued a notification (AF 5-
31/2015/18 dated 30th January, 2017) on revised guidelines for fixing the rentals of municipal shops. The purpose
of the notification is to streamline the rentals and improve the revenue base of ULBs. The salient point of notification
is as under:
1. The value of the shop is to be calculated by multiplying the Collector Rate with the area of the shop.
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Final Report
2. The annual rental of the shop shall be @ 2.40% of the value of the shop for Nagar Panchayats; @ 3.60%
of the value of the shop for Nagar Palika Parishad; @ 4.80% of the value of the shop for Municipal
Corporation having population up to 3 lakh; @ 6.00% of the value of the shop for Municipal Corporation
having population between 3 lakh to 5 lakh; and @ 7.20% of the value of the shop for Municipal Corporation
having population above 10 lakh.
3. The annual rent will be revised at an interval of 3 years @ 5% compounded on every revision.
4. The lease period will be 15 years and upon expiry of lease period the lease rent will increase by 25%.
This notification which is not yet enforced clearly reflects intention of State Government to make a shift from area
based system of rentals to value based system of rentals.
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Final Report
CHAPTER 4 :
EXISTING LAND BASED FISCAL TOOLS IN
RAIGARH
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Final Report
4 EXISTING LAND BASED FISCAL TOOLS IN RAIGARH
This chapter analyses various land based fiscal tools with specific reference to Raigarh so as to assess the tools
that can be put to use in the city so as to achieve sustainable revenue growth for the ULBs while also being fair
and equitable to the citizens and end users of property.
4.1 Financial Position of Raigarh Municipal Corporation
This chapter presents the financial position of Raigarh Municipal Corporation of, the existing land-based fiscal tools
(LBFTs) being used in Raigarh and the corresponding legal and regulatory framework for each tool. The objective
is to have an understanding of the rate structure, revenue collection, implementation framework, etc.
The following land based fiscal tools (Taxes, Fees and Charges) are levied by various ULBs in Chhattisgarh:
(i) A tax on lands and buildings called Property Tax
(ii) Water tax
(iii) Sanitary cess
(iv) Lighting tax
(v) Fire tax
(vi) Tax on entry of goods into municipal area
(vii) Conservancy tax
(viii) Drainage tax
(ix) Profession tax
(x) Tax on vehicles and animals
(xi) Toll of vehicles and animals
(xii) Fees on the registration of cattle sold within the city
(xiii) Market dues on goods exposed for sale on government or council land.
(xiv) Betterment tax on properties whose value may have improved as a result of town planning scheme
undertaken by the Council
(xv) A tax on pilgrims
(xvi) A tax on persons occupying, houses, buildings or lands
(xvii) Toll on new bridges constructed by Council
(xviii) A tax on advertisements other than advertisements published in newspapers
(xix) A tax on theatres, theatrical performances and other shows for public amusement
(xx) A terminal tax on goods
(xxi) User charges for services
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Final Report
(xxii) Compounding fees in respect of the area of unauthorized construction on the basis of the rate of sale of
land determined by the Collector of Stamps
(xxiii) Municipal license fees and Permissions fee
(xxiv) Development fee/sanction of building plans fees
(xxv) Additional stamp duty on transfer of immovable property under section 133A of Municipal Corporation Act,
1956.
(xxvi) Compounding fee for construction made without permission
(xxvii) Registration and renewal fee for colonizers
(xxviii) Development fee from colonizers
The details of year-wise municipal income under various income heads for FY 2014-15 and FY 2015-16 are given
in Table 4-1.
Table 4-1: Revenue Income Status at a Glance –Raigarh Municipal Corporation (in INR Lakhs)
Particulars 2014-15 2015-16

Tax Revenues 1,111.41 1,192.21
Property Tax 464.07 989.13
Advertisement Tax 23.55 19.74
Other Taxes 128.04 183.33
Octroi & Toll 427.83 -
Water Tax 2.87 -
Tax 65.04 -
Assigned Revenues & Compensation 318.15 598.43
Compensation in lieu of Taxes & Duties 318.15 427.83
Taxes & Duties collected by Others - 170.60
Rental Income from Municipal Properties 92.58 80.54
Rent from Civic Amenities 92.58 80.54
Fees and User Charges 492.45 605.53
Licensing Fees 123.44 4.73
Development Charges - 82.92
Penalties and Fines - 161.04
Other Fees 369.01 340.16
User Charges - 16.67
Sale & Hire Charges - 0.17
Sale of Others - 0.17
Interest Earned 169.43 73.97
Interest from Bank Accounts 169.43 73.97
Other Income 177.56 73.27
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Miscellaneous Income 177.56 73.27
Total Revenue 2,361.59 2,624.12
The revenue receipts of Raigarh Municipal Corporation have increased from INR 2,361.59 Lakh in 2014-15 to INR
2,624.12 Lakh in 2015-16, registering a growth rate of 11 per cent.
According to the financial documents, the share of tax revenue decreased from 47 percent of total revenue in
2014-15 to 45 percent in 2015-16. Meanwhile, Assigned Revenues & Compensation continue to form a major part
of the revenue. Rental Income from Municipal Properties shows a share of around 3 percent of the total revenue
receipts. Moreover it is observed that the interest income has decreased from 7 percent in FY 2014-15 to 3 percent
in FY 2015-16.
Assigned Compens Rental

Taxes &
Revenues ation in Income Fees and Developm Sale &
Tax Duties Interest Total
& lieu of from User ent Hire
Revenues collected Earned Revenue
Compens Taxes & Municipal Charges Charges Charges
by Others
ation Duties Properties
2014-15 1,111.41 318.15 318.15 - 92.58 492.45 - - 169.43 2,361.59
2015-16 1,192.21 598.43 427.83 170.60 80.54 605.53 82.92 0.17 73.97 2,624.12
Figure 12: Revenue Income - Raigarh Municipal Corporation
The tax revenue income consists primarily from Property Tax which is around 83 percent of the total tax revenue.
The property tax increased by 113 percent from 2014-15 to 2015-16.
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Final Report
Compensa Taxes &

Developm
Tax Property Advertise Other Octroi & tion in lieu Duties
Water Tax Tax ent
Revenues Tax ment Tax Taxes Toll of Taxes & collected
Charges
Duties by Others
2014-15 1,111.41 464.07 23.55 128.04 427.83 2.87 65.04 318.15 - -
2015-16 1,192.21 989.13 19.74 183.33 - - - 427.83 170.60 82.92
Figure 13: Tax Revenue Income - Raigarh Municipal Corporation
The non-tax revenue income consists of rental income, fees & user charges, interest earned, and other income.
The non-tax revenue is in decreasing trend from 2014-15 that is from 39.47 percent to 35.29 percent in 2015-16
of total income.
Rental Income from

Fees and User Charges Interest Earned Other Income
Municipal Properties
2014-15 92.58 492.45 169.43 177.56
2015-16 80.54 605.53 73.97 73.27
Figure 14: Non-Tax Revenue Income - Raigarh Municipal Corporation
One of the steady source of income is from letting out of properties by the Municipal Corporation. In FY 2014-15 it
was 3.92 percent whereas in FY 2015-16 it has come down to 3.07 percent of the total revenue income.
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Final Report
Rental Income from Municipal Properties Rent from Civic Amenities

2014-15 92.58 92.58
2015-16 80.54 80.54
Figure 15: Rental Income from Municipal Properties - Raigarh Municipal Corporation
Revenue Expenses Trends
The revenue expenditure of Raigarh Municipal Corporation has increased from INR 2,536.33 Lacs in 2014-15 to
INR 2,604.36 Lacs in 2015-16 registering an increase of 2.68 percent whereas the revenue receipts during the
same period increased to 11 percent. The establishment expense increased from 45 percent in 2014-15 to 48
percent in 2015-16 of the total expenses. On the other hand operation and maintenance expenses increased
marginally from 39 percent to 40 percent of the total expenses over the same period. An analysis of Revenue
Expenditure is presented in Table 4-2 below.
Table 4-2: Expenditure Status at a Glance –Raigarh Municipal Corporation (in INR Lakhs)

Establishment Expenses 1,144.16 1,238.22
Administrative Expenses 334.88 239.66
Operations & Maintenance 989.27 1,033.06
Program Expenses 34.74 36.57
Revenue Grants, Contribution and Subsidies 3.73 8.25
Miscellaneous Expenses 29.47 48.37
Interest & Finance Charges 0.09 0.24
Total Expenditure 2,536.33 2,604.36
Excess of Income over Expenditure (174.74) 19.76
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Final Report
Revenue
Interest &
Establishment Administrative Operations & Program Grants, Miscellaneous Total
Finance
Expenses Expenses Maintenance Expenses Contribution Expenses Expenditure
Charges
and Subsidies
2014-15 1,144.16 334.88 989.27 34.74 3.73 29.47 0.09 2,536.33
2015-16 1,238.22 239.66 1,033.06 36.57 8.25 48.37 0.24 2,604.36
Figure 16: Revenue Expenditure - Raigarh Municipal Corporation
The Municipal Corporation had registered negative income over expenditure in 2014-15 but in 2015-16 there is
surplus registered though just Rs. 20 lakh.
4.2 LEGISLATIVE BACKING
4.2.1 The Chhattisgarh Municipal Corporation Act, 1956
Section 132 - Taxes to be imposed under this Act (1) For the purpose of this Act, the Corporation shall,
subject to any general or special order which the state Government may make in this behalf, impose in the
whole or in any part of the Municipal area, the following taxes namely:
(a) a tax payable by the owners of buildings or lands situated within the city with reference to the
gross annual letting value of the buildings or land, called the property tax, subject to the provisions
of section 135, 136 and 138.
Section 133-A - Power to impose additional stamp duty on transfer of immovable property (1) The
duty imposed by the Indian Stamp Act, 1899 (II of 1899) on instruments of sale, gift and usufructuary
mortgage, respectively, of immovable property, shall in the case of instruments affecting immovable
property situated within the limits of any corporation and executed on or after the date on which the
provisions of this Act are made applicable to such limits be increased by one per centum on the value of
the property so situated, or in the case of an usufructuary mortgage on the amount secured by the
instrument, as set forth in the instrument.
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Final Report
Section 135 - Imposition of property Tax - Notwithstanding anything contained in this Act, the tax under
clause (a) of sub-section (1) of section 132 shall be charged, levied and paid, at the rate not less than six
percent and not more than twenty percent of the annual letting value, as may be determined by the
Corporation for each financial year.
Section 138 - Annual letting value of land or building - (1) Notwithstanding anything contained in this
Act or any other law for the time being in force, annual letting value of any building or land, whether revenue
paying or not, shall be determined as per the resolution of the Corporation adopted in this behalf on the
basis of per square meter of the built up area of a building or land, as the case may be, taking into
consideration the area in which the building or land is situate, its location, situation, purpose for which it is
used, its capacity for profitable user, quality of construction of the buildings and other relevant factors and
subject to such rules as may be made by the State Government in this behalf
Section 163-A - Creation of Infrastructure Development Fund -- 1. Notwithstanding anything contained

in this Act or any other Act for the time being in force, the State Government may create an Infrastructure
Development Fund with a view to assist the Municipal Corporation in developing the infrastructure. 2. The
sources of the infrastructure fund and the procedure and manner in which the amount from the fund shall
be provided to Municipal Corporation shall be such as may be prescribed.
Section 308-B. Relaxation in Compounding the unauthorized construction - (1) Notwithstanding

anything contained in Section 308-A or any other provisions of this Act or any other law for the time being
in force, the Commissioner may, on the application made in this behalf by order, compound the cases
involving deviations from the approved plan or map, or construction made without permission by collecting
compounding fee at such rate as may be determined by the State Government.
Section 366. Licenses and permissions - (1) Whenever it is prescribed by or under this Act that the
permission of the Commissioner is necessary for the doing of any act, such permission shall, unless it is
otherwise expressly provided, by in writing. Except when it is otherwise expressly provided in this Act or in
any rule or bye law made there under, a fee for every such license or written permission may be charged
at such rates as may be fixed by the Corporation and such fee shall be payable by the person to whom the
license is granted.
Section 415. Dispute between Corporation and Local Authorities - If any dispute arises between the
Corporation and any local authorities as regards anything done or to be done under this Act, it shall be
referred to the Government for decision and such decision may include an order as to the costs of any
enquiry ordered by the Government and shall be final.
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4.2.2 The Chhattisgarh Municipal Corporation and Municipalities (Registration of Colonizer, Term and
Conditions) Rules, 2013.
Rule 3: Registration of colonizer or builder - (1) Any person who intends to undertake development of colony
under section 292-A of Municipal Corporation Act,1956 shall apply in Form-one appended to the Rules.
The application shall be accompanied by Bank Guarantee as under-
a) Municipal Corporation having population of 3 lakh or more Rs.10 lakh
b) Municipal Corporation having population of less than 3 lakh Rs. 05 lakh
c) Municipal Councils Rs. 03 lakh
d) Nagar Palikas Rs. 01 lakh
Rule 4: Registration and renewal fees. - (1) The Registration and renewal fees shall be as follows-
S.No. Area Amount of
Registration fee Renewal fee
a Municipal Corporation having population of 3 lakh or more Rs.30000/- Rs.30000/-
b Municipal Corporation having population of less than 3 Rs.20000/- Rs.20000/-
lakh
c Municipal Councils Rs.10000/- Rs.10000/-
d Nagar Palikas Rs.5000/- Rs.5000/-
Rule 8: Application for the development of the colony and permission fee. - (1) When a colonizer
registered under Rule 3 wants to establish any colony and take up development work, he shall submit an
application to the competent authority together with the fee prescribed under rule 8(2) as under-
S.No. Area Fee for development of colony

a Municipal Corporation having population of 3 lakh or more Rs.50000/-per hectare
b Municipal Corporation having population of less than 3 Rs.25000//-per hectare
lakh
c Municipal Councils Rs.10000//-per hectare
d Nagar Palikas Rs.50000//-per hectare
Rule 11: Permission for development work. - Permission shall be granted after fulfilling the following
conditions-
(i) Out of plots/flats to be developed 15% of plots/10% of flats shall be reserved for transfer to the
competent authority for EWS.
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Final Report
(ii) Colonizer shall deposit 2% of the estimated cost of internal development cost of the colony as
supervision charge with the Municipality
(iii) Rupees 100//- per square metre for external development of the colony with the Municipality
(iv) The rate in (iii) relates to 2011 and will increase @5% per year thereafter.
Rule 15A - Regularization of unauthorized colonies that came into existence up to 31st December 2014.
(1) Notwithstanding anything contained in these rules, the unauthorized colonies that came into existence
up to 31st December 2014 on other than Government land shall be regularized subject to the conditions
given in Notification dated 5th January 2016.
4.2.3 Notification No. F 7-8/2011/18 Dated 5th January 2016
In exercise of the powers conferred by Section 292-A, 292-B, 292-C, 292-F and 292-I read with Section
433 of the Chhattisgarh Municipal Corporation Act, 1956 (No.23 of 1956) and Section 339-A, 339-B, 339-
C, 339-F and 339-I read with Section 355 and 356 of the Chhattisgarh Municipalities Act, 1961 (No.37 of
1961), the State Government, hereby, makes the following amendment in the Chhattisgarh Municipal
Corporation and Municipalities (Registration of Colonizer, Terms and Conditions) Rules, 2013, namely:
AMENDMENT in the said rules - 1. After rule 15, the following shall be added, namely, “15-A. Regularization
of Unauthorized colonies that came into existence up to 31st December 2014. (1) Notwithstanding anything
contained in these rules, the unauthorized colonies that came into existence up to 31st December 2014 on
other than government land shall be regularized subject to the following conditions:
(i) Such colony shall be deemed to be in the category of unauthorized colony which has been
constructed by the colonizer without obtaining the legal permission or no-objection certificate from
the department of Town and Country Planning, Urban land ceiling, Land Diversion, Nazul and
Municipality
(ii) Unauthorized colonies situated on Development Plan main roads, parks, playgrounds, areas of
cultural heritage, river, tank, area of drains, green belt or area of recreation shall not be regularized.
(iii) Only such unauthorized colonies shall be regularized where at least twenty-five percent houses have
been constructed and people are residing therein. Where only the plots are in existence, action for
regularization shall be taken in accordance with rule 15 of this rule.
(iv) Once the Competent Authority takes up the work of regularization of any colony in his hand it shall
be deemed that the diversion of land of that colony has been done and its use is in accordance with
the Master Plan of the City.
(v) The Competent Authority shall cause to be prepared the estimate and layout for the development
work, including the basic amenities of the unauthorized colonies for which the competent authority
shall organize a meeting and discuss with the inhabitants concerned and the colonizer, if available,
and after considering their suggestions, if any, finalize the estimate and layout. The amount of
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expenditure to be incurred for preparing the layout shall be fixed not exceeding ten per cent of the
development charges and the same shall be included in the development charges.
(vi) The amount of estimated expenditure on development works shall be recovered as development
charges from the owner/occupants of the house/plot of the colony concerned in proportion of the
area of house/ plot which is in their occupation. In the layout prepared by the competent authority
for the total area of the colony, if open land for public amenities as per law is not available then the
competent authority shall estimate the cost of such requisite open land and recover double amount
of such estimated cost from the Colonizer.
(vii) In case the development fees or the cost of requisite open land, as the case may be, is not deposited
by the occupants/colonizer of the house/ plot, such amount shall be recovered in accordance with
the provisions of the Act as arrears of land revenue.
(viii) The competent authority shall deposit the amount of development fees received from the occupiers
of houses/plots in a separate bank account. Similarly, the amount which is recovered as arrears of
land revenue shall also be deposited in the same account. The drawal from such account shall be
made only for the expenditure relating to the development works of the concerned colony with the
joint signature of the competent authority and the Collector or his subordinate officer authorized by
the Collector in this behalf. The sanction of the Development Works shall be given by the concerned
authorities of the municipality within their powers as vested in them.
(ix) In such unauthorized colony in which the houses have been constructed, the concerned urban body
shall, after compromise with the house owners, regularize such unauthorized construction of the
house. The building permission fee and the compounding charges shall be recovered from such
house owner according to law.
(x) In the unauthorized colony when any house or plot has been regularized then such house/plot shall
be deemed to have been exempted ipso facto from penal proceeding.
Section 349 - Fees for licenses and permissions

The Council may charge such fee as may be prescribed by bye-laws for--
(i) any license granted under this Act;
(ii) any permission granted under this Act, for making any temporary erection or for putting up any
projection or for the temporary occupation of any public street or any land or building belonging to
the Council; and
(iii) any application or appeal made to or filed before the Council under this Act and for giving copies, of
its orders or other documents.
(iv) The rate of the license and permission fees shall be revised once in every three years.
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4.2.4 The Chhattisgarh Nagar Tatha Gram Nivesh Adhiniyam, 1973
An Act to make provision for planning and development and use of land; to make better provision for the
preparation of Development Plans and Zoning Plans with a view to ensure Town Planning Schemes are
made in a proper manner and their execution is made effective; to constitute Town and Country Planning
Authority for proper implementation of Development Plan; to provide for the development and administration
of special areas through Special Area Development Authority; to make provision for the compulsory
acquisition of land required for the purpose of the Development Plans and for purposes connected with the
matters aforesaid.
Section 1. Short title, extent commencement and application - (1) This Act may be called the
Chhattisgarh Nagar Tatha Gram Nivesh Adhiniyam, 1973; (2) It extends to the whole of Chhattisgarh.
Section 3. Director and other officers - (1) The State Government shall appoint an officer to be the
Director of Town and Country Planning for the State. (2) The Director shall exercise such powers and
perform such duties as are conferred or imposed upon him by or under this Act.
Section 10. Restriction on use of land or development thereof - (1) Notwithstanding anything contained
in any other law for the time being in force, on or after the date of publication of the draft regional plan, no
person, authority, department of Government or any other person shall change the use of land for any
purpose other than agriculture, or carry out any development in respect of any land contrary to the
provisions of the draft plan, without the prior approval of the Director or an officer not below the rank of
Deputy Director authorised by the Director, in this behalf.
Section 13. Planning area - (1) The State Government may, by notification, constitute planning areas for
the purposes of this Act and define the limits thereof. (3) Notwithstanding anything contained in the
Chhattisgarh Municipal Corporation Act, 1956 (No. 23 of 1956), the Chhattisgarh Municipalities Act, 1961
(No. 37 of 1961) or the Chhattisgarh Panchayat Raj Adhiniyam, 1993 (No. 1 of 1994), the Municipal
Corporation, Municipal Council or the Nagar Panchayat or a Panchayat, as the case may be, shall, in
relation to the planning areas, from the date of the notification issued under sub-section (1), cease to
exercise the powers, perform the functions and discharge the duties which the State Government or the
Director is competent to exercise, perform and discharge under this Act.
Section 24. State Government to control development and use of land - (1) The overall control of
development and use of land in the State shall vest in the State Government. (2) Subject to the provisions
of sub-section (1) and the rules made under this Act, the overall control of development and use of land in
the planning area shall vest in the Director with effect from such date as the State Government may,
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by notification, appoint in this behalf. (3) The State Government may make rules to regulate the control of
development and use of land in planning area and non-planning area in the State and may, by notification,
apply the said rules to any planning area or non-planning area from such, date as may be specified therein
and where the rules are made applicable to a non-planning area, such notification shall define the limits of
the non-planning area, provided that different rules may be made for different classes of local authorities in
a planning area or non-planning area, as the case may be.
Section 24A. Construction of an additional floor in a residential building - Where under the provisions
of this Act or rules made thereunder or any other law enacted under entry 5 of the State List of the Seventh
Schedule to the Constitution of India for the time being in force, regulating the constructions of residential
building or any rules or regulations or bye-laws made thereunder it is permissible to construct less than
three floors then notwithstanding anything contained in the Act or the law or the rules or the regulations or
the bye-laws aforesaid it shall he permissible to construct an additional floor in such residential building
subject to sanction of a plan of such construction under the aforesaid Act or law, as the case may be.
Section 26. Prohibition of development without permission - After the coming into operation of the
development plan, no person shall change the use of any land or carry out any development of land without
the permission in writing of the Director.
Section 29. Application for permission for development by others - (1) Any person, not being the Union
Government, State Government, a local authority or a special authority constituted under this Act, intending
to carry out any development on any land, shall make an application in writing to the Director for permission,
in such form and containing such particulars and accompanied by such documents complying with the
provisions of Acts, rules and bye-laws relating to development, control of the natural hazard prone area as
may be prescribed. (2) Such application shall also be accompanied by such fee as may be prescribed.
Section 38. Establishment of Town and Country Development Authority - (1) The State Government
may, by notification, establish a Town and Country Development Authority by such name and tor such area
as may be specified in the notification. (2) The duty of implementing the proposal in the development plan,
preparing one or more town development schemes and acquisition and development of land for the purpose
of expansion or improvement of the area specified in the notification under sub-section (1) shall, subject to
the provision of this Act vest in the Town and Country Development Authority established for the said area.
Section 59. Development charges - (1) Where as a result of the implementation of town development
scheme, there is, in the opinion of the Town and Country Development Authority, as appreciation in the
market values of lands adjacent to and affected by a scheme the Town and Country Development Authority
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may, in lieu of providing for the acquisition of such land, levy development charges on owners of such land.
(2) The development charges shall be an amount equal to not less than one-fourth and not more than one-
third of the difference between the value of the land on the date of publication of the intention to prepare
the town development scheme and the date of completion of the scheme.
Section 60. Mode of levy of development charge - (1) On completion of the town development scheme,
the Town and Country Development Authority, shall, by a notice in such form and published in such manner
as may be prescribed, declare the fact of such completion and of its intention to levy development charges
in the area covered by the scheme, calling upon owners of land liable to pay development charges to submit
objection, if any, within such period which shall not be less than thirty days from the date of publication of
the notice, and to such authority as may be specified in the notice. (2) The authority specified in the notice
shall after giving the objectors an opportunity to be heard, forward the report to the Town and Country
Development Authority. (3) On receipt of the report under sub-section (2) the Town and Country
Development Authority shall pass such orders thereon as it may consider fit. (4) The Town and Country
Development Authority shall, not later than three months after the publication of a notice declaring its
intention to levy development charges, issue a notice in the prescribed form, assessing the charges due
from every' person affected by the levy' of the charges. (9) The Town and Country Development Authority
may, on an application made to it in that behalf, permit assesse to make payment of development charges
in annual instalments not exceeding five and fix a date by which each instalment shall be payable.
Section 61. Fund of Town and Country Development Authority - The Town and Country Development
Authority shall have its own fund and all receipts of that authority shall be credited thereto and all payments
by that authority shall be made there from.
Section 61A. Annual contribution to Town and Country Development Authority from the State
Government and local authority - (1) Every Town and Country Development Authority shall be entitled to
receive grant in aid from the State Government and the local authority at the rate specified in sub- section
(2). (2) The grant-in-aid shall be calculated @ Rs. 2000 for every 10,000 units of population up to the first
50,000; and @ Rs. 2000 for every 20,000 units of population above 50,000.
Section 64. Constitution of special areas - (1) If any area, town or township, is designated as a special
area in the regional plan, or if the State Government is otherwise satisfied that it is expedient in the public
interest that any area, town or township should be developed as a special area. It may, by notification,
designate the area as a special area, which shall be known by such name as may be specified therein.
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Section 65. Special Area Development Authority. - (1) Every special area shall have a Special Area
Development Authority.
Section 69. Powers of the Special Area Development Authority. - The Special Area Development
Authority shall (a) for the purpose of acquisition of land, exercise the powers and follow the procedure which
a Town and Country Development Authority have or follows under this Act; (b) for the purpose of planning,
exercise the powers which the Director has under this Act.
Section 73. Power of State Government to give directions - (1) In the discharge of their duties the
officers appointed under Section 3 and the authorities constituted under this Act shall be bound by such
directions on matters of policy as may be given to them by the State Government. (2) If any dispute arises
between the State Government and any authority, as to whether a question is or is not a question of policy,
the decision of the State Government shall be final.
Section 85. Powers to make rules. - (1) The State Government may, after previous publication, make
rules for carrying out the purposes of this Act. (2) In particular and without prejudice to the generality of the
foregoing power, such rules may provide for - (viii) (a) the form of application under Section 29 (1), the
particulars which such application shall contain and the documents which shall accompany such
application; (b) the fee which shall be accompanied with the application under Section 29 (2); (3) All rules
made under this Act shall be laid on the table of the Legislative Assembly.
4.2.5 The Chhattisgarh Nagar Tatha Gram Nivesh Niyam, 1975.
Rule 12. Form of application for permission for development of land by others –
(A) Any person not being the Union Government, State Government, or Local Authority, special authority
shall apply under the sub-section (1) of section 20 in Form VII for permission for development of land and
in Form VIII for development of land along with the schedule and specification sheet attached with the
application form. (B) Fees. – Every application submitted under sub-section (2) of section 29 shall be
accompanied by a fee specified below:
(i) For the development of land other than erection of a building Rs. 50 per acre or part thereof.
(ii) For building operation.
S.No. Area Rate of Fee for Rate of fee for

ground floor subsequent storey
i For a ground floor area up to 1200 sq. ft Rs.20/- Rs.15/-per storey
ii For a ground floor area of more than Rs.25/- Rs.20/-per storey
1200 sq. ft. but not exceeding 3000 sq. ft.
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iii For a ground floor area of more than Rs.50/- Rs.40/-per storey
3000 sq. ft. but not exceeding 6000 sq. ft.
iv For a ground floor area more than 6000 sq. Rs.75/- Rs.50/-per storey
ft. & above.
Note 1- For purposes of calculation of the fee ground area shall mean the area of the portion which is proposed to
be built upon excluding the internal court yard and portion.
Note 2- For purposes of rates prescribed above the basement where provided will be regarded as the first storey,
the ground floor over the basement as the second storey and so on.
4.2.6 The Chhattisgarh Bhumi Vikas Rules, 1984
Notification No. 2608-XXXII-i-86, dated 20-G1986. In exercise of the powers conferred by sub-section (3)
of Section 24 of the Chhattisgarh Nagar Tatha Gram Nivesh Adhiniyam, 1973, (No. 23 of 1973), the
State Government hereby appoints the date of publication of this notification in the Chhattisgarh Gazette
as the date on which the Chhattisgarh Bhumi Vikas Rules, 1984 shall apply in the non-planning areas.
Rule 2(29-a). "Premium Floor Area Ratio” means floor area in addition to determined floor area of
prescribed area rate and area of which shall be prescribed by the Government and maximum limits of which
shall not be more than 50% of permissible floor area ratio.
Rule16. Application for permission for development or for Building.
Rule 21. Fees - (1) Validity of Notice subject to payment of Fees-No notice as referred to in rule l6 shall be
deemed valid unless the person giving notice has paid the fees for the time being in force to the Authority
and an attested copy of the receipt of such payment is attached with the notice. (2) In case the authority
after processing the application of building permit, the building permission/development. (3) Scale of Fee.
-The scale of fee shall be as under: -
A For permission for development Fee
(i) For development of area up to I hectare Rs. 2500/-
(ii) For development of area exceeding I hectare but not exceeding 2.5 Rs. 5000/-
hectare
(iii) For development of area 'exceeding 2.5 hectare but not exceeding 5 Rs. 10000/-
hectares
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(iv) For development of area exceeding 5 hectares for every hectare or part additional fee at Rs.
thereof 2500/-
B. For permission for building other than high rise buildings

S.No. Type of construction Built up area Fees chargeable in
Sq. meter Sq. meter Rupees
1 A building intended to be exclusively for 0 75 500
residence 76 125 875
126 200 1500
201 300 2250
301 400 3000
401 600 5000
601 750 6250
751 1000 8750
1000 1250 12500
1250 1500 I7500
1500 2000 25000
2001 2500 37500
2500 Above 37500 and l5 per
square meter for
additional fees
2 A building intended to be used as shop, Fee specified in item no. 1 together with an additional
store house, factory or for carrying or charge of 50% of such amount of fees, except that for a
trade or business or any other built-up area above 2500 square meter the fees chargeable
commercial or industrial purpose. shall be Rs. 15/- per square meters for additional fees.
3 A building intended to be used as Fees as prescribed in item no. 1
administrative block in a factory.
4 A building intended to be used for shop- Fees specified in item no. 1 together with an additional
cum-residence purposes. charge of 50% such amount of fees.
5 A building intended to be used as Up to 800 seating capacity @ Rs. 15,000/-;
cinema theatre. Above 800 seating capacity @ Rs. 25,000/-
6 A building intended to be used for any 50% of fees specified in item No. 4
social charitable culture, educational
purposes, Dharmshala and similar
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Sq. meter Sq. meter Rupees
types of building and for any other
purpose not specifically provided for.
7 Addition or alteration with built up area Rs. 100/- in each case of building mentioned in item 1, 3
or external addition or alteration which and 6 Rs. 500/- in each case of building mentioned in item
does not add to the built-up area such No. 2. 4 and 5.
as Court yard compound N-4 wall,
alteration in elevation or roofing such
tiles to A.C. Sheet or flat surface,
additional opening or closing not
covered by proviso to sub-rule (l) of
Rule 14.
8 ln case of addition alteration in the Up to 5% Nil. above 5% to 10% - Rs. 125/-. Above I0% fresh
proposed plan. application according to the rule shall be necessary
9 Revaluation of the building permission l0% of the amount of fees charged originally in respect of
the building
S.No. C. For permission for high-rise building

Type of construction Fees chargeable in Rupees
1 A building intended to be exclusively for residence. Rs. 25/- per square meter floor area
space.
2 A building intended to be used as shop, store , house, Fees prescribed in item no. 1 with
factory or for carrying on trade or business or any other additional charges of 100% of amount of
commercial or industrial purpose. fees.
3 A building intended to be used as administrative block in Fees as prescribed in item no. 1
a factory.
4 A building intended to be used for shop cum- residence Fees specified in item no. 1 together with
purposes. additional charges of 50% of such amount
of fees.
5 A building intended to be used for any special, charitable, 50% of fees specified for item no. 1
cultural, educational purposes, including hospital,
school, club, Dharmshala and similar types of building
and for any other purpose not specifically provided for.
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S.No. D. Fees for the permission of development of Integrated Township

Name of Planning / Special Area Fees
1 Raipur, Naya Raipur Rs. 200 per sq. rneter
2 Bilaspur, Korba, Bhilai Rs. 150 per sq. meter
3 Other Planning & Special Area Rs. 100 per sq. Meter
E. In addition to above Re. 1/- per square meter as Environment fee for the development of sub-town shall
have to be paid.
Rule 95. Power of relaxation - The Director of Town and Country Planning, Government of Chhattisgarh
may permit special relaxation to any of the rules, provided the relaxation sought does not violate the health
safety, fire safety. structural safety, public safety of the inhabitants and the building and neighbourhood.
4.2.7 The Chhattisgarh Land Revenue Code, 1959
The Chhattisgarh Government vide notification no. F-6-2/Revenue/2001 dated 23-11-2001 issued
adaptation of laws order, 2000, which is applicable to the entire state of Chhattisgarh with effect from 1-11-
2000. According to this order, M.P. Land Revenue Code,1959 as amended up to 31.10.2000 is adapted
and extended to the State of Chhattisgarh.
Section 59. Variation of land revenue according to purpose for which land is used. (5) where land for use
for any purpose is diverted to any other purpose and land revenue is assessed thereon under the
provisions of this section, the competent authority shall also have power to impose a premium on the
diversion in accordance with rules made under this code.
Section 258. General rule making power. -

1) The state government may make rules generally for the purpose of carrying into effect the provisions
of this code.
2) In particular, and without prejudice to the generality of the foregoing powers such rules may provide
for-
(iii) regulation of assessment of land revenue on diversion of land to other purposes and
imposition of premium under section 59;
(vi) diversion of survey numbers into sub-divisions and apportionment of the assessment of
survey number among the sub-divisions of a survey number under section 70;
(xiv) the manner of dividing plot numbers into sub-divisions and apportioning the assessment of
plot number among, the sub-divisions; and the limits either of area or of land revenue or both
in any local area for recognition of sub-divisions under section 94.
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3) All rules made under this section shall be subject to the condition of previous publication.
4) All rules made under this code shall be laid on the table of the legislative Assembly and shall be
subject to such modifications as the legislative Assembly may make.
4.2.8 Rules regarding Alteration of Assessment and Imposition of premium for the purpose of levy of
premium on Agricultural land
Rule 14 (1) - For the purpose of levy of premium of agricultural land other than the land specified in the
proviso to sub-section (5) of section 59 of the code diverted to non-agricultural purposes, in any town and
village in the state of Chhattisgarh shall be divided into the following classes as shown in column (1) of
schedule-A appended to these Rules and the premium shall be imposed according to the rates specified in
column (2), (3), (4), (5), (6) and (7) of the said Schedule.
Schedule-A
Classes Residential Residential Commercial Public/ SEZ Medical
purpose Unit/ or Industrial Institutional Facility
Colony/ Purpose Purpose
Project
Municipal Rs.15/-per Rs.20/-per Rs.25/-per Rs.20/-per Rs.20/- Rs.15/-
Corporation sqm. sqm sqm sqm per sqm per sqm
and Nagar
Palika area
5 km within Rs.10/-per Rs.15/-per Rs.20/-per Rs.15/-per Rs.15/- Rs.10/-
Municipal sqm sqm. sqm sqm per sqm per sqm
Corporation
and Nagar
Palika area
4.2.9 Chhattisgarh Griha Nirman Mandal Adhiniyam, 1972
The name M.P. was substituted by Chhattisgarh by section 79 of the M.P. reorganisation Act, 2000 vide
notification no. 2458/2001/N.Pra. dated 30th June 2001
Section 51 CHAPTER XI - Assessment and Recovery of Betterment Charges.

Betterment charges - (1) When by making of housing scheme any land in the area comprised in the scheme
will in the opinion of the Board be increase in value, the Board in framing the scheme may declare that
betterment charges shall be payable by the owner of the land or any person having an interest therein in
respect of the increase in value of land from the execution of the scheme. (2) Such increase in value shall
be the amount by which the value of the land on the completion of the execution of the housing
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scheme, estimated as if the land were clear of the buildings exceeds the value of the land prior to the
execution of the scheme estimated in like manner and the betterment charges shall be one half of such
increase in value.
4.2.10 Chhattisgarh Anadhikrit Vikas Ka Niyamitikaran Adhiniyam, 2002.
An Act to regularize the unauthorised development in the Planning Area in the State of Chhattisgarh, by
vesting certain powers specified herein, in an Authority to exercise, perform and discharge the duties
entrusted to them within specified duration of time. It extends to the whole of Chhattisgarh.
Section 2 - The provisions of this Act shall apply to such unauthorized developments which were in
existence on or before the date notified by the State Government.
Section 4(1) - The State Government shall constitute for each district an Authority to be called "District
Regularisation Authority" for the purpose of regularisation of unauthorized development.
Section 6 - The Authority shall have power to (iii) For the purpose of imposing penalty the authority shall
evaluate the unauthorized development on the basis of prevailing market value of land, construction, etc.
The authority shall also evaluate its monthly rent. (iv) The Authority shall determine penalty, on the basis of
such evaluation done and the cost of development of basic infrastructure in the vicinity which may be
required because of the unauthorized development. (v) Upon compliance of the order issued by the
Authority and deposit of the regularisation penalty, such development would cease to be unauthorized and
a certificate to that effect will be issued to the applicant by the. Authority in such Performa as may be
prescribed.
4.2.11 Chhattisgarh Anadhikrit Vikas Ka Niyamitikaran (Sanshodhan) Adhiniyam, 2003.
Section 6-A - Special provision for residential building

For imposition of penalty on residential buildings, the unauthorised development shall be classified on the
basis of its plot-area, as follows:
a. Up to 120 sqm
b. from 120 sqm to 240 sqm
c. from 240 sqm 360 sqm
d. above 360 sqm
For residential buildings the penalty shall be fixed on the basis of the floor area of the unauthorised
development. If the building is constructed without any building permission, then the penalty shall be
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imposed on the total floor area. If the building is constructed with additional floor area other than specified
in the building permission, penalty shall be imposed only on such additional area.
For residential buildings, the rate of penalty shall be as follows:

a. No penalty shall be imposed on the buildings constructed on plot areas up to 120 sqm
b. The rate of penalty for the buildings constructed on plot areas above 120 sqm shall be as follows:
Classification on the basis of plot area Rate per sqm (in rupees)
Up to 120 to 240 sqm 100
Up to 240 to 360 sqm 150
above 360 sqm 250
4.2.12 The Chhattisgarh Anadhikrit Vikas Ka Niyamitikaran Niyam, 2002
Rule 5.-Fixation of Penalty

(1) For the purpose of deciding the penal amount to be imposed on any applicant, except for the
development carried out for residential purposes. the area wise market value of the unauthorized
development. shall be fixed by the Authority and represented as per unit developed area.
(2) The Calculation of market rate shall be on the basis of land value per unit area, the construction cost
"per unit area, and the development cost per unit area”. Thus, the market rate shall be calculated as follows:
Market rate = Land value per unit area + construction cost per unit area + development cost per unit
area.
Calculation of development expenditure will be made on the basis of development made in the surroundings
or development works which will be required to be done, due to regularisation of the unauthorised
development.
(3) Marked value of the land and valuation of the construction shall be done as per Bharatiya Stamp
Adhiniyam, 1899 and the rules made there under "Moolya Margdarshak Sidhanton Ka Banaya Jaana Aur
Unka Punarikshan Niyam, 2000".
(4) The Authority shall publish the market rate so fixed for any area, in widely circulated newspaper and
display the map showing the different areas having different categories of rates prescribed by it.
(5) (i) For the purpose of deciding the penal amount in individual cases, the unauthorized development may
be categorised into residential and non-residential property on the basis of its purpose and use,
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(5) (ii) The property, which is developed with residential purposes and is being used for the same, shall be
called residential property
(5) (iii) All other developed properties except those defined in sub-rule (5) (ii), shall he have termed non-
residential properties.
In each case, group shall be decided on the basis of total developed area. Thus, the total of authorised
area and unauthorised developed area of a single building shall be taken into consideration for deciding as
to which group, the case belongs to.
(6) For the developments carried out for residential purposes, the penalty shall be imposed on the basis of
provisions made in section 6-A of the Act.
7 (1) For calculation of the penal amount to be imposed on unauthorized developed properties for non-
residential purposes, the applicants shall be classified into any of the five categories as given in the table
below.
S.No. Group of Applicant Area of Unauthorized Development
1 Group A1 Up to 20 square metres
2 Group B1 More than 20 square metres and up to 60 square metres
3 Group C1 More than 60 square metres and up to 100 square
metres
4 Group D1 More than 100 square metres and up to 200 square
metres
5 Group E1 More than 200 sqm.
(2) The Penal amount to be imposed for regularisation of unauthorized developed property shall be decided
on the basis of the percentage of market rate fixed for the area in which the property is located.
4.2.13 Chhattisgarh Anadhikrlt Vikas Ka Niyamltikaran (Sanshodhan) Adhiniyam, 2016
An Act further to amend the Chhattisgarh Anadhikrlt Vikas Ka Niyamitikaran Adhiniyam, 2002.
Section 2 - Amendment of section 3 of Chhattisgarh Anadhikrlt Vikas Ka Niyamitikaran Adhiniyam, 2002.

After clause (ii) of sub-section (1) of Section 3 of the Chhattisgarh Anadhikrit Vikas Ka Niyamitikaran
Adhiniyarn, 2002 (No. 21 of 2002), (hereinafter referred to as the Principal Act), the following shall be
inserted, namely, "(ii-a) "Building permission fee" means such fee as is ascertained from time to time under
clause (b) and (c) of sub-rule (3) of rule 21 of the Chhattisgarh Bhumi Vikas Rules, 1984,”
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Section 3 - Amendment of section 6 of Chhattisgarh Anadhikrlt Vikas Ka Niyamitikaran Adhiniyam, 2002.

In sub-section (1) of Section 6 the Principal Act - (a) for clause (iii), the following shall be substituted, namely,
"(iii) For the purpose of imposing penalty all commercial and other non-residential buildings not covered
under Section 6-A, the Authority shall follow the following scale, namely :-
S.No. Plot Area having Unauthorized Construction Penalty Payable

1 Up to 100 sq meters 16 times of building permission fees
2 Above 100 sq. meters but less than 200 sq. meters 21 times of building permission fees
4 Above 300 sq. meters but less than 400 sq. meters 31 times of building permission fees.
6 Above 500 sq. meters but Jess than 600 sq. meters 41 times of building permission fees.
7 Above 600 sq. meters but less than 700 sg meters 46 times of building permission fees
8 Above 700 sq. meters 51 times of building permission fees"
(b) clause (iv) shall be deleted.
Section 4 - Amendment of section 6A of Chhattisgarh Anadhikrlt Vikas Ka Niyamitikaran Adhiniyam, 2002

- For clause (2) of sub-section (iii) of Section 6-A of the Principal Act, the following shall be substituted,
namely,
"(2) The rate of penalty for the buildings constructed on plot areas above 120 sqm shall be as follows:
S.No. Classification on the basis of Plot Area Rate per sqm (in Rupees)
1 from 120 to 240 sqm 125
2 from 240 to 360 sqm 200
3 above 360 sqm 300"
Source: The Chhattisgarh Anadhikrlt Vikas Ka Niyamltikaran (Sanshodhan) Adhiniyam, 2016
4.3 VCF tools in Practice in Chhattisgarh / Raigarh
Summary of land based fiscal tools currently being levied in Chhattisgarh / Raigarh:
4.3.1 Property tax
Property tax is a tax levied by the municipal corporation on the properties (including the land and any building
constructed theron) in city. It is ad-valorem tax payable annually by the property owner based on the rate to be
charged on the built-up area of property. Property tax is guided by the Chhattisgarh Municipal Corporation Act,
1956, subject to the provisions of section 132 to 138.
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The annual letting value of land and building is determined under the “Bhawano / Bhumiyon Ki Varshik Bhada
Mulya ka Avdharan Niyam, 1997”. The annual letting value of land or building whether revenue paying or not, is
determined on the basis of per square meter of the built-up area of a building or land, (as the case may be) taking
into consideration the area in which the building or land is situate; its location, purpose for which it is used, its
capacity for profitable user, quality of construction of the buildings and other relevant factors and subject to such
rules as may be made by the State Government in this behalf. The Property tax, Water tax, Samekit Kar (general
sanitation tax, light tax, and fire tax), and Education cess is calculated on the basis of the annual letting value.
Table 4-3 shows the annual revenue collected by Municipal Corporation of Raigarh from Property Tax.
Table 4-3: Property tax revenue (in Rs. lakhs)
Year 2014-15 2015-16 2016-17 CAGR

Demand 507.16 910.63 840.53 18%
Collection 466.11 857.6 372.44 -7%
Collection efficiency 92% 94% 44%
4.3.1.1 Rate of property tax in Raigarh:

Raigarh municipal area has been divided into 4 zones for the purpose of derivation of property tax. The zone wise
annual letting value is determined by the ULB on the basis of various factors for land and building both. The Table
4-4, Table 4-5 and Table 4-6 below describes the prescribed letting value for land, prescribed letting value for built-
up area in different zones and property tax rates respectively as per the notification dated 30.3.2016.
Table 4-4 : Annual letting value for land (Rs. per sqft)
Zone No. Residential Commercial

Zone 1 9 12
Zone 2 7.5 9.75
Zone 3 4.5 6
Zone 4 3 4.5
Table 4-5: Zone wise annual letting value for (per sqft) for building on built up area
Zone No. Residential Commercial

Pucca Kachha Semi-Pucca Pucca
1 13.5 7 12 15
2 12 6 10.5 13.5
3 6 3 5.25 7.5
4 4.5 2 3.75 6
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Table 4-6: The property tax rate is defined as under (applicable since 30.03.2016)
S.No. Annual letting value (Zone 1 – 15) Property tax rate on annual letting value of
residential / industrial / commercial building
and land
1 Annual letting value upto INR 6000/- Nil
2 Annual letting value INR 6001/- to 20,000/- 6%
3 Annual letting value INR 20,001/- to 50,000/- 8%
4 Annual letting value INR 50,001/- to 80,000/- 10%
5 Annual letting value INR 80,001/- to 1,00,000/- 12%
6 Annual letting value INR 1,00,001/- to 15%
1,20,000/-
7 Annual letting value INR 1,20,001/- to 18%
1,50,000/-
8 Annual letting value more than INR 1,50,001/- 20%
4.3.1.2 Vacant land tax:

The above property tax is applicable on the adjoining vacant lands (excluding the marginal open space) as well.
However, currently it is not being levied in Raigarh.
4.3.1.3 Water tax:

As per the Chhattisgarh Municipal Corporation Act 1956, amended section no 132 (4), the following is the
applicable rate of water tax:
a) INR 60/- per month on properties exempted from property tax
b) For properties not exempted from property tax, INR 200/- + 5% of applicable property tax
4.3.1.4 Samekit Kar:

As per the Chhattisgarh Municipal Corporation act 1956, amended section no 132 (5), the following is the
applicable rate of Samekit tax (general sanitation tax, light tax, and fire tax):
a) INR 300/- annually on properties exempted from property tax (Annual letting value less than Rs.6,000)
b) For properties not exempted from property tax, INR 600/- (Annual letting value more than Rs. 6,001)
4.3.1.5 Education Cess:

In case the annual letting value of property is more than Rs. 10,000 an education cess of 1.5% will be applicable
on residential properties and 5% on commercial properties along with the property tax.
4.3.1.6 Efficacy of the tool

The efficacy of the existing tools is evaluated based on the following parameters:
• Efficiency: The tool should have little to no scope for avoidance and should be able to capture any increase
in the land value due to infrastructure provision.
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• Equity: The charge rates towards tax or user fee should be should be equitable to the land values.
• Adequacy: In terms of revenue generating capacity, stability, and buoyancy.
• Manageability: In terms of implement-ability and administrative costs.
• Legal feasibility: In terms of backing with state/municipal legislations or government orders.
The appropriateness of existing LBFTs tool of property tax for RMC in terms of their efficiency, equity, adequacy,
manageability, and legal feasibility is presented below:
VCF Tool Efficiency Equity Adequacy Manageability

Property tax Not buoyant as Not equitable. The About 38% of the Yearly charge
Vacant land tax reference rates are city has been divided revenues of the requires
Water tax revised after long into only 4 zones to Municipal resources.
Samekit Kar interval of times. create a distinction corporation come
Education Cess The efficiency of between deferring from property tax
collection is very values across the including vacant land
low. city. tax, Samekit kar and
Jal Kar.
Legal provision: Chhattisgarh Municipalities Act, 1961
Remarks
• The value capture tools distinguish between the rates applicable on the properties based on different
zones, type of structure, the commercial potential, the class of road on which it is located and the use to
which the property put to.
• Though the structure for calculation of charges is aligned with the principle of value capture finance, its
implementation does not effectively facilitate value capture finance.
• The prescribed annual letting values are segregated in only four zones; hence it fails to reflect the higher
or lower value of underlying asset across the zones.
• The prescribed rates are not linked with any index and are not revised automatically. The frequency of
revision has been observed to be inadequate.
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4.3.2 Building Permission Fee (Bhawan Anugya Shulk)
Building permission charges are levied by the competent authority (Municipal Corporation / Development Authority)
for providing basic public amenities and for the execution of development works and projects. The building
permission (Bhawan Anugya) charges are guided by the provision of the Chhattisgarh Bhumi Vikas Rules, 1984
(As per C.G. Gazette Notification dated 07th May 2016). These provisions are same for whole state of
Chhattisgarh. It is provisioned to be increased by 10% every year. Table 4-7 shows the annual revenue collected
by Municipal Corporation of Raigarh from Building Permission Fee.
Table 4-7: Revenue from building permission charges (In Rs. lakhs)
Parameter 2012-13 2013-14 2014-15 2015-16

Building Construction Permission Charges 354.64 57.46 61.86 82.92
4.3.2.1 Rate for calculation of charges:
a) For permission of development
S.No. Particular Amount (INR)

i For development of area upto 1 Ha 3,750
Ii For development of area exceeding 1 Ha but not exceeding 2.5 Ha 7,500
iii For development of area exceeding 2.5 Ha but not exceeding 5 Ha 15,000
iv For development of area exceeding 5 Ha for every Ha or part thereof, 15,000 + 3,750
additional fee @
b) For permission of building other than multi-storied buildings
S.No. Type of construction Fees chargeable

1 Building intended to be used for residential use Built up area (sqm) Amount (INR)
0 75 825
76 125 1447
126 200 2475
201 300 3713
301 400 4950
401 600 8250
601 750 10313
751 1000 14438
1001 1250 20625
1251 1500 28875
1501 2000 41250
2001 2500 61875
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S.No. Type of construction Fees chargeable

61875 and INR 20 for
Above 2500 every additional sqm
2 A building intended to be used as shop, store Fee specified in item no. 1 together with an
house, factory or for carrying or trade or business additional charge of 50% of such amount of fees
or any other commercial or industrial purpose.
3 A building intended to be used as administrative Fees as prescribed in item no. 1
block in a factory.
4 A building intended to be used for shop-cum- Fees specified in item no. 1 together with an
residence purposes. additional charge of 50% such amount of fees.
5 A building intended to be used as cinema theatre. Seating capacity 800 – INR 22,500/-
Seating capacity more than 800 – INR 37,500/-
6 A building intended to be used for any social 50% of fees specified in item No. 4
charitable culture, educational purposes,
Dharmshala and similar types of building and for
any other purpose not specifically provided for.
7 Addition or alteration with built up area or external Rs. 150/- in each case of building mentioned in item
addition or alteration which does not add to the 1, 3 and 6, Rs. 750/- in each case of building
built up area such as Court yard compound N-4 mentioned in item No. 2. 4 and 5.
wall, alteration in elevation or roofing such tiles to
A.C. Sheet or flat surface, additional opening or
closing not covered by proviso to sub-rule (l) of
Rule 14.
8 ln case of addition alteration in the proposed plan. Up to 5% Nil. above 5% to 10% - Rs. 200/-. Above
I0% fresh application according to the rule shall be
necessary
9 Revaluation of the building permission 15% of the amount of fees charged originally in
respect of the building concerned
a) For permission of multi-storied buildings
S.No. Type of construction Fees chargeable in Rupees

space.
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4.3.2.2 Sadak Badha Shulk (Malba charges / road blockage charges)

In addition to building permission charges, an additional road blockage charge of Rs. 11 per sq mt of built up area
are applicable.
4.3.2.3 Upkar Rashi (1%) / Karmakar Shulk / Labour Welfare Charges

As per UADD letter no. 6702 / 7733 / 2014 / 18 dated 21.04.2016, If total building cost is more than Rs. 10.0 lakhs
then Upkar Rashi is payable @ 1% of total BUA in sq.ft x Rs. 1000.
4.3.2.4 Environment Charge

An additional fee of Rs. 1 per sq.mt of Plot area is applicable.
4.3.2.5 Water recycling charge

An additional fee of Rs. 11 per sq.mt of Plot area is applicable.

The appropriateness of existing LBFTs of building permission fee for RMC in terms of their efficiency, equity,
adequacy, manageability, and legal feasibility is presented below:
Building It is not linked to the Not equitable. The About 3.16% of the The charges are
permission fee land value hence not charges are linked revenues of the levied at the point
buoyant. with the area of the Municipal of building plan
property and vary Corporation come approval for which
between INR 11 to from building there is an existing
INR 30 per sqm. permission fee setup. However in
However; there is no absence on any
provision for these online system the
charges to be value administrative
based. costs are high.
Legal provision: These charges are guided by the provision of the Chhattisgarh Bhumi Vikas Rules, 1984 (As per
C.G. Gazette Notification dated 07th May 2016). These provisions are same for whole state of Chhattisgarh.
Remarks
• The tool distinguishes between the charge applicable on the properties based on the size and use, but
does not distinguish between the intrinsic value of the underlying asset.
• As per the latest gazette, buoyancy has been built in by introducing an annual increment of 10%.
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4.3.3 Development Charges (Vikas Shulk)
Development charges are levied by the competent authority (Municipal Corporation / Development Authority) for
providing basic amenities and for the execution of development work and projects. These charges are levied for
the recovery of the total cost of amenities already provided or proposed to be provided in an area. The charges so
levied should not exceed the amount of the total cost of amenities. The development charge is levied under the
provisions contained in the Chhattisgarh Nagar Tatha Gram Nivesh Adhiniyam, 1973. However the rate of
development charges is defined by the ULB and revised from time to time. The charges are levied along with the
building permission charges.

A flat rate of Rs. 134 per sq mt of land area is applicable as development charges.

The appropriateness of existing LBFTs of development charges for MCK in terms of their efficiency, equity,
Development It is not buoyant as Not equitable. The About 3.16% of the The charges are
charges there is no provision charges are linked revenues of the levied at the point
of an automatic with the area of the Municipal corporation of building plan
annual increase nor land come from building approval for which
it is linked with any permission fee, which there is an existing
index includes the setup
development charges as
well
Legal provision: These are charges as per the rules formulated by Corporation from time to time.
Remarks
• The tool only distinguishes between the charge applicable on the residential, commercial and industrial
properties, but it does not distinguish between the charges based on the intrinsic value of the underlying
asset.
• The tool does not have any inbuilt buoyancy
• The tool in its current form is not equitable and fails to capture any increase in value of the underlying
asset.
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4.3.4 Regularisation Charges (Samjhota / Rajinama Shulk)
The regularisation charges or Samjhota / Rajinama Shulk is an amount levied by a governing authority to regularize
the development of newly developed or existing unauthorized colonies / building. The regularisation charges are
levied under the provisions contained in the Chhattisgarh Anadhikrit Vikas Ka Niyamitikaran Adhiniyam, 2002
(Sanshodhan Adhiniyam, 2003 and 2016). This is an act to regularize the unauthorised development in the
Planning Area in the State of Chhattisgarh, by vesting certain powers specified herein, in an Authority to exercise,
perform and discharge the duties entrusted to them within specified duration of time. It extends to the whole of
Chhattisgarh. The current applicable rates are as per UADD letter no. AF 8-6 / 2015 / 18 dated October 2015.

As per the Chhattisgarh Anadhikrlt Vikas Ka Niyamltikaran (Sanshodhan) Adhiniyam, 2016, an Act further to
amend the Chhattisgarh Anadhikrlt Vikas Ka Niyamitikaran Adhiniyam, 2002; for the purpose of imposing penalty
on all commercial and other non-residential buildings not covered under Section 6-A, the Authority shall follow the
following scale, namely:
S.No. Plot Area having Unauthorized Construction Penalty Payable
1 Up to 100 sq meters 15 times of building permission fees
2 Above 100 sq meters but less than 200 sq meters 20 times of building permission fees
4 Above 300 sq meters but less than 400 sq meters 30 times of building permission fees.
6 Above 500 sq meters but Jess than 600 sq meters 40 times of building permission fees.
7 Above 600 sq meters but less than 700 sg meters 45 times of building permission fees
8 Above 700 sq meters 50 times of building permission fees"
For residential buildings the penalty shall be fixed on the basis of the floor area of the unauthorised development.
If the building is constructed without any building permission, then the penalty shall be imposed on the total floor
area. If the building is constructed with additional floor area other than specified in the building permission, penalty
shall be imposed only on such additional area.
For residential buildings, the rate of penalty shall be as follows:
No penalty shall be imposed on the buildings constructed on plot areas up to 120 sqm
The rate of penalty for the buildings constructed on plot areas above 120 sqm shall be as follows:
Classification on the basis of plot area Rate per sqm (in rupees)
Up to 120 to 240 sqm 100
Up to 240 to 360 sqm 150
above 360 sqm 250
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The appropriateness of existing LBFTs of regularisation charges for RMC in terms of their efficiency, equity,
Regularisation It is not buoyant as Not equitable in case of plot The current The charges are
charges there is no regularisation. The charges structure of levied post
provision of an are linked with the area of regularisation building
automatic annual the plot and do not charge levy is post- construction. The
increase nor it is distinguish either between facto and is linked building
linked with any the value of the plot or the with regularisation permission
index benefits availed by the plot drive across the department is well
owner. state. placed to handle
However, in case of building these.
regularisation, the
regularisation charges are
fairly equitable as it is linked
to the value of the under
lying asset
Legal provision: Chhattisgarh Anadhikrit Vikas Ka Niyamitikaran Adhiniyam, 2002 (Sanshodhan Adhiniyam, 2003
and 2016)
Remarks
• Regularisation of unauthorized development in the current form is a post facto tool used by the municipal
corporation to regularize the unauthorized construction and unauthorized area development.
• The regularisation of buildings is value linked, however the regularisation of area development is area
linked with a high multiple being used for larger plots.
• The tool is dependent upon regularisation drive conducted from time to time
• The tool in the current form fails to capture value from an intrinsic demand of property owners to avail
higher benefits through relaxation of rigid development control regulations.
• A proactive development Regularisation tool which makes available certain relaxations in development
control regulations including FSI, ground coverage, set back and height restrictions, linked with the value
of the underlying asset is better tool for value capture.
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4.3.5 Property Development and Leasing
Urban Local Bodies have significant lands at prime locations within a city. Such lands are often unutilized / under-
utilized leading to significant inefficiencies in land value capture. Though one of the options to unlock land value
often exercised by development authorities is land sale, the tool results in only a one time value gain. A better tool
often under-utilized is that of property development on vacant land parcels, and the properties thus developed
being put out for market linked efficient short term leases.
The tool is also capable of addressing essential retail and commercial need gaps, like local shopping centers,
hawkers market, etc. Table 4-8 shows the annual revenue collected by Municipal Corporation of Raigarh from
rental income of Municipal Properties.
Table 4-8: Revenue from Renting of Municipal Properties (In Rs. lakhs)
Parameter 2012-13 2013-14 2014-15 2015-16

Rental income from Municipal Properties (in lakhs) 80.80 76.15 92.58 80.54

The appropriateness of existing LBFTs of property development and leasing for RMC in terms of their efficiency,
equity, adequacy, manageability, and legal feasibility is presented below:

Property The property lease Property rents, when Approx. 3.07% of the The administration
development and revenues need to be charged market revenues of the can continue to
leasing managed by a linked, as a Municipal use the existing
specialised asset percentage of the corporation come administrative set
management team. property value, are from the rental up being utilised to
Existing leases are equitable. The income from manage the
managed by ULB property owners with municipal properties. existing property
itself. With suitable higher property value The leases lack leases without any
capacity building are charged more buoyancy and incremental cost
exercises the rent as compared to market correction expenditure.
existing setup can those with lesser mechanism leading
be enhanced to property value. to sub-optimal rent
collection, and
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increase the missed opportunity
efficiency of the tool. to capture property
value appreciation
benefits.
Legal provision: The legal provisions for exists under Chhattisgarh Municipalities Act, 1961.
Remarks
• Though the sale of land is not considered to be a VCF tool, remunerative use of land is often utilized by
ULBs as an effective land value capture tool.
• The sale of land results in one time gain with the ULBs loosing rights to capture any future increase in
land value.
• Prime properties with high demand and growth potential should be developed and leased on short term
leases. Any market linked increase in rentals would facilitate effective value capture throughout the life of
property.
• Suitable rent revision and renegotiation provision should be built into the lease agreement to ensure the
buoyancy in value capture.
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Final Report
CHAPTER 5 :
IDENTIFICATION OF APPLICABLE VCF
TOOLS FOR RAIGARH
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Final Report
5 IDENTIFICATION OF APPLICABLE VCF TOOLS FOR RAIGARH
This section identifies the potential reforms that can be made in the existing LBFTs and suggests new LBFTs that
can be introduced to improve the revenue base of the ULB.
5.1 Property Tax
The property tax in Raigarh is charged as under:
• The property tax is charged as a percentage of the annual letting value of the property.
• The annual letting value of land or building whether revenue paying or not, is determined on the basis of per
square meter of the built-up area of a building or land, (as the case may be) taking into consideration the
micro-market in which the building or land is situate; its location, purpose for which it is used, its capacity for
profitable user, quality of construction of the buildings and other relevant factors and subject to such rules as
may be made by the State Government in this behalf.
• The annual letting value was last revised in 2017, after almost 5 years of its previous revision in 2012.
Key observations
• The mechanism of property tax is linked to annual letting value and hence factors in land value capture.
• The system lacks buoyancy.
• The city has been divided into only 4 zones to create a distinction between deferring values across the
city zones and hence fail to distinguish between high value and low value properties.
• The collection efficiencies are fluctuating between 44% - 94%.
5.1.1 Revenue Potential from Property Tax/ Fee
The revenue (collection) from property tax for the year 2015-16 is Rs. 989.13 lakhs, which is approx 39% of total
revenue of RMC.
An analysis of annual letting value vis-à-vis computation of property tax for various sizes of commercial and
residential properties is presented in Table 5-1 and Table 5-2 respectively.
Table 5-1 : Annual Letting Value vis-à-vis Computation of Property Tax for various sizes of Commercial Properties
Pucca Annual Letting Annual Letting Applicable Property Property Tax For
Commercial Rate (Rs. Per sqft) Value (in Rs.) for Tax Rate for Commercial
(area in sq ft) for Commercial Commercial Commercial Property Property (in Rs.)
400 15 6000 6% 360
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Pucca Annual Letting Annual Letting Applicable Property Property Tax For
Commercial Rate (Rs. Per sqft) Value (in Rs.) for Tax Rate for Commercial
(area in sq ft) for Commercial Commercial Commercial Property Property (in Rs.)
500 15 7500 6% 450
1000 15 15000 6% 900
1250 15 18750 6% 1125
2000 15 30000 8% 2400
3000 15 45000 8% 3600
4000 15 60000 10% 6000
5000 15 75000 10% 7500
Table 5-2 :Annual Letting Value vis-à-vis Computation of Property Tax for various sizes of Residential Properties
Pucca Residential Annual Letting Annual Letting Applicable Property Tax For
(area in sqft) Rate (Rs. Per sqft) Value (in Rs.) for Property Tax Rate Residential
for Residential Residential for Residential Property (in Rs.)
Property
500 13.5 6750 6% 405
750 13.5 10125 6% 607.5
1000 13.5 13500 6% 810
1250 13.5 16875 6% 1012.5
1500 13.5 20250 8% 1620
2000 13.5 27000 8% 2160
2500 13.5 33750 8% 2700
3500 13.5 47250 8% 3780
The amount of property tax paid by a property owner is fixed for a size of the property irrespective of its land value.
An analysis of Property Tax amount as percentage of Land Values for Commercial and Residential properties is
presented in Table 5-3 and Table 5-4 respectively.
Table 5-3: Property Tax amount as percentage of Land Values for Commercial properties
Property Tax
Property
Pucca Value of on
Land Tax For
Commercial Commercial Commercial
Locality Value (in Commercial
(area in sq Land (in Building as
Rs/sqm) Property (in
ft) Rs.) %age of Land
Rs.)
Value
1 Laxmipur Chowk - Indira Chowk 6600 400 360 245262 0.15%
2 Gajanand Puram Colony 8700 500 450 404125 0.11%
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Property Tax
Property
Pucca Value of on
Land Tax For
Rs.)
Value
3 Shamsunder Aggarwal Colony 12400 1000 900 1151988 0.08%
4 Commerce College - K.M.Chowk 15200 1250 1125 1765143 0.06%
5 Chuna Bhatta - Commerce College 19300 2000 2400 3586027 0.07%
6 Kirorimal Chowk - Kharsiya Road 30900 3000 3600 8612040 0.04%
7 Purani Hatari - Bus Stand 41000 4000 6000 15235972 0.04%
8 Chaitanya Nagar & Beriwal Colony 54000 5000 7500 25083612 0.03%
Table 5-4: Property Tax amount as percentage of Land Values for Residential properties
Property Tax
Property Tax
Pucca Value of on
Land For
Rs.)
Value
2 Gajanand Puram Colony 8700 750 607.5 606187 0.10%
4 Commerce College - K.M.Chowk 15200 1250 1012.5 1765143 0.06%
5 Chuna Bhatta - Commerce College 19300 1500 1620 2689521 0.06%
From Table 5-3 and Table 5-4 above it is seen that when the existing property tax on annual letting value for
commercial properties is translated to land value, the properties with lowest land value of Rs. 6600 per sqm is
paying property tax @ 0.15% of the land value whereas the properties with highest land value of Rs. 54000 per
sqm is paying property tax @ 0.03% of the land value. Similarly, when the existing property tax on annual letting
value for residential properties is translated to land value, it is seen that the properties with lowest land value of
Rs. 6600 per sqm is paying property tax @ 0.13% of the land value whereas the properties with highest land value
of Rs. 54000 per sqm is paying property tax @ 0.02% of the land value.
The current system of calculation of letting value is therefore neither buoyant nor equitable. A revision in the letting
value by referencing it with the property values (circle rates) will make it buoyant and equitable i.e. the property
owners with higher property value will pay more tax and property owners with less property value will pay less tax.
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Final Report
This land value based property tax may be fixed at a rate which the owners of least value property are paying. This
will help RMC in increasing its revenue base from property tax significantly.
Further, a comparison between the property tax rate for Raigarh and Korba (refer Table 5-5) suggest a stark
difference between the suggested ranges of annual letting value for computation of property tax rate. As per the
estimates, most of the properties in Raigarh will come in the bracket of 6% - 8% property tax rate on annual letting
value. Considering the usual sizes of residential and commercial properties and prescribed annual letting value
per sq ft, very few properties will be subject to a tax slab of more than 8%. A revision in the prescribed range will
result in a substantial increase in revenue for Raigarh Municipal Corporation.
Table 5-5: Property Tax rate comparison – Raigarh & Korba
S.No. Annual letting value Annual letting value Property tax rate on annual letting
value of residential / industrial /
Raigarh Korba
commercial building and land
1 Annual letting value upto INR Annual letting value upto INR Nil
6000/- 6000/-
2 Annual letting value INR Annual letting value INR 6001/- 6%
6001/- to 20,000/- to 12,000/-
3 Annual letting value INR Annual letting value INR 8%
20,001/- to 50,000/- 12,001/- to 20,000/-
50,001/- to 80,000/- 20,001/- to 30,000/-
80,001/- to 1,00,000/- 30,001/- to 50,000/-
1,00,001/- to 1,20,000/- 50,001/- to 75,000/-
1,20,001/- to 1,50,000/- 75,001/- to 1,00,000/-
8 Annual letting value more Annual letting value more than 20%
than INR 1,50,001/- INR 1,00,001/-
5.1.2 Cost-Benefit Analysis
The Cost Benefit Analysis is presented in Table 5-6.

Table 5-6: Cost – Benefit Analysis for Property Tax/ Fee
Instrument Name Property Tax/ Fee

Existing Status The property tax at present is charged on annual letting value. This rate for calculating
the annual letting value however is almost same for all the zones in Raigarh.
Potential Value By linking annual letting value to value of land, the annual revenue from property tax
can increase significantly.
Efficiency Property tax when linked to market rentals will ensure buoyancy in the value capture.
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Instrument Name Property Tax/ Fee

Equity Property tax based on prevailing market value will ensure equity.
Adequacy It is suggested that the Land and Building Tax may be levied in Chhattisgarh on the
lines of Rajasthan. The rates of tax may be 1% of the market value of lands per year
and the collections from the Land and Building Tax put in a separate Bank account and
reserved for infrastructure development in the city. The total number of properties
(residential, commercial, and mixed-use properties) in Raigarh are around 30000. If the
smaller plots, say, smaller than 200 square meters estimated to be 6000 (@20%) are
excluded, from the levy of Land and Building Tax and estimate average size of the
balance taxable plots numbering 24000 to be 200 square meters each and the average
market price of land to be Rs. 15000/- per square meter (the minimum being Rs.6600/-
per square meter and going up to Rs.54000/- per square meter) an average plot of 200
square meters would be values at Rs.30,00,000/- and the annual Land and Building
Tax for each property @ 1% of the market value would come to Rs 30000/-. Thus
collection of Rs. 72 crores from the levy of Land and Building Tax from 24000 properties
can be envisaged.
Manageability Online system for assessment and collection may be introduced to reduce
administrative costs.
One suggestion that came out during our interactions with officials from RMC was to
generate a common monthly utility bill containing the combined total of the
electricity bill, water & sewerage bill and the monthly Property tax. This will
ensure that access to utilities could be cut in case of non-payment of the combined
utility bill. The collection agency for such a combined utility bill can (through an escrow
mechanism) further subdivides the money received between the electricity provider
(Chhattisgarh State Power Distribution Company Limited) and Raigarh Municipal
Corporation which collects property tax, water and sewerage charges as per the
individual claims. This will ensure higher collection efficiency for property tax. (Refer
Annexure A for the draft MOU for Generation And Collection of Combined Utility Bill)
Legal Feasibility Chhattisgarh Municipal Corporation Act, 1956
Timelines GIS Mapping of all properties – A Short Term Measure (0-1 year)
Move from area based method to value based method will need amendment in Act –
A Short Term Measure (0-1 year).
Introduction of on-line system for demand and collection of property tax may be targeted
in Medium Term (1-3 years).
Remark Strict enforcement to improve efficiency of collection
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5.2 REVENUE POTENTIAL FROM IMMOVABLE PROPERTIES UNDER RMC
List of immovable properties (shops) available with RMC has been presented earlier in Section 3.8. Rental income
from municipal properties is through leasing of shops/properties owned by RMC. During FYs 2015-16 and 2014-
15, RMC has collected Rs. 80.54 lakh and Rs. 92.58 lakh respectively. The details of monthly lease rent earned
from some of the sample shops viz-à-viz the market rent is presented in Table 5-7.
Table 5-7: Monthly Lease Rent viz-a-viz Prevailing Market Rent of Shops owned by RMC
S.No. Location of Shop Number of Average area Average Lease Average Market
Shops per shop (in Rent Rent
sqft) (Rs/ Month) (Rs/ sqft/
Month)
1 On Ground Floor in Jail 17 140 1325 30-35
Compound
2 Shaheed Bhagat Singh 17 159 760 25-30
Complex
3 Sanjay Complex 104 120 791 125-160
4 Sadar Hatri 27 206 468 20-30
5 Subhash Chandra Bose 13 115 783 30-40
Shopping Complex
6 Kevrabari First Floor 17 200 526 10-15
7 New Market 30 244 661 50-60
8 Town Hall Complex 27 240 658 40-50
9 Shyam Takies Road 17 228 435 40-50
10 Gandhi Ganj 17 208 225 50-75
11 Ram Leela Maidan 20 98 830 40-50
Total 306
It is seen that generally the revenue from municipal properties is very low as compared to the revenue generated
by other comparable privately-owned properties. It is understood that the shops are leased by RMC through
auction. The lease period generally is 3 years and the lease rent on expiry of the lease period is increased by 10%
to 30%.
It is suggested that for auction the minimum reserve price is kept at 70% of the lowest prevailing market rentals in
that area and the lease agreement should have annual escalation clause of 10% to 15%. On the expiry of the
lease period the reserve price should again be looked at for necessary corrections in comparison to the prevailing
market prices. In the re-auction, the out-going lessee may be provided with the first right of refusal on the lease
amount offered during the re-auction. This process will ensure bouyancy in the lease rents.
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A broad analysis of the potential revenue to RMC from above mentioned approach is presented in Table 5-8.
Table 5-8: Potential Revenue from Shops under RMC
S.No.
Average Lease Rent
Prevailing Average
Number of Shops
Prevailing Market
Rent (in Rs Lakh)
Location of Shop
Revenue from all

Market Rent (Rs/
Potential Annual
Average Area of
Existing Annual
Revenue (in Rs.
shop @ 70% of
sqft/ Month)
(Rs/ Month)
Shop (sqft)
Lakh)
1 On Ground 17 140 1325 2.70 30-35 5.99
Floor in Jail
Compound
2 Shaheed 17 159 760 1.55 25-30 5.67
Bhagat Singh
Complex
3 Sanjay Complex 104 120 791 9.87 125-160 131.04
4 Sadar Hatri 27 206 468 1.51 20-30 9.34
5 Subhash 13 115 783 1.22 30-40 3.76
Chandra Bose
Shopping
Complex
6 Kevrabari First 17 200 526 1.07 10-15 2.85
Floor
7 New Market 30 244 661 2.37 50-60 30.74
8 Town Hall 27 240 658 2.13 40-50 21.77
Complex
9 Shyam Takies 17 228 435 0.88 40-50 13.02
Road
10 Gandhi Ganj 17 208 225 0.45 50-75 14.85
11 Ram Leela 20 98 830 1.99 40-50 6.58
Maidan
Total 306 25.78 245.65
Note: The market rents are based on market assessment.
From the above table, it is seen that if the lease rent for the municipal properties is made comparable to the
prevailing market rentals there is a potential of increasing the annual revenue from the Rentals from above stated
306 properties to Rs. 245 lakh per annum against the existing revenue of Rs. 25 lakh. This approach if scaled up
to all the municipal properties which are currently contributing to annual revenue of Rs. 80 lakh, there is a potential
to increase the annual revenue to almost Rs. 784 lakh.
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In line with the Terms of Reference, the Cost Benefit Analysis in terms of existing status, potential value, efficiency,
equity, adequacy, manageability, legal feasibility, timelines (short, medium, long) and general remarks is presented
in Table 5-9.
Table 5-9 : Cost – Benefit Analysis for Leasing of Immovable Properties of RMC
Instrument Name Leasing of Immovable Properties of RMC

Existing Status Shops are given on lease by RMC. The lease rents however are much less as
compared to the prevailing market rents.
Potential Value The annual lease rent potential could be around Rs. 784 lakh against existing revenue
stream of approximately Rs. 80 lakh.
Efficiency Lease rents when linked to market rentals will ensure buoyancy in the value capture.
Equity Lease rents based on prevailing market value will ensure equity for any lessee.
Adequacy The revenue potential of Rs. 784 lakh from lease rent will increase the share of revenue
from rentals from the current level of approximately 3.0% substantially in coming FYs.
Manageability Lease rents are collected on monthly basis according to the conditions laid in the lease
agreement. Require manpower for collection thereby incurring administrative costs.
Online system for collection of lease rent may be introduced to reduce administrative
costs.
Legal Feasibility Chhattisgarh Municipal Corporation Act, 1956
Timelines Any new leasing should be worked out based on prevailing market rents – A Short Term
Measure (1-2 years).
Introduction of on-line system for collection of lease rent may be targeted in Medium
Term (3-5 years).
Remark Effective tool to increase revenue of RMC.
5.3 BUILDING PERMISSION FEE
The Building Fee in Raigarh is charged as under:
(a) For residential development @ Rs. 11 – Rs. 30 per sqm
(b) For commercial building @ Rs. 16.5 – Rs. 45 per sqm.
The above method is area based and does not take into account the market value of the underlying asset, hence
fails to capture value though there is a provision of 10% increase every year.
The average circle rate of land in Raigarh varies from Rs. 6,600 per sqm to Rs. 54,000 per sqm. The averaged out
building fee rate for residential development works out at Rs. 20 per sqm while that for commercial development
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works out at Rs. 30 per sqm. An analysis of land values in different localities of Raigarh vis-à-vis current building
permission fee for same size of property is presented in Table 5-10:
Table 5-10: Building Permission Fee amount as percentage of Land Values
Building
Area of Building
Land Value Value of permission
property permission
Locality (in Land (in charge as
(area in sq fee
Rs/sqm) Rs.) %age of
ft) @Rs.20
Land Value
Commerce College -
15200 1200 2230 1694537
4 K.M.Chowk 0.13%
Chuna Bhatta - Commerce
5 19300 1200 2230 2151616
College 0.10%
Kirorimal Chowk - Kharsiya
30900 1200 2230 3444816
6 Road 0.06%
Chaitanya Nagar & Beriwal
54000 1200 2230 6020067
8 Colony 0.04%
This analysis reflects that the Building Fee on low valued plots is 8 times higher than the plots which are high
valued. Therefore, the area based rates are iniquitous and results in loss of substantial revenue. It is therefore
suggested to charge the Building Fees based on the land value without increasing the total liability for the citizen
who holds plots with lesser market value. This can be done by applying the effective rate of Building Fee as a
percent @ 0.3% of notified land rate applicable to the lowest land rate (Rs. 6,600/- per sqm) to all land parcels.
During the FY 2015-16, RMC collected INR 82.92 lakh from building fee. Going by the analysis as presented in
the previous para, the potential revenue can be enhanced by 4 to 5 times thereby resulting in potential revenue of
about INR 250 lakh to INR 300 lakh per annum from Building Fee.
Similarly, the rates of land development approval fees @ Rs.50/-per acre and fees for development of colony @
Rs.50000/- per hectare, based on per acre /hectare of plot area look easy to understand and administer but the
same are not equitable as the same are more (in terms of percentage of land value) for the land parcels which
have less market value. Moreover, the area based rates are not buoyant as they do not keep pace with increase
in value of land. This results in loss of potential revenue. Moreover, whenever the rates are sought to be revised
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in line with rise in market value, it requires amendment of Law/Rules which is a lengthy legislative procedure. If
the rates are linked to land value, the same would automatically keep pace with change in the notified land rates
and no amendment of law/rules will be required.

Table 5-11: Cost – Benefit Analysis for Building Permission Fee
Instrument Name Building Fee/ Construction Fee

Existing Status The Building Permission Fee is charged for new constructions under the provision of
the Chhattisgarh Bhumi Vikas Rules, 1984
Potential Value The annual incremental revenue potential of 4 to 5 times by moving from area based
method to value based method.
Efficiency Building fee when linked to market rentals will ensure buoyancy in the value capture.
Equity Building fee based on prevailing market value will ensure equity.
Adequacy The annual revenue potential could be INR 250 lakh to INR 300 lakh.
Manageability Building Permission Fee is collected upfront. Online system for collection of building
construction fee may be introduced to reduce administrative costs.
Legal Feasibility Chhattisgarh Bhumi Vikas Rules, 1984
Timelines Move from area based method to value based method will need amendment in Act –
A Short Term Measure (0-1 year).
Introduction of on-line system for collection of building construction fee may be targeted
Remark Effective tool to increase revenue of ULB.
5.4 Development Charges
States like Andhra Pradesh, Gujarat, Maharashtra, Tamil Nadu and Madhya Pradesh levy Impact Fee and collect
it upfront while granting development permissions. In Hyderabad, the Impact Fee is charged based on the width
of the road abutting the property and it varies from Rs. 200/- to Rs. 400 per sq ft on total built up area. It is legally
backed by Andhra Pradesh Urban Areas (Development) Act, 1975 and under Special Development Regulations.
Development charges are levied in Chhattisgarh backed by the Chhattisgarh Nagar Tatha Gram Nivesh
Adhiniyam, 1973, Section 59.
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The Development Charges in Raigarh are currently levied at INR 134 per sqm on plot area for all type of
developments / properties. The method of calculation of development charges does not take into account the
market value of the underlying asset, hence fails to capture value. The method also lacks buoyancy.
An analysis of currently charged Development Charges as a percentage of value of underlying asset is presented
in Table 5-12 below.
Table 5-12: Analysis of currently charged Development charges as a percentage of value of underlying asset
Building
Building
Land Value Development Value of permission
permission
Locality (in charge (Rs. Land (in charge as
fee @Rs.134
Rs/sqm) per sq mt) Rs.) %age of Land
per sqm
Value
4 Commerce College - K.M.Chowk 15200 1200 14939 1694537 0.88%
Chuna Bhatta - Commerce
5 19300 1200 14939 2151616 0.69%
College
From the above table it is seen that the development charges are non-equitable. Property owners with least
property value are exposed to highest development charges.
Section 59 of The Chhattisgarh Nagar Tatha Gram Nivesh Adhiniyam, 1973 provides for levy of Development
charges. Section 59 (1) states that where as a result of the implementation of town development scheme, there is,
in the opinion of the Town and Country Development Authority, as appreciation in the market values of lands
adjacent to and affected by a scheme the Town and Country Development Authority may, in lieu of providing for
the acquisition of such land, levy development charges on owners of such land. Sub-section 59(2) lays down the
rate for levying development charges. It states that The development charges shall be an amount equal to not less
than one-fourth and not more than one-third of the difference between the value of the land on the date of
publication of the intention to prepare the town development scheme and the date of completion of the scheme.
The provision in the Act is linked to the value of the land however the implementation at present is based on area
based method. In order to effectively capture land value increment, create buoyancy and equity, it is recommended
to transition from the current area based development charges to value linked charges.
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Table 5-13: Cost – Benefit Analysis for development charges
Instrument Name Development charge

Existing Status Charged along with the building permission fee
Potential Value If charged as per Section 59 of The Chhattisgarh Nagar Tatha Gram Nivesh Adhiniyam,
1973 @ an amount equal to not less than one-fourth and not more than one-third of the
difference between the value of the land on the date of publication of the intention to
prepare the town development scheme and the date of completion of the scheme, the
revenue potential for the ULB is substantial
Efficiency Development charges when linked to market rentals will ensure buoyancy in the value
capture.
Equity Development charges based on prevailing market value will ensure equity.
Adequacy An analysis of Development Charges reveals that the development charges when
translated to the land value (Collector Rate) on low valued plots works out at around
2.0% of the land value (Collector Rate) and around 0.25% of the land value for highest
valued plots. Therefore, the prevailing area-based rates are iniquitous and results in
loss of substantial revenue. It is therefore suggested to levy the Development Charges
based on the land value without increasing the total liability for the citizen who holds
plots with lesser market value. This can be done by applying the effective rate of
Development Charges @ 2.0% of notified land rate applicable at present to the lowest
land rate (Rs. 6,600/- per sqm) to all land parcels. If the development charge is levied
@ 2.0% (the rate which currently is levied on the land parcels with least value) of the
land value, the current average rate of Rs. 134 per sqft will increase to Rs. 200 per sqft
to Rs. 300 per sqft (assuming that the average land price in the city is Rs. 10000 to Rs
15000 per sqft.). This will result in an increase in revenue of the ULB under this head
by almost 50% to 100%.
Manageability Development charge is collected upfront along with building permission fee. Online
system for assessment and collection may be introduced to reduce administrative
costs.
Legal Feasibility The Chhattisgarh Nagar Tatha Gram Nivesh Adhiniyam, 1973, Section 59
Timelines Move from area based method to value based method – A Short Term Measure (1-2
years).
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Instrument Name Development charge

Introduction of on-line system for collection of development charges may be targeted
Remark Effective tool to increase revenue of RMC.
5.5 Premium on Relaxtion of Rules or Additional FSI/FAR
Sale of additional FSI is a planning and fiscal tool whereby the Local Planning Authority provides development
rights in excess of the baseline FSI in exchange of payment of a pre-defined premium. The basic principle behind
this fiscal tool is the separation of property rights and development rights. As a planning tool, premium FSI can be
used effectively for managing the density of urban areas. For example, higher FSI along transport corridors such
as metro lines (Transit Oriented Development) encourages greater use of public transport and prevents urban
sprawl.
As a fiscal tool, premium FSI is effective in locations where developable land is scarce or the baseline FSI is low.
It needs to be used judiciously as it serves as a perverse incentive to local authorities to restrict baseline FSI use
the tool for revenue maximisation, often leading to erosion of the legitimate tax base (such as property or land
value tax).
More and more States are coming with the policy of saleable FSI/FAR. It is widely used in Maharashtra, Karnataka,
Gujarat and Tamil Nadu to allow for additional development rights beyond the permissible limits in the state town
planning laws and regulations. Nagpur Municipal Corporation (NMC) has adopted a policy of increasing FSI/FAR
by 0.3 by paying premium to it. The premium will be charged at the rate of 60% of ready reckoner value for
residential constructions and at the rate of 90% for commercial constructions. Half of the premium collected by
NMC will go to the state government. This policy is only applicable for non-congested areas.
Purchase-able FAR is one the most effective VCF tools for the cities/areas where land values are high. The
instances of unauthorised construction are very high in the city of Raigarh. Hence it represents the need for
regulating and institutionalizing this widely used value capture tool of charging a premium on additional FAR.
Under the Chhattisgarh Municipal Corporation Act, 1956, there is provision of relaxation in compounding the
unauthorized construction and regularization of unauthorized colonies. There are provisions of hefty regularisation
charges on such constructions. However, the Municipal Commissioner has authority to regularize the construction
only if the unauthorised area is 10% of permissible constructed area. In such scenario, the instances of people
going for regularisation are very less. There are regularisation drives by state government under the provisions of
Chhattisgarh Anadhikrit Vikas Ka Niyamitikaran Adhiniyam for regularisation of unauthorised constructions and
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colonies beyond the 10% mark. The last such drive was announced in 2014-15, after almost 10 years of previous
such drive in year 2003. The provision of premium for purchasable FAR will also help in curtailment of instances
of unauthorised construction.
5.5.1 Revenue Potential from Premium on relaxation of rules or additional FSI/FAR
The base FAR in Raigarh is 1.5. It is suggested to provide for a sell-able FAR up to additional 0.25. There are
approximately 30000 houses in Raigarh. The total area under the houses @ 200 sqm per house works out at 6
million sqm. If 5% house owners go for purchase-able FAR of 0.25, this would result in selling of 75000 sqm of
area under additional FAR. The average circle rate for plots in Raigarh works out at Rs. 10000 to Rs. 15000 per
sqm and if the purchasable FAR is charged at 50% of prevailing circle rate this would result in potential revenue
of Rs. 37.50 crore to Rs. 56.25 crore.
Table 5-14: Cost – Benefit Analysis for purchasable FAR
Instrument Name Premium on Relaxtion of Rules or Additional FSI/FAR

Existing Status In Chhattisgarh there is no provision in any Act for charging any premium or fees for
grant of any additional FSI. Section 24A of the Chhattisgarh Nagar Tatha Gram Nivesh
Adhiniyam, 1973 provides for construction of an additional floor in a residential building.
Section 358 of The Chhattisgarh Municipal Act,1961 confers Power on the Municipality
to make bye-laws governing height of buildings; the number and height of storey's.
Potential Value The potential revenue could be Rs. 37.50 crore to Rs. 56.25 crore.
Efficiency Through the use of additional FAR as a fiscal tool, the planning authority can efficiently
incentivise vertical development and prevent urban sprawl. Doing this through market-
based incentives is far more efficient then doing the same through strict development
restrictions as the letter is prone to non-compliance.
Equity The charge is equitable as cost of FAR is linked with the property value
Adequacy The revenue potential could be sizeable.
Manageability Development charge is collected upfront along with building permission fee. No
additional cost is required to manage.
Legal Feasibility Can be introduced either in Chhattisgarh Nagar Tatha Gram Nivesh Adhiniyam, 1973
or The Chhattisgarh Municipal Act,1961.
Timelines Require concurrence from State Legislative Assembly – A Medium Term Measure (3-5
years).
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Instrument Name Premium on Relaxtion of Rules or Additional FSI/FAR

Remark Effective tool to increase revenue of ULB and will also help in curtailing the practice of
unauthorised construction.
5.6 Stakeholder Consultations
The consultant team carried out consultations with the officials from Municipal Corporations Durg, Bhilai,
Rajnandgaon, Bilaspur, Korba, Ambikapur, Raigarh and Jagdalpur as well as officials from SUDA on various VCF
tools and their applicability in the context of respective municipal corporations. The VCF tools as given in the
National VCF Policy Framework prepared by MoHUA were discussed in detail. The current provisions of land
based taxes and user charges were discussed. Opinion on various possibilities to increase the revenue base from
land were given and discussed. The analysis presented above is based on these consultations.
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CHAPTER 6 :
IMPLEMENTATION FRAMEWORK
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6 IMPLEMENTATION FRAMEWORK
6.1 IDENTIFICATION OF CLAUSES TO BE AMENDED
6.1.1 Rationale for Change in Area Based Rates of Building Related Fee
Rule 12. Form of application for permission for development of land by others –
(A) Any person not being the Union Government, State Government, or Local Authority, special authority
shall apply under the sub-section (1) of section 20 in Form VII for permission for development of land and
in Form VIII for development of land along with the schedule and specification sheet attached with the
application form. (B) Fees. – Every application submitted under sub-section (2) of section 29 shall be
accompanied by a fee specified below:
(iii) For the development of land other than erection of a building Rs. 50 per acre or part thereof.
(iv) For building operation.

i For a ground floor area up to 1200 sq.ft Rs.20/- Rs.15/-per storey
ii For a ground floor area of more than Rs.25/- Rs.20/-per storey
1200 sq.ft. but not exceeding 3000 sq.ft.
iii For a ground floor area of more than Rs.50/- Rs.40/-per storey
3000 sq.ft. but not exceeding 6000 sq.ft.
iv For a ground floor area more than Rs.75/- Rs.50/-per storey
6000 sq.ft. & above.
Source: The Chhattisgarh Nagar Tatha Gram Nivesh Niyam, 1975
Note 1- For purposes of calculation of the fee ground area shall mean the area of the portion which is proposed to
be built upon excluding the internal court yard and portion.
Note 2- For purposes of rates prescribed above the basement where provided will be regarded as the first storey,
the ground floor over the basement as the second storey and so on.
As elaborated in Section 5.2 of Chapter 5, the area based rates towards Building Plan Sanction Fees as
given above, are not buoyant as the same are not designed to keep pace with any changes in the land
values. To bring in buoyancy and to make the fee rates equitable it is necessary to link the fee rate with
the prevailing land prices.
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In Chhattisgarh, the compounding fee for regularization of unauthorized construction is based on value of
the property thus relating the fee and levies to value of the property is not new in Chhattisgarh. Linking
building plan sanction fee to prevailing land prices will ensure automatic increase in rates and obviate the
need for revision of rates which requires a lengthy process. The land rates however should be regularly
monitored and revised annually as is done for stamp duty purpose.
Similarly, the rates of land development approval fees @ Rs.50/-per acre and fees for development of
colony @ Rs.50000/- per hectare, based on per acre /hectare of plot area look easy to understand and
administer but the same are not equitable as the same are more (in terms of percentage of land value)
for the land parcels which have less market value. Moreover, the area based rates are not buoyant as
they do not keep pace with increase in value of land. This results in loss of potential revenue. Moreover,
whenever the rates are sought to be revised in line with rise in market value, it requires amendment of
Law/Rules which is a lengthy legislative procedure. If the rates are linked to land value, the same would
automatically keep pace with change in the notified land rates and no amendment of law/rules will be
required.
The need to change the unjust and iniquitous rates of fees is also mandated by the provisions of Section
131 of the Chhattisgarh Municipal Act 1961 which are elucidated in next section.
6.1.2 Power of Government to abolish, suspend or reduce the amount or rate of any tax under the
Chhattisgarh Municipalities Act, 1961.
Section 131 of The Chhattisgarh Municipal Act,1961 - Power of State Government in regard to relief in
taxes, if, on a complaint made to it or otherwise, it appears to the State Government that any tax levied by
a Council is unfair in its incidence or that such levy or any part thereof is obnoxious to the interest of the
inhabitants of the Municipality, it may, by an order, require the Council to remove the objections to any such
tax within such time as may be specified, therein, and on the failure of Council to comply with the order
within the time so specified to the satisfaction of the State Government the State Government may, by
notification and subject to such conditions or restrictions as may be specified therein, abolish, suspend or
reduce the amount or rate of any tax.
The case for a change from area based development charges to value based development charges is
supported by the example of Mumbai. It could be presented to illustrate the magnitude of benefits that
might accrue if value based rates are adopted. The rate of development charge under the Maharashtra
Regional and Town Planning Act prevalent since 1992 till 2010 in Mumbai was Rs. 350 per sq.m for
residential or institutional use. It was 1.5 times for industrial uses and 2 times for commercial uses. This rate
in 2009-10 was less than 0.11 to 0.58% of the then notified rates of market value of land. The revenue
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earned on account of development charge in 2007-08, 2008-09 and 2009-10 was Rs. 61.44, Rs. 87.13 and
Rs. 132.8 cores respectively. As the rates remained unchanged the growth in revenue was purely on
account of physical expansion of development area. In 2010 the rate was changed from area based rates
to value based rate of 2.5% of land value as determined in the Ready Reckoner which are applicable for
charging stamp duty on transfer of property. As a consequence, the development charge revenue increased
to Rs. 225.1 cores in 2010-11 and to Rs. 306.9 cores in 2011-12. Moreover, Jantri rates are generally lower
than the real market rates. If the Jantri valuation is improved to reflect real market rates, the revenue could
be substantially higher.
6.1.3 Rationale for change in Rates of Premium on diversion of land use under The Chhattisgarh Land
Revenue code, 1959 (Rules regarding Alteration of Assessment and Imposition of premium for the
purpose of levy of premium on Agricultural land)
Rule 14.(1) of the Rules regarding Alteration of Assessment and Imposition of Premium for the purpose of
levy of premium on agricultural land provides that for the purpose of levy of premium of agricultural land
diverted to non-agricultural purposes, in any town and village in the State of Chhattisgarh shall be divided
into the following classes as shown in column (1) of Schedule-A appended to these Rules and the premium
shall be imposed according to the rates specified in column (2), (3), (4), (5), (6), and (7) of the said Schedule.
Schedule-A
Purpose Unit/Colony/ or Institutional Facility
Project Industrial Purpose
Purpose
Municipal Rs.15/- per Rs.20/- per Rs.25/- per Rs.20/- per Rs.20/- per Rs.15/- per
Corporation and sqm sqm sqm sqm sqm sqm
Nagar Palika Area
5 km within Rs.10/- per Rs.15/- per Rs.20/- per Rs.15/- per Rs.15/- per Rs.10/- per
Municipal sqm sqm sqm sqm sqm sqm
Corporation and
Nagar Palika Area
The area based rates of Diversion Premium as given above, are not buoyant as the same are not designed to
keep pace with change in the land values. Therefore, the rates need to be made land value based as a percent of
land rate for sale/purchase. Linking fee rates to prevailing land prices will ensure automatic increase in rates and
obviate the need for revision of rates which requires a lengthy process. The land rates however should be regularly
monitored and revised annually as is done for stamp duty purpose.
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Moreover the area based rates of Diversion Premium are unjust and iniquitous as the same when
translated to percentage of land value works out relatively higher for land parcels with low market value.
For instance, the Diversion Premium @ Rs.25/- per square meter for land in Laxmipur Chowk - Indira Chowk
area will work out to 0.38% {(25*100)/(6600)} of the market value of land of Rs.6600/- per square meter.
However in case of Royal Residency Colony area where the land rate is Rs.14200/- per square meter, the
Diversion Premium will come to only 0.18% of the market value of land. While in Chaitanya Nagar & Beriwal
Colony area where the land rate is @ Rs.54000/- per square meter on main road it will come to only 0.046%
{(25*100)/(54000)} of the market value of land. Therefore, the area based rates are iniquitous and results
in loss of substantial revenue. It is therefore suggested to charge the Diversion Premium based on the land
value without increasing the total liability for the citizen who holds plots with lesser market value. This can
be done by applying the effective rate of Diversion Premium as a percent @ 0.38% of notified land rate
applicable to the lowest land rate (Rs. 6600/- per sqm) to all land parcels.
The case for a value based levy of charges for change of land use is supported by practice in other states
like Rajasthan where, in exercise of powers conferred by sub-section (I) of Section 74 and Section 73-B of
the Rajasthan Urban Improvement Act, 1959, the State Government of Rajasthan made the rules called the
Rajasthan Urban Improvement (Change of use of Residential Land or Premises for Commercial Purposes)
Rules, 1974. Rule 5 (1) of these Rules provides that the State Government shall consider recommendation
of the Collector and may allow the change of the use of residential land and/or premises of the applicant to
commercial purpose subject to the payment of conversion charges subject to Rule 5(2) which provides that
the applicant shall pay the following conversion charges:
a. Where the change of use is in respect of land and/or premises with full proprietary rights - 75% of
the appreciated value of such land and/or premises subject to a maximum of Rs. 200/- per sq. yard
if such change of use is only for hotel purpose and Rs. 100/- per yard if the change of use is only for
cinema purpose.
b) Where the change of use is in respect of land or premises with lease hold rights 5% of the
appreciated value of such land/or premises which shall be subject to revision every 15th year in the
first instance and every 10th year later on and the amount of upward revision shall at each state be
not less than 24% but shall not exceed Rs. 200 per sq. yard if such change of use is only for hotel
purpose and Rs. 100/-per sq. yard if the change of use is only for cinema purpose.
However, the rates of conversion charges @ 75% of the appreciated value of land and/or premises
converted to commercial use under The Rajasthan Urban Improvement (Change of Use of Residential Land
or Premises for Commercial Purposes) Rules, 1974, has been capped at the maximum of Rs. 200/- per
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square yards for Hotels and at Rs.100/- per square yards for cinemas, but it remains on the higher side for
others.
Conversion fee under the Chandigarh Conversion of Land Use of Industrial sites into Commercial activity
/services in industrial area, phase-I and phase-II, Chandigarh Scheme 2005 (published in gazette dated
19/09/2005) under Capital of Punjab (Development and Regulation) Act,1952 was declared under Clause
6(ii) to be 50% of the average price of the commercial sites fetched in the auctions held in the last 3 years.
6.1.4 Rationale for enacting Law/Rules for levy of Conversion charges on change of land use in urban
areas from residential to commercial / industrial use and for sub-division, and amalgamation of
plots:
The Chhattisgarh law provides for charging premium for permitting diversion of agricultural land from
agricultural land use to non-agricultural land use and provides for different rates of premium to be charged
for diversion of agricultural lands for different categories of land use i.e. residential land use, colony use,
commercial land use / industrial land use, institutional use, SEZ use or Medical facility land use .The rates
in Municipal Corporation and Nagar Palika Area range from Rs.15/- per square meter for residential and
medical land use to Rs.20/- per square meter for colony project, institutional land use and SEZ land use to
Rs.25/- per square meter for commercial /industrial land use. However, in Chhattisgarh there is no provision
for charging fees for change of land use or land conversion / diversion from residential use to other non-
residential uses in urban areas under the relevant Acts like the Municipalities Act, the Development Act and
the Housing Board Act. Many other states like Rajasthan provide for the same.
Section 166 (1) of the Rajasthan Municipalities Act. 2009 provides for Declaration of Development Areas.
The Municipality may, with the approval of the State Government and by notification in the Official Gazette,
declare any area in the city to be a development area for the purposes of this Act. Under section 166 (2) -
on or after the date on which notification under subsection (1) is published in the Official Gazette, no person
shall institute or change the use of any land or carry out any development of land without the permission in
writing of the Municipality.
Section 171 (1) of the Rajasthan Municipalities Act, 2009 deals with Sanction for sub-division of plot or
lay out of Private Street. Every person who intends to sub-divide his land or his plot or make or lay out a
private street on such land or plot on or after the date of the operation of plan under Section 161 shall submit
the intended layout plan for such purpose together with such particulars and such fees, as may be
determined by bye -laws or by Government Orders, to the Municipality for sanction.
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Section 177 (1) of the Rajasthan Municipalities Act,.2009 provides for restrictions on use and development
of land after declaration of a Scheme. On or after the date on which a draft scheme is published under
section 174, no person shall, within the area included in the project or scheme, institute or change the use
of any land or building or carry out any development, unless such person has applied for and obtained the
necessary permission for doing so from the Municipality in accordance with the bye-laws made in this behalf:
Section 182 of the Rajasthan Municipalities Act, 2009 states that there is restriction on change of use of
land and it is only within the power of the State Government to allow change of use of land. Section
182 (1) lays down that No person shall use or permit the use of any land situated in any municipal area, for
the purpose other than that for which such land was originally allotted or sold to any person by the State
Government, any Municipality, any other Local Authority or any other body or authority in accordance with
any law for the time being in force or, otherwise than as specified under a Master Plan, wherever it is in
operation. Section 182 (2) further states that in the case of any land not allotted or sold as aforesaid and
not covered under sub-section (1), no person shall use or permit the use of any such land situated in a
municipal area for the purpose other than that for which such land was being used on or before the
commencement of this Act. It is section 183 (3) which permits the state government to allow change of
use. It states that Notwithstanding anything contained in sub-section (1) or sub-section (2), the State
Government or any authority authorized by it by notification in the Official Gazette, may allow the owner or
holder of any such land to have change of use thereof, if it is satisfied so to do in public interest, on payment
of conversion charges at such rates and after inviting and hearing objections from the neighborhood in
such manner as may be prescribed with respect to the following changes in use, namely:
a) from residential to commercial or any other purpose; or
b) from commercial to any other purpose; or
c) from industrial to commercial or any other purpose; or
d) from cinema to commercial or any other purpose; or
e) from hotel to commercial or any other purpose; or
f) from tourism to commercial or any other purpose; or
g) from institutional to commercial or any other purpose:
Provided that rates of conversion charges may be different for different areas and for different purposes.
Where the State Government or any authority authorized by it under sub-section (3), is satisfied that a
person who ought to have applied for permission or regularization under this section, has not applied and
that such permission can be granted or the use of land can be regularized, it may proceed to determine the
conversion charges after due notice and hearing the party or parties and the charges as may be prescribed,
shall become due to the Municipality and be recoverable under sub-section (6). The Municipality may hold
camps for expediting this work and take the assistance of any agency as well: Provided that regularization
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of land use change shall not be permitted in cases where the original land use was for a public purpose
such as education, medical or any charitable purpose and the allotment was made at any concessional rate
unless the difference in the original rate of allotment and the prevailing is paid and specific consent of the
authority which made the original allotment has been obtained.
The Rajasthan Urban Improvement (Change of Use of Residential Land or Premises for Commercial
Purposes) Rules, 1974 lay down the rates for conversion charges for change of land use. The same are
briefly given below:
1) Rule 5 (2) of The Rajasthan Urban Improvement (Change of Use of Residential Land or Premises
for Commercial Purposes) Rules, 1974 lays down that the applicant shall pay the following
conversion charges:
a) Where the change of use is in respect of land and/or premises with full proprietary rights - 75%
of the appreciated value of such land and/or premises subject to a maximum of Rs. 200/- per sq.
yard if such change of use is only for hotel purpose and Rs. 100/- per yard if the change of use
is only for cinema purpose.
b) Where the change of use is in respect of land or premises with lease hold rights 5% of the
appreciated value of such land/or premises which shall be subject to revision every 15th year in
the first instance and every 10th year later on and the amount of upward revision shall at each
state be not less than 24% but shall not exceed Rs. 200 per sq. yard if such change of use is
only for hotel purpose and Rs. 100/-per sq. yard if the change of use is only for cinema purpose.
The Rajasthan Unified Building Bye-laws 2017 applicable to entire State prescribe the current fee for
allowing sub-division / reconstitution of plots on covered area of plot as under:
a. Sub-division: Rs. 50/- per sqm.
b. Reconstitution of plot: Rs 100/- per sqm.
Section 73-B of the Rajasthan Urban Improvement Trust Act, 1959 also provides for Restriction on change
of use of land and power of State Government to allow change in use of land. Under section 73-B (2),
notwithstanding anything contained in Sub-section (1), the State Government or any authority authorized
by it, by notification in the Official Gazette, may allow the owner or holder of any such land, to have change
of use thereof, if it is satisfied so to do in public interest, on payment of conversion charges at such rates
and in such manner as may be prescribed with respect to the following changes in use:
a) from residential to commercial or any other purpose; or
b) from commercial to any other purpose; or
c) from industrial to commercial or any other purpose; or
d) from cinema to commercial or any other purpose; or
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e) from any existing permissible use of land to any other purposes, as the State Government may
prescribe.
It is also provided that rates of conversion charges may be different for different areas and for different
purposes. As per Government of Rajasthan, Urban Development Department Notification No. P.3(50)/n v
v/03/2012 dated 21/09/2012 issued under section 90A (4) of Rajasthan Land Revenue Act,1956 read with
Rajasthan Urban Areas (Conversion of agricultural lands into non-agricultural uses and allotment) Rules
2012, conversion charges called Premium per square yards in Jaipur Development Authority area (except
Lal Kothi scheme, 200 feet strip on both sides of JLN Road and Prithviraj Nagar scheme) the rates of
premium are as under:
Residential
• Upto 200 sq. yards within Corporation area = Rs.150/- per sq. yard
• More than 200 sq. yards within Corporation area = Rs.200/- per sq. yard
• Group Housing within Corporation area = Rs.150/- per sq. yard
Commercial
• Up to 200 sq. yards within corporation area = Rs.600/- per sq. yard
• More than 200 sq. yards within corporation area = Rs.800/- per sq. yard
These rates were valid up to 31/03/2014 and thereafter additional 5% per year. Also these rates would be
increased by 10% for corner plots and plots on roads with 60 feet or more width.
6.1.5 Rationale for change in Rates of Betterment Charges under the Chhattisgarh Griha Nirman Mandal
Adhiniyam, 1972
Section 51 of the Chhattisgarh Griha Nirman Mandal Adhiniyam, 1972, Chapter XI provides for Assessment
and Recovery of Betterment Charges. Section 51(1) states that “When by making of housing scheme any
land in the area comprised in the scheme will in the opinion of the Board be increase in value, the Board in
framing the scheme may declare that betterment charges shall be payable by the owner of the land or any
person having an interest therein in respect of the increase in value of land from the execution of the
scheme”.
Section 51(2) of the Chhattisgarh Griha Nirman Mandal Adhiniyam, 1972, further states that “Such increase
in value shall be the amount by which the value of the land on the completion of the execution of the housing
scheme, estimated as if the land were clear of the buildings exceeds the value of the land prior to the
execution of the scheme estimated in like manner and the betterment charges shall be one half of such
increase in value”.
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The rate of Development Tax levied by the Municipal Corporation of Faridabad under section 118 of the
Faridabad Municipal Corporation Act, 1994 on increase in land values as a result of execution of
development schemes, is equal to one-half of the increase and in case of Betterment charges levied by the
local Development Authority in Faridabad on the increase in land values as a result of execution of
development schemes it is fixed at one-third of the increase in land values.
Section 62 of the Rajasthan Urban Improvement Trust Act, 1959 gives power to the Improvement Trust to
levy betterment charges, where as a consequence of any scheme having been executed by the Trust in
any area, the value of any property in that area, in the opinion of the Trust, has increased or will increase,
the Trust shall, with the sanction of the State Government, be entitled to levy upon the owner of the property
or any person having interest therein a betterment charge in respect of the increase in the market value of
the property resulting from the execution of the scheme. Such betterment charge shall be an amount equal
to one-fourth of the amount by which the market value of the property on the completion of the execution
of the scheme, estimated as if the property were clear of buildings, exceeds the market value of the property
prior to such execution estimated in like manner.
The rate of levy of betterment charges under all the Acts is, however, dependent upon increase in market
value of land and if there has been no increase in land values in a particular year or for consecutive years
there will be no levy of the betterment charges by the Housing Board or the Improvement Trust or the
Municipal Corporation or the Development Authority and normally there is no provision even for cost
recovery in spite of expenditure having been incurred on betterment of infrastructure in the area except
some states like Goa. The Goa, Daman and Diu Town and Country Planning Act, 1974 provides for
establishment of Development Authorities for urban areas, control on lands and building activity and levy
and collection of contribution for cost recovery of expenditure on schemes for development of infrastructure
in a development area in the city. The Planning and Development Authority has power under the Goa,
Daman and Diu Town and Country Planning Act,1974 to make planning schemes for different areas and to
estimate the costs of the scheme as per provisions of section 86 of the Act and also to collect the costs from
the beneficiary plot owners as Contribution towards costs of scheme under section 88 of the Act. However,
the contribution is limited to cost recovery of the scheme and cannot exceed 1/3rd of the increase in land
value as a result of execution of a scheme. Therefore, the flaw is that in case there is no increase in land
values as a result of execution of the scheme there will be no contribution for cost recovery.
Having this type of uncertain and slippery Tax base is against the principles of having a clear and precise
tax base. No increase in land rates would normally happen either because of liberal policies of the
government in allowing construction of affordable housing by subsidized loans and/or by allowing more FAR
which would cause more burden on infrastructure and civic services needing more funds for construction of
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additional infrastructure. Thus, on the principle that development must pay for development the beneficiaries
must pay for development schemes implemented by the ULBs even if there is no increase in land values.
Therefore, it is suggested that the rates of Betterment Charge leviable by the Housing Board/Municipal
corporation/Development Authority in Chhattisgarh should be made on the lines of Rajasthan Land and
Building Tax which is chargeable @ up to 2% of the market value/circle rates of lands annually but is being
charged @ 0.5% -1% on the market value of lands. Similarly, the Betterment Charge may be levied on all
properties falling in the scheme area except the small plot holders who are the low income group in the city,
by fixing the minimum fees @10% on the market value of lands as notified for stamp duty purposes or 50%
of increase in land value, whichever is more. That will provide the right kind of funds for funding the
strengthening and augmentation of infrastructure for the city.
6.1.6 Rationale for enacting new provisions for levy of Infrastructure development tax on big residential
properties/complexes and on non-residential properties.
The Goa Infrastructure Tax Act, 2009 provides for levy and collection of Infrastructure Tax from big
residential properties admeasuring 101 square meter and above, commercial and industrial properties for
providing infrastructure like water, electricity, roads, sewerage. The logic is very clear that such development
of new big properties /complexes and commercial complexes/properties create substantial additional
burden on infrastructure and following the American principle that development should pay for development
and old property owners should not be made to pay for them, the new big property owners and the non-
residential ones should pay for their infrastructure requirements of new roads, parking needs, power
requirements and transport needs. Therefore there is a good case for levy of Infrastructure Development
Tax based on market value of the new properties and not as a contribution for meeting the actual/estimated
costs so as to avoid legal challenges to ‘cost of the scheme’ and also to build some Infrastructure fund for
financing future needs of infrastructure.
The Infrastructure Tax as charged in Goa as given in the schedule can be termed as the Impact Fee for
providing infrastructure for the new development like water, electricity, roads, sewerage, etc. It is levied
under The Goa Infrastructure Tax Act, 2009 on new development at the time of seeking construction
permission. Section 3 of The Goa Infrastructure Tax Act, 2009 provides for the levy of Tax on Infrastructure
on any construction to be undertaken by any person on any land specified in the Schedule. There shall be
levied and paid a tax on infrastructure at the rates specified in the said Schedule. The Government may, by
notification in the Official Gazette, amend any entry in the Schedule and the Schedule shall be deemed to
have been amended accordingly. Therefore, amendment of the rates is not very difficult and does not
require legislative intervention.
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It also states that where a license for construction has already been issued to any person before the
commencement of this Act, the infrastructure tax shall be levied and paid at the time of the renewal of the
construction license or before the issuance of the occupancy certificate/completion certificate, whichever is
earlier, after carrying out assessment of tax through the Competent Authority under this Act. The tax on
infrastructure shall be assessed and collected by the Competent Authority at the time of approving the
construction plan or at the time of issuing construction license.
It also states that where a building proposed to be constructed is on a land earmarked for commercial
use/zone, the rate of tax applicable thereto shall be as applicable to commercial buildings irrespective of its
use. However where a building proposed to be constructed is in a land earmarked for other use or in zone
other than commercial zone, in any plan in force, such as residential or settlement zone, where commercial
utilization of building is done partly on the ground floor or any other floor, the rate of tax applicable to
commercial buildings shall be charged only to the floor area which is used for commercial purpose while for
other area of the building which is used for residential purpose, the rate applicable to residential building
shall be charged while assessing infrastructure tax.
The Infrastructure Act is not in derogation of other laws. Therefore, the provisions of this Act shall be in
addition to the laws governing the building activities, including The Goa Municipalities Act, 1968, The Goa,
Daman and Diu Town and Country Planning Act, 1974, The Goa Panchayat Raj Act, 1994, The City of
Panaji Corporation Act, 2002 and The Goa (Regulation of Land Development and Building Construction)
Act, 2008. However, in order to ensure the primacy of this Act, it is provided that no Local Authority can
issue construction license to any residential building or a commercial building or an industrial building unless
a person applying for the construction license has paid the infrastructure tax due under this Act, in respect
of such building or structure. Also, no person shall start constructing a building unless the tax payable under
this Act, in respect of such building or structure, has been paid. It is also provided that no local authority
shall issue Occupancy Certificate to any building for which the construction license has been issued before
the coming into force of this Act, unless the person applying for it produces a certificate from the competent
authority that the tax due under this Act has been paid and no person shall occupy any building or part
thereof unless the tax payable under this Act in respect of such building or structure has been paid. The
rate of Infrastructure Tax in Goa is Rs.200/- per sqm for residential, Rs.800/- per sqm for commercial and
Rs.250/- per sqm for industrial building or structure.
It is pertinent to note that in Goa there is no nexus between payment of Infrastructure Tax or Impact fee and
the cost or actual expenditure on provision of infrastructure. Therefore, being a Tax and not a fee, it is
slightly different from the Impact fee in USA as it is not charged limited to the cost of the project. The Impact
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fee in USA however is charged on new development to finance incremental expansion of on-site
infrastructure.
Impact fee in Andhra Pradesh is levied in order to mitigate the impacts of construction of commercial
buildings that lead to increased traffic necessitating decongestion measures. This fee is levied for the sites
abutting certain important roads having demand for commercial activity.
6.1.7 Rationale for levy of Infrastructure Development Charge as well as of Infrastructure Augmentation
Charge on change of land use/diversion of land use:
The conversion of agricultural lands into non-agricultural use entails not only increase in market value of
lands which is partly shared by the ULBs by levy of conversion charges, it also entails additional demand of
modern infrastructure and additional burden on civic services requiring additional funds for providing
additional infrastructure. Similarly, permission for conversion of residential lands into commercial user not
only increases the market value of such lands which is again shared as conversion charges by the ULBs
but also results into additional burden on civic services and demand for additional infrastructure. Therefore,
following the principle that development must pay for development, the financial impact of the need for
additional infrastructure generated by the change of land use must be compensated by the beneficiaries of
change of land use .This justifies levy of Infrastructure Development Charge on construction on lands
converted from agricultural to residential use and levy of Infrastructure Augmentation Charge on new
developments which come up on lands converted from residential to commercial user.
The Haryana Development and Regulation of Urban Areas Act, 1975 section 2 (hha) defines "Infrastructure
Development Charges" to include the cost of development of major infrastructure projects and section 2
(hhb) defines "Infrastructure Augmentation Charges" to include the cost of the augmentation of major
infrastructure projects. Section 3 (1) of The Haryana Development and Regulation of Urban Areas Act, 1975
provides that “Any owner desiring to convert his land into a colony shall, unless exempted under section 9,
make an application to the Director, for the grant of license to develop a colony in the prescribed form and
pay for it such fee and conversion charges as may be prescribed. The Haryana Development and
Regulation of Urban Area Rules, 1976 prescribe the rates in Schedule-A and Schedule-B for Infrastructure
Development Charges and Infrastructure Augmentation Charges respectively. For instance, in Faridabad
Complex the development of colonies by colonizers attracts conversion charges for change of land use as
well as payment of Infrastructure Development Charges and Infrastructure Augmentation Charges. The
rates of Infrastructure Development Charges are given in Schedule –A of the Haryana Development and
Regulation of Urban Area Rules, 1976 which are per square meter ranging from Rs.70/- per square meter
in residential category lower potential zone to Rs.500/- per square meter in residential hyper potential zone.
In case of commercial category, the rates vary from Rs.190/- per square meter to Rs.1000/- per square
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meter. Similarly, the rates of Infrastructure Augmentation Charges in Faridabad as given in schedule – B of
the Haryana Development and Regulation of Urban Area Rules, 1976 are between Rs.0.5 lakh per acre to
Rs.5 lakh per acre for residential land and between Rs. 2 lakh per acre to Rs. 20 lakh per acre for commercial
land.
These charges are levied and collected at the time of application for license for laying a colony and issuance
of completion certificate. The area based rates of Infrastructure Development Charge as well as of
Infrastructure Augmentation Charge as presently levied in Faridabad are iniquitous as these are the same
for owners of lands with less market value as well as for those with higher market value of land. Moreover,
these are not buoyant as the same are not designed to keep pace with rise in land value and the need for
buoyancy. Therefore the rates, if adopted by State of Chhattisgarh, need to be made value based as a
percent of land rate per square meter linked to current land rates. Since the converted lands may fall within
the jurisdiction of the Municipal Corporation or the Development Authority or the Housing Board necessary
amendment for inserting provisions for levy of Infrastructure Development charge as well as of Infrastructure
Augmentation Charge will be required to be made in the three Acts and corresponding Rule and notifications
for fixing the rates.
In Chhattisgarh Rule 8 (1) of The Chhattisgarh Municipal Corporation and Municipalities (Registration of
colonizer, term and conditions) Rules, 2013 captioned “Application for the development of the colony and
permission fee” provides that when a colonizer registered under rule 3 wants to establish any colony and
take up development work, he shall submit an application to the competent authority together with the fee
prescribed under rule 8(2) which is Rs.50000/- per hectare in case of Municipal Corporation having
population of 3 lakh or more and @ Rs.25000/- per hectare in case of Municipal Corporation having
population of less than 3 lakh.
Rule 11 of The Chhattisgarh Municipal Corporation and Municipalities (Registration of colonizer, term and
conditions) Rules, 2013 deals with permission for development work and provides that Permission shall be
granted after fulfilling the following conditions-
a) Out of plots/flats to be developed 15% of plots / 10% of flats shall be reserved for transfer to the
b) Colonizer shall deposit 2% of the estimated cost of internal development cost of the colony as
c) Rupees 100/- per square meter for external development of the colony with the Municipality
d) The rate in (c) relates to 2011 and will increase @5% per year thereafter.
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However, it would be better to levy Infrastructure development charges and Infrastructure augmentation
charges based on market value of land on conversion /diversion of land use for development of a colony.
6.1.8 Rationale for making provision in law for charging Premium on Additional FAR/FSI:
A Betterment levy related Amendment to Jaipur Region Building Regulation 2010 was made as per
Gazette notification dated 20 May 2011 and Additional FAR over and above standard FAR in case of flats
will be sanctioned on payment of betterment levy of Rs.100/- per square feet or 25% of residential land rate,
whichever is more. In case of group housing standard FAR of 1.33 could be exceeded up to 2.25 on payment
of betterment levy @ Rs.100/- per square feet or 25% of land rates, whichever is more. Additional coverage
can be allowed up to 5% on payment of betterment levy on the additional covered area at the same rates.
If the height of the building is more than 30 meter betterment levy @ of Rs.300/- per square feet or 25% of
residential land rates, whichever is more, will be payable on the covered area in the additional height. In
case of commercial use which can be allowed up to 3% of the covered area in group housing, betterment
levy on the commercial use area will be 40% of residential land rate. In case of commercial properties, the
additional covered area will attract betterment levy @ of Rs.200/- per square feet or 25% of reserved land
rate for commercial lands, whichever is more.
The betterment levy in case of additional FAR over and above standard FAR will be a per table below-
Additional FAR above 2.25 For Residential/ Institutional premises For Commercial premises
0-1 Betterment levy 30% of residential reserve Betterment levy 30% of

land rate commercial reserve land rate
1-2 Betterment levy 35% of residential reserve Betterment levy 30% of
More than 2 Betterment levy 50% of residential reserve Betterment levy 30% of
Note: In case of Hotels the betterment levy rates will apply in case the FAR is above 3.
Betterment charges for allowing extra FAR were further amended under Jaipur Region Building Regulation
2012 vide Gazette notification dated 07.12.2012 amending Jaipur Region Building Regulations 2010. A New
provision made in para 8.10(8) FAR provided that for more than standard FAR, Betterment Charge will be
payable as per table below:
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0-1 30% betterment levy (On residential 30% betterment levy (On
reserve price) commercial reserve price)
1-1.15 35% betterment levy (On residential 35% betterment levy (On
More than 1.15 50% betterment levy (On residential 50% betterment levy (On
A further Amendment was made as per Gazette notification dated 2 August 2013 as under-
On roads 24m - 30m wide for 30% of reserved residential land rate 30% of reserved commercial
additional FAR up to 0.5 land rate
additional FAR 0.5-1 land rate
additional FAR up to 1-1.5 land rate
On roads more than 60m 50% of reserved residential land rate 50% of reserved commercial
wide for additional FAR land rate
above1.5
Premium on additional FSI has been used as a fiscal tool in Maharashtra in 2008 when the State
Government proposed in the Budget to allow additional FSI of 0.33 in the suburbs of Mumbai by charging
‘premium’ linked to ‘Ready Reckoner’ rates. The revenues were to be shared in equal proportion between
the State Government and the Municipal Corporation of Greater Mumbai. The scarcity of development rights
created by constrained FSI Regulations was sought to be exploited by turning it into a fiscal tool. However,
charging of such premium was struck down by Mumbai High Court as ultravires in Writ Petition Number
2443 of 2008 wherein the Honorable High court held that “Section 22 which falls under Chapter III and which
requires what must be the contents of the development Plan, does not expressly confer any power on the
state government or the planning Authority to make a provision for imposing a fee whether regulatory or
compensatory…..Once the legislature has provided for development charge under provisions of Section
124 A, which charge has to be kept in a separate fund to be used for providing amenities, it is not open for
the state or the Planning Authority to contend that under the guise of giving grant of additional FSI of 0.33
they are entitled to a charge or a fee for the purpose of providing amenities. The Respondents /state
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Government has not been able to show any provision in the MRTP Act expressly / specifically authorizing
any levy of such premium based on the ready Reckoner value of land per sq. meter “Since there was no
legal provision in the MRTP Act for charging any premium on permitting additional FSI, amendment to the
MRTP Act 1966 was therefore brought by inserting provision for imposition of fees, charges and premium
for grant of additional FSI or for special permission or for use of discretionary powers under the development
control legislation. Maharashtra had to go for Amendment of section 14 by inserting new sub-section (l) at
the end of the section as under-
In Section 14 of the principal Act, after clause (k), the following clause shall be added, namely:-
“(l) Provisions for permission to be granted for controlling and regulating the use and development of land
within the jurisdiction of a local authority or the Collector, as the case may be, including imposition of fees,
charges and premium, at such rate as may be fixed by the State Government or the Planning Authority,
from time to time, for grant of an additional Floor Space Index or for the special permissions or for the use
of discretionary powers under the relevant Development Control Regulations, and also for imposition of
conditions and restrictions in regard to the open space to be maintained about buildings, the percentage of
building area for a plot, the location, number, size, height, number of storeys and character of buildings and
density of population allowed in a specified area, the use and purposes to which buildings or specified areas
of land may or may not be appropriated, the sub-division of plots, the discontinuance of objectionable users
of land in any area in reasonable periods, parking space and loading and unloading space for any building
and the sizes of projections and advertisement signs and hoardings and other matters as may be considered
necessary for carrying out the objects of this Act”.
In the case of Ahmedabad Urban Development Authority vs. S.J. Pasawalia, the Supreme Court upheld a
Gujarat High Court judgment where it had been held that in the absence of any express/specific provision
in the Gujarat Town Planning & Urban Development Act authorizing the levy of a development charge on
plot holders who carried out any development/ construction, regulations framed by the Ahmedabad Urban
Development Authority purporting to levy a development charge were illegal. Both the High Court and the
Supreme Court negated the contention that even in the absence of any specific provision, a power to recover
a fee for the purpose of development of the area in question and for implementing schemes of development,
could be implied in the Act as being incidental or ancillary to carrying on the functions for which the
Development Authority had been constituted under the Town Planning Act. The Supreme Court held "in a
fiscal matter it will not be proper to hold that even in the absence of express provision; a delegated authority
can impose a fee or a tax. In our view, such power of imposition of tax and/or a fee by a delegated authority
must be very specific and there is no scope for implied authority for imposition of such tax or fee. It appears
to us that the delegated authority must act strictly within the parameters of the authority delegated to it under
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the Act and it will not be proper to bring the theory of implied intent or the concept of incidental and ancillary
power in the matter of exercise of fiscal power.”
In Chennai, the Chennai Metropolitan Development Authority has made provision for collection of charges
for award of premium FSI in the Development Control Regulations but The Tamil Nadu Town and Country
Planning Act 1971 does not have explicit provisions for levy of any charges for award of additional FSI.
Similar is the position in Karnataka Zonal Regulations of Mangalore 2011 and also in Gujarat General
Development Control Regulations where additional FSI may be permitted on payment of premium or
additional Infrastructure Charge. However, in the absence of explicit provision for levy of a premium or
charge as a tax in the Town and Country Planning Act the legality of the charges is doubtful.
Charging premium for additional FSI is emerging as a popular VCF tool. However, in Chhattisgarh there is
no provision in any Act for charging any premium or fees for grant of any additional FSI. Section 24A of
the Chhattisgarh Nagar Tatha Gram Nivesh Adhiniyam, 1973 provides for construction of an additional floor
in a residential building stating that “where under the provisions of this Act or rules made there under or any
other law enacted under entry 5 of the State List of the Seventh Schedule to the Constitution of India for the
time being in force, regulating the constructions of residential building or any rules or regulations or bye-
laws made there under it is permissible to construct less than three floors then notwithstanding anything
contained in the Act or the law or the rules or the regulations or the bye-laws aforesaid it shall be permissible
to construct an additional floor in such residential building subject to sanction of a plan of such construction
under the aforesaid Act or law, as the case may be”. However, there is no provision for charging any fee on
sanction of an additional floor.
Section 358 of The Chhattisgarh Municipal Act,1961 confers Power on the Municipality to make bye-laws
governing height of buildings; the number and height of storey's composing a building and height of rooms
and the dimensions of rooms intended for human habitation; and the height and slope of the roof above the
uppermost floor but nowhere the power to levy fees or charges for allowing additional height has been
conferred on the state government or any authority.
The position in Raigarh is similar as there is no provision for charging any premium or fees or betterment
levy for grant of any additional FSI in the Raigarh Development Authority Act, 1982 although the
Development Authority has power to regulate the location, height, number of storey and size of buildings
and other structures. Therefore, it is necessary to amend the law and make provision for levy of premium
or charge or betterment levy for grant of additional FSI by inserting provisions in section 68 of the Raigarh
Development Authority Act 1982, similar to the one inserted by Maharashtra into Section 14(1) of the MRTP
Act 1966 as under:-
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“Provisions for permission to be granted for controlling and regulating the use and development of land
within the jurisdiction of a local authority or the Collector, as the case may be, including imposition of fees,
charges, betterment levy and premium, at such rate as may be fixed by Regulations by the State
Government or the Planning Authority, from time to time, for grant of an additional Floor Space Index or
for the special permissions or for the use of discretionary powers under the relevant Development Control
Regulations.”
6.1.9 Rationale for levy of Certain Fee/Charges in Chhattisgarh levied by the State Government in
Rajasthan
(i) Certification of Ownership Application Fee

The Rajasthan Urban Land (Certification of Titles) Bill, 2016 has an objective to providing clear land title to
urban lands - a step towards good governance and increase the Ease of Doing Business. The Rajasthan
Assembly passed the Rajasthan Urban Land (Certification of Titles) Bill, 2016 on 5th April, 2016. With this,
Rajasthan also became the first state to bring and pass Rajasthan Urban Land (Certification of Titles) Bill,
2016.
State residents, can now seek a certificate of ownership of their lands by paying a nominal fee to the state
government. The state government will set up an authority which will seek all the documents from the
landowners, and will verify it against records held by the state. The authority will issue a certificate and a
map to the owner for property with state guarantee. Currently, it is kept voluntary for the owners to apply for
this certificate. The state government has kept the application fee of 0.5% of the land rate determined by a
district level committee to encourage more people to join this new scheme. Through the Bill the state
government has given itself the power to enter into any property or premise for the purpose of survey by
giving its owner a prior notice. Experts believe that this Bill will give a clear title to the owner and will reduce
litigations in the courts. This is seen as one of the key steps towards land reforms and Rajasthan has
become the first state to introduce in the country.
(ii) Development under Land Pooling Bill
The Rajasthan Land Pooling Scheme Bill provides for easy aggregation of small land parcels to undertake
urban development, revenue from which can then be generated through user fee/taxes. This Act will
facilitate acquisition of small land parcels for bigger infrastructure projects. In many big ticket projects,
fragmented land holdings often prove to be tricky in terms of acquisition thereby also affecting the projects.
According to this law, if land owners decide to give up their properties, they would get a proportional share
in the developed land, thereby stimulating easier acquisition. This law has been primarily meant for
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the development of the infrastructure & investment promotion regions. The biggest advantage of this law
would be that it will speed up development works and simultaneously would create a fare advantage for
those who own the properties, where the project would have to be set up. This will help in developing
infrastructure as per the master plan. The land required for development will be shared by all the land
owners in the area. People in the area will contribute land and in return will get developed land in the same
proportion. In order to ensure justified acquisition of land, the government will allocate land close to where
it has been taken from, as far as possible. According to the law, land owners will get up to 55 per cent of
the developed land from the authority. Post development, it could be said that the value of their returned
land will be much more than the original value of their entire land & hence it can be a win-win situation for
all the stakeholders involved.
The allocation of land from the total area covered under the scheme include (i) fifteen percent for parks,
playgrounds, garden and open spaces and social infrastructure such as schools, dispensary, fire brigade,
community facilities, and public utility; (ii) fifteen percent for roads; and (iii) fifteen percent for sale by
appropriate authority for residential, commercial or industrial use depending on the nature of development
including minimum 5% for Economically Weaker Sections and Lower Income Group housing. Provided that
the percentage of the allocation of land may be altered depending upon the nature of development and for
the reasons to be recorded in writing. The proceeds from the sale of land referred to in (iii) above shall be
used for the purpose of providing infrastructure facilities.
(iii) Contribution from plots in land pooling scheme
Chapter 3 - Control of Development and Use of Land provides under section 14 of The Rajasthan Land
Pooling Scheme Bill for Restrictions on development after publication of declaration of intention of land
pooling scheme.- (1) On or after the date on which a declaration of intention of land pooling scheme is
published in the Official Gazette under section 4 in respect to any area, no person shall carry out any
development in any building or in or over any land, within the limits of the said area without the permission
in writing of the appropriate authority and without obtaining certificate from it to the effect that development
charge, scrutiny fees or any other fee leviable under this Act has been paid or that no such charge is leviable.
Section 15 of The Rajasthan Land Pooling Scheme Bill -. Application of permission for development - (1)
Any person, intending to carry out any development in any building or in or over any land after the publication
of intention of land pooling scheme shall make an application in writing to the appropriate authority for
permission for such development in such form and containing such particulars and accompanied by such
documents as may be prescribed. (2) Every application under sub-section (1) shall be accompanied by such
fee as may be prescribed. (3) On an application having been duly made under subsection (1) and on
payment of the development charge or betterment charges or any other charges, if any, as may be
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assessed, the appropriate authority with the approval of the Land Pooling Officer appointed under section
21 of The Rajasthan Land Pooling Scheme Bill may- (i) pass an order- (a) granting permission
unconditionally; or (b) granting permission subject to such conditions as it may think necessary to impose;
or (c) refusing permission. (4) The appropriate authority in considering the application for permission shall
ensure that it is in conformity with the provisions of the land pooling scheme prepared or under preparation
under this Act and where the development or any modification is likely in the opinion of the appropriate
authority to interfere with the operation of the land pooling scheme or to be prejudicial to planned
development, or any plan of the local authority, the appropriate authority may refuse such permission
Section 23 of The Rajasthan Land Pooling Scheme Bill provides the Contents of preliminary and final
scheme.- (4) In the final scheme, the Land Pooling Officer shall - (i) fix the difference between the total of
the values of the original plots and the total of the values of the plots included in the scheme in accordance
with the clause (vi) of sub-section (1) of section 41; (ii) determine whether the areas used, allotted or
earmarked for a public purpose or purposes of the appropriate authority are beneficial wholly or partly to
the owners or residents within the area of the scheme; (iii) estimate the portion of the sums payable as
compensation on each plot used, allotted or earmarked for a public purpose or for the purpose of the
appropriate authority which is beneficial partly to the owners or residents within the area of the scheme and
partly to the general public, which shall be included in the costs of the scheme; (iv) calculate the contribution
to be levied under subsection (1) of section 43 of The Rajasthan Land Pooling Scheme Bill, on each plot
used, allotted or earmarked for a public purpose or for the purpose of the appropriate authority which is
beneficial partly to the owners or residents within the area of the scheme and partly to the general public;
(v) determine the amount of exemption, if any, from the payment of contribution that may be granted in
respect of plots exclusively occupied for religious or charitable purposes; (vi) estimate the increment to
accrue in respect of each plot included in the scheme in accordance with the provisions of section 42; (vii)
calculate the proportion of the contribution to be levied on each plot in the final scheme to the increment
estimated to accrue in respect of such plot under sub-section (1) of section 43 of The Rajasthan Land
Pooling Scheme Bill; (viii) calculate the contribution to be levied on each plot included in the final scheme;
(ix) determine the amount to be deducted from, or added to, as the case may be, the contribution leviable
from a person in accordance with the provisions of section 43 of The Rajasthan Land Pooling Scheme Bill;
(x) estimate with reference to claims made before him, after notice has been given by him in the prescribed
manner and in the prescribed form, the compensation to be paid to the owner of any property or right
injuriously affected by the making of the land pooling scheme in accordance with the provisions of section
46, (5) The Land Pooling Officer shall draw in the prescribed form the preliminary and the final scheme in
accordance with the draft scheme:
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Section 42 of The Rajasthan Land Pooling Scheme Bill gives the method of Calculation of increment.- For
the purposes of this Act, the increments shall be deemed to be the amount by which, at the date of the
declaration of intention to make a scheme, the market value of the plot included in the final scheme
estimated on the assumption that the scheme has been completed, would exceed at the same date the
market value of the same plot estimated without reference to improvements contemplated in the scheme:
Provided that in estimating such value, the value of buildings or other works erected or in the course of
erection on such plot shall not be taken into consideration. Section 43 of The Rajasthan Land Pooling
Scheme Bill. Contribution towards costs of scheme.- (1) The costs of the scheme shall be met wholly or in
part by a contribution to be levied by the appropriate authority on each plot included in the final scheme
calculated in proportion to the increment which is estimated to accrue in respect of such plot by the Land
Pooling Officer: Provided that- (i) (a) where the cost of the scheme does not exceed half the increment, the
cost shall be met wholly by a contribution, and (b) where it exceeds half the increment, to the extent of half
the increment it shall be met by a contribution and the excess shall be borne by the appropriate authority;
Section 52 of The Rajasthan Land Pooling Scheme Bill empowers and gives Power of appropriate authority
to make agreement.- (1) The appropriate authority shall be competent to make any agreement with any
person in respect of any matter which is to be provided for in a land pooling scheme, subject to the power
of the State Government to modify or disallow such agreement and unless it is otherwise expressly provided
therein, such agreement shall take effect on and after the day on which the land pooling scheme comes
into force
6.1.10 Rationale for levy of Land and Building Tax on the market value of lands and buildings in
Chhattisgarh as levied by the Municipal Corporations in Rajasthan.
The Rajasthan Lands and Buildings Tax Act, 1964 is an Act to provide for the levy of a tax on land and
buildings in urban areas of the State of Rajasthan. Section 3 – Levy of Lands and Buildings Tax: (1) With
effect on and from 1st April, 1973, for each year, the State Government shall levy and collect a tax on lands
and buildings situated in an urban area (hereinafter referred to as Lands and Buildings Tax), from the owner
of such lands and buildings, at such rate not exceeding 2% of the market value thereof as the State
Government may, by notification in the Official Gazette declare in this behalf. However, the State
Government may fix graduated rates of tax on different slabs of market values of urban lands and buildings:
But until a notification declaring rate of tax is issued under this sub-section, the rate of tax on lands and
buildings shall be as follows:-
On the first Rs. 1, 00,000/- of the market value Nil

of the land and building.
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On the next Rs. 2, 00,000/- of the market value ½%

On the next Rs. 7, 00,000/- of the market value 1%
On the balance of the market value of the land 1½%
and building in excess of Rs. 10,00,000/-
Provided further that with effect on and from [the date of commencement of the Rajasthan Lands and
Buildings Tax (Amendment) Act, 1995 (Act No. 14 of 1995)] no tax shall be levied and collected on lands
and buildings situate in an urban area having a population of less than [one and a half lakh according to the
latest census figures. Provided further that if any area is declared a cantonment, or is constituted a
Municipality, after the commencement of the Rajasthan Urban Land Tax (Amendment) Act, 1973, the tax
on lands and buildings situate in such area shall be levied and collected with effect from the commencement
of the year following the year during which the area is declared a cantonment or is constituted a Municipality.
It is suggested that the Land and Building Tax may be levied in Chhattisgarh on the lines of Rajasthan. The
rates of tax may be 1% of the market value of lands per year and the collections from the Land and Building
Tax put in a separate Bank account and reserved for infrastructure development in the city. As per census
2011 the population of Raigarh was about 1.50 lakh. The total number of properties (residential, commercial,
and mixed-use properties) in Raigarh are 30414. If the smaller plots, say, smaller than 200 square meters
estimated to be 6000 (@20%) are excluded, from the levy of Land and Building Tax and estimate average
size of the balance taxable plots numbering 24000 to be 200 square meters each and the average market
price of land to be Rs. 15000/- per square meter (the minimum being Rs.6600/- per square meter and going
up to Rs.54000/- per square meter) an average plot of 200 square meters would be values at Rs.30,00,000/-
and the annual Land and Building Tax for each property @ 1% of the market value would come to Rs
30000/-. Thus collection of Rs. 72 crores from the levy of Land and Building Tax from 24000 properties can
be envisaged.
6.2 Proposed amendments
Broadly the following amendments/changes need to be made in the various Acts /Rules/Schedules in
Chhattisgarh.
• Rates of fees for land development/building plan sanction to be made market value of land-based
instead of area based
• Rates of diversion of land use/conversion charges to be amended from area based to land value
based as a percentage of market value on the lines of Mumbai.
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• Rates of betterment charges to be amended with provision for some minimum charges regardless
of nominal increase or no increase in land value.
• Conversion charges on change of land use from residential to commercial / industrial in urban areas
to be levied in Chhattisgarh and made land value based on the lines of Mumbai.
• Chhattisgarh laws to be amended to add provision for charging betterment levy on grant of additional
FAR on the lines of Rajasthan.
• Insertion of new provisions in the Chhattisgarh Municipal Act and the Development Act for charging
Infrastructure Development charge and Infrastructure Augmentation charge in addition to land use
diversion fee/conversion charges on the lines of Faridabad.
• Insertion of new provisions for allowing land pooling and charging fees for making application for
land pooling and for charging contribution from beneficiaries of land pooling plots.
• Insertion of new provisions for land titling and land title certificates on payment of fee.
• Enactment of new law for levy of Land and Building Tax on the lines of Rajasthan.
6.3 Acts/sections/Rules/Bye-laws /Notifications to be amended
6.3.1 Amendment of Section 187A of The Chhattisgarh Municipalities Act. 1961-
Section 187A - Compounding of offences of construction of buildings without permission, (1)

Notwithstanding anything contained in this Act or any other Act for the time being in force or any rules or
byelaws made there under, the offence of constructing buildings without permission or contrary to the
permission granted may be compounded, provided that in compounding the cases, fees shall be charged,
as under in respect of the area of unauthorized construction on the basis of the rate of sale of land
determined by the Collector of Stamps for the area concerned:--
Provided further that the compounding shall be made in case of residential construction by the Chief
Municipal Officer and in case of non-residential construction with the permission of President-in-Council.
This section may be amended to include all compoundable deviations in erection of buildings and
sanction/ regularization of additional FAR.
6.3.2 Amendment of Section 339B of the Chhattisgarh Municipalities Act. 1961
Section 339B - Development of Colonies

(1) The Registration Certificate granted under Sections 339-A shall entitle the colonizer to undertake the
development of one or more colonies in the Municipal area or the Nagar Panchayat area, as the
case may be, subject to the provisions of this Act, and on the following conditions:--
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(a) in every residential colony in the Municipal Council or Nagar Panchayat area, out of the total
area fifteen percent of the land shall have to be transferred by the colonizer to the Chief
Municipal Officer for economically weaker sections on such terms and in such manner
as may be prescribed;
(b) in respect of land on which the Urban Land (Ceiling and Regulation) Act, 1976 was applicable,
the colonizer shall have to transfer land to the Chief Municipal Officer as required under
clause (a);
(c) where the colony is proposed on a small piece of land the area of which is less than one acre,
such colonizer who does not wish to provide land for economically weaker sections as
required in clause (a) shall deposit into the "Service to Poor Fund" of the Municipal Council
or the Nagar Panchyat area, as the case may be, opened in terms of Section 117-A, fee at
such rate as may be prescribed.
(2) In addition to transferring land for economically weaker sections under sub-section (1), the colonizer
shall also reserve at least ten percent fully developed plots of the prescribed size or in alternate offer,
constructed houses/flats of the prescribed size in his residential colony for sale to persons belonging
to lower income group on terms as may be prescribed.
(3) For sale of houses to the economically weaker sections and the lower income group, the procedure
for selection of eligible persons and the determination of the cost of such plots or houses shall be as
may be prescribed by the Government.
(4) Permission to develop colony shall be given by the Chief Municipal Officer and appeal against any
order of the Chief Municipal Officer shall lie before the Government.
The above conditions may be amended by adding further conditions as these do not include a
condition to pay Infrastructure Development Charges in case of new development and Infrastructure
Augmentation Charges in case of addition to the existing infrastructure of an existing colony.
of colonizer, term and conditions) Rules, 2013.
Rule 8- Application for the development of the colony and permission fee - (1) When a colonizer
registered under rule 3 wants to establish any colony and take up development work, he shall submit an
application to the competent authority together with the fee prescribed under rule 8(2) as under-
a Municipal corporation having population of 3 lacs or more Rs.50000/-per hectare

b Municipal corporation having population of less than 3 lacs Rs.25000//-per hectare
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c Municipal councils Rs.10000//-per hectare

d Nagar palikas Rs.50000//-per hectare
The fee prescribed for development of a colony is area based and should be amended and made
land value based.
of colonizer, term and conditions) Rules, 2013
Rule 11 - Permission for development work. Permission shall be granted after fulfilling the following
conditions-
(a) Out of plots/flats to be developed 15% of plots/10% of flats shall be reserved for transfer to the
(b) Colonizer shall deposit 2% of the estimated cost of internal development cost of the colony as
(c) Rupees 100//- per square metre for external development of the colony with the Municipality
(d) The rate in (iii) relates to 2011 and will increase @5% per year thereafter.
This Rule may be amended to make the Rates of external development charges land value based
and should include rates of Infrastructure development charge and Infrastructure Augmentation
charge at (v) and (vi) based on market value of land as in case of compounding fee for regularization
of unauthorized construction.
6.3.5 Amendment in section 349 of the Chhattisgarh Municipalities Act, 1961
Section 349 of The Chhattisgarh Municipalities Act. 1961- Fees for licenses and permissions. The
Council may charge such fee as may be prescribed by bye-laws for--
a) any license granted under this Act;
b) any permission granted under this Act
This section may be amended to include -

c) Sanction of additional FAR
d) Land pooling application fee
e) Contribution by final plot holders in a land pooling scheme
f) Land title certification fee
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6.3.6 Amendment of Section 163-A of The Chhattisgarh Municipal Corporation Act, 1956.
Section 163-A - Creation of Infrastructure Development Fund.-

1. Notwithstanding anything contained in this Act or any other Act for the time being in force, the State
Government may create an Infrastructure Development Fund with a view to assist the Municipal Corporation
in developing the infrastructure. 2. The sources of the infrastructure fund and the procedure and manner in
which the amount from the fund shall be provided to Municipal Corporation shall be such as may be
prescribed.
This section may be amended to include the collections from Infrastructure development charges
and Infrastructure Augmentation charges
6.3.7 Amendment of Section 308-B of the Chhattisgarh Municipal Corporation Act, 1956.
Section 308-B -Relaxation in Compounding the unauthorized construction.- (1) Notwithstanding

anything contained in Section 308-A or any other provisions of this Act or any other law for the time being
in force , the Commissioner may, on the application made in this behalf by order, compound the cases
involving deviations from the approved plan or map, or construction made without permission by collecting
compounding fee at such rate as may be determined by the State Government.
This section may be amended to include compounding of deviations in erection of buildings and
sanction of additional FAR.
6.3.8 Amendment of Rule 12 of The Chhattisgarh Nagar Tatha Gram Nivesh, Niyam, 1975.
Section 29 of The Chhattisgarh Nagar Tatha Gram Nivesh Adhiniyam, 1973 - Application for permission for
development by others provides under sub-section 29 (2) that Such application for permission for
development shall also be accompanied by such fee as may be prescribed.
For prescribing the fee Section 85 of The Chhattisgarh Nagar Tatha Gram Nivesh Adhiniyam, 1973 confers
Powers to make rules on The State Government which may, after previous publication, make rules for
carrying out the purposes of this Act and In particular and without prejudice to the generality of the foregoing
power, such rules may provide for the fee which shall be accompanied with the application under Section
29 (2).Accordingly The Chhattisgarh Nagar Tatha Gram Nivesh, Niyam, 1975 were framed.
Rule 12 of The Chhattisgarh Nagar Tatha Gram Nivesh, Niyam, 1975 provides that - (A) Any person not
being the Union Government, State Government, or Local Authority, special authority shall apply under the
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sub-section (1) of section 20 in Form VII for permission for development of land and in Form VIII for
development of land along with the schedule and specification sheet attached with the application form.
(B) Fees. – Every application submitted under sub-section (2) of section 29 shall be accompanied by a fee
specified below :-
(a) For the development of land other than erection of a building Rs. 50 per acre or part thereof.
(b) For building operation.
Serial No. Area Rate of Fee For Rate of fee for

Ground Floor subsequent storey
1 2 3 4
i For a ground floor area up to 1200 sq.ft Rs.20/- Rs.15/-per storey
ii For a ground floor area of more than 1200 sq.ft. but Rs.25/- Rs.20/-per storey
not exceeding 3000 sq.ft.
iii For a ground floor area of more than 3000 sq.ft. but Rs.50/- Rs.40/-per storey
not exceeding 6000 sq.ft.
iv For a ground floor area more than 6000 sq.ft. & Rs.75/- Rs.50/-per storey
above.
Source: The Chhattisgarh Nagar Tatha Gram Nivesh Niyam, 1975
The rates are area based which may be amended and made market value of land based.
6.3.9 Amendment of Section 59 of The Chhattisgarh Nagar Tatha Gram Nivesh Adhiniyam, 1973
Section 59 of The Chhattisgarh Nagar Tatha Gram Nivesh Adhiniyam, 1973 provides for levy of
Development charges. Section 59 (1) states that Where as a result of the implementation of town
development scheme, there is, in the opinion of the Town and Country Development Authority, as
appreciation in the market values of lands adjacent to and affected by a scheme the Town and Country
Development Authority may, in lieu of providing for the acquisition of such land, levy development charges
on owners of such land. Sub-section 59(2) lays down the rate for levying development charges. It states
that The development charges shall be an amount equal to not less than one-fourth and not more than
one-third of the difference between the value of the land on the date of publication of the intention to prepare
the town development scheme and the date of completion of the scheme.
Levy of Development charges under Section 59 (1) is dependent upon incurring of expenditure on
development of an area so that as a result of the implementation of town development scheme the
value of land increases. However it has not been envisaged that in some years there may be no
increase in land values for various reasons in spite of investment of substantial funds by the
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state on development of an area, In such cases even the cost recovery of the expenditure incurred
by the state may not be possible leaving the state /ULB without funds for continuing the
development works for the citizens .Therefore provision may be made in section 59 for charging
the cost of the scheme spread over the beneficiary properties/area as the minimum levy of
development charge and the share of ½ or 1/3 of the increment in land values may be kept as the
upper limit.
6.3.10 Amendment of Rule 21(3) of The Chhattisgarh Bhumi Vikas Rule, 1984
Rule 21. Fees - (1) Validity of Notice subject to payment of Fees-No notice as referred to in rule l6 shall be
deemed valid unless the person giving notice has paid the fees for the time being in force to the Authority
and an attested copy of the receipt of such payment is attached with the notice. (2) In case the authority
after processing the application of building permit, the building permission/development. (3) Scale of Fee.-
The scale of fee shall be as under:-
(i) For development of area up to I hectare Rs. 2500/-
(ii) For development of area exceeding I hectare but not exceeding 2.5 Rs. 5000/-
hectare
(iii) For development of area 'exceeding 2.5 hectare but not exceeding 5 Rs. 10000/-
hectare
(iv) For development of area exceeding 5 hectare for every hectare or part additional fee at Rs.
thereof 2500/-
Source: The Chhattisgarh Bhumi Vikas Rules, 1984

Rupees
Sq. meter Sq. meter
1 A building intended to be exclusively for 0 75 500
residence 76 125 875
126 200 1500
201 300 2250
301 400 3000
401 600 5000
601 750 6250
751 1000 8750
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Rupees
Sq. meter Sq. meter
l00l 1250 12500
l25l 1500 I7500
l50l 2000 25000
2001 2500 37500
2500 Above 37500 and l5 per
square meter for
additional fees
2 A building intended to be used as shop, Fee specified in item no. 1 together with an additional
store house, factory or for carrying or charge of 50% of such amount of fees, except that for a built
trade or business or any other up area above 2500 square meter the fees chargeable shall
commercial or industrial purpose. be Rs. 15/- per square metres for additional fees.
3 A building intended to be used as Fees as prescribed in item no. 1
administrative block in a factory.
4 A building intended to be used for shop- Fees specified in item no. 1 together with an additional
cum-residence purposes. charge of 50% such amount of fees.
5 A building intended to be used as Up to 800 seating capacity @ Rs.15,000/-;
cinema theatre. Above 800 seating capacity @ Rs. 25,000/-
6 A building intended to be used for any 50% of fees specified in item No. 4
social charitable culture, educational
purposes, Dharmshala and similar
types of building and for any other
purpose not specifically provided for.
7 Addition or alteration with built up area Rs. 100/- in each case of building mentioned in item 1, 3
or external addition or alteration which and 6 Rs. 500/- in each case of building mentioned in item
does not add to the built up area such No. 2. 4 and 5.
as Court yard compound N-4 wall,
alteration in elevation or roofing such
tiles to A.C. Sheet or flat surface,
additional opening or closing not
covered by proviso to sub-rule (l) of
Rule 14.
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Rupees
Sq. meter Sq. meter
8 ln case of addition alteration in the Up to 5% Nil. above 5% to 10% - Rs. 125/-. Above I0% fresh
proposed plan. application according to the rule shall be necessary
9 Revaluation of the building permission l0% of the amount of fees charged originally in respect of
the building
S.No. C. For permission for high-rise building

Type of construction Fees chargeable in Rupees
space.
2 A building intended to be used as shop, store , house, Fees prescribed in item no. 1 with
factory or for carrying on trade or business or any other additional charges of 100% of amount of
commercial or industrial purpose. fees.
3 A building intended to be used as administrative block in Fees as prescribed in item no. 1
a factory.
4 A building intended to be used for shop cum- residence Fees specified in item no. 1 together with
purposes. additional charges of 50% of such amount
of fees.
5 A building intended to be used for any special, charitable, 50% of fees specified for item no. 1
cultural, educational purposes, including hospital,
school, club, Dharmshala and similar types of building
and for any other purpose not specifically provided for.
S.No. D. Fees for the permission of development of Integrated Township

Name of Planning / Special Area Fees
1 Raipur, Naya Raipur Rs. 200 per sq. rneter
2 Bilaspur, Korba, Bhilai Rs. 150 per sq. meter
3 Other Planning & Special Area Rs. 100 per sq. Meter
The scale of fees is area based per hectare /per square meter which may be made land value based.
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6.3.11 Amendment of Rule 95 of The Chhattisgarh Bhumi Vikas Rules, 1984
Rule 95 of The Chhattisgarh Bhumi Vikas Rules, 1984 contains the Power of relaxation given to the
Director of Town and Country Planning, Government of Chhattisgarh who may permit special relaxation to
any of the rules, provided the relaxation sought does not violate the health safety, fire safety. structural
safety, public safety of the inhabitants and the building and neighborhood.
However Rule 95 of The Chhattisgarh Bhumi Vikas Rules 1984 does not empower the Director to
charge any fees for granting the relaxation which may be added by amending this Rule.
6.3.12 Amendment of section 258 of The Chhattisgarh Land Revenue Code, 1959 regarding premium on
diversion of land use.
Section 59 (5) of The Chhattisgarh Land Revenue Code, 1959 provides that where land for use for any
purpose is diverted to any other purpose and land revenue is assessed thereon under the provisions of
this section, the competent authority shall also have power to impose a premium on the diversion in
accordance with rules made under the Land Revenue code,1959.
Section 258 of The Chhattisgarh Land Revenue Code, 1959 provides for the General rule making power of
the state Government. Section 258(1) empowers the state government to make rules generally for the
purpose of carrying into effect the provisions of this code and sub-section 258(2) further lays down that in
particular and without prejudice to the generality of the foregoing powers such rules may provide for (iii)
regulation of assessment of land revenue on diversion of land to other purposes and imposition of premium
under section 59; (iv) diversion of survey numbers into sub-divisions and apportionment of the assessment
of survey number among the sub-divisions of a survey number under section 70; (xiv) the manner of dividing
plot numbers into sub-divisions and apportioning the assessment of plot number among ,the sub-divisions;
and the limits either of area or of land revenue or both in any local area for recognition of sub-divisions
under section 94.
However, this section does not provide for the power to levy any premium or fees on (vi) – diversion
of survey numbers into sub-division. Also it does not provide for allowing amalgamation of plots
and for charging premium or fees for allowing amalgamation of plots. Therefore, in order to do all
that section 258 may be amended accordingly
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Final Report
6.3.13 Amendment of Rule 14 of the Rules regarding Alteration of Assessment and Imposition of premium
for the purpose of levy of premium on Agricultural land.
Rule 14 (1) - For the purpose of levy of premium of agricultural land other than the land specified in the
proviso to sub-section (5) of section 59 of the code diverted to non-agricultural purposes, in any town and
village in the state of Chhattisgarh shall be divided into the following classes as shown in column (1) of
schedule-A appended to these Rules and the premium shall be imposed according to the rates specified in
column (2), (3), (4), (5), (6) and (7) of the said Schedule.
Schedule-A
purpose Unit/ or Industrial Institutional Facility
Colony/ Purpose Purpose
Project
Municipal Rs.15/-per Rs.20/-per Rs.25/-per Rs.20/-per Rs.20/- Rs.15/-
Corporation sqm. sqm sqm sqm per sqm per sqm
and Nagar
Palika area
5 km within Rs.10/-per Rs.15/-per Rs.20/-per Rs.15/-per Rs.15/- Rs.10/-
Municipal sqm sqm. sqm sqm per sqm per sqm
Corporation
and Nagar
Palika area
Source: The Chhattisgarh Land Revenue Code, 1959
The above schedule of rates of premium is clearly area based per square meter and may be amended
on land value basis.
6.3.14 Amendment of Section 51 of the Chhattisgarh Griha Nirman Mandal Adhiniyam, 1972 relating to
Betterment charges.
Section 51 CHAPTER XI - Assessment and Recovery of Betterment Charges.

Betterment charges - (1) When by making of housing scheme any land in the area comprised in the scheme
will in the opinion of the Board be increase in value, the Board in framing the scheme may declare that
betterment charges shall be payable by the owner of the land or any person having an interest therein in
respect of the increase in value of land from the execution of the scheme. (2) Such increase in value shall
be the amount by which the value of the land on the completion of the execution of the housing scheme,
estimated as if the land were clear of the buildings exceeds the value of the land prior to the execution of
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Final Report
the scheme estimated in like manner and the betterment charges shall be one half of such increase in
value.
Levy of Betterment charges by the Housing Board under Section 51 is dependent upon incurring of
expenditure on betterment of an area so that as a result of the implementation of town development
scheme the value of land increases. However it has not been envisaged that in some years there
may be no increase in land values for various reasons in spite of investment of substantial funds
by the Housing Board on development of an area, In such cases even the cost recovery of the
expenditure incurred by the Housing Board may not be possible leaving the Housing Board without
funds for continuing the development works for the citizens .Therefore provision may be made in
section 51 for charging the cost of the scheme spread over the beneficiary properties/area as the
minimum levy of betterment charge and the share of ½ of the increment in land values may be
kept as the upper limit.
6.4 Need for Separate Accounting for diversion Charges, Conversion charges, Betterment charges and
Betterment levy:
Section 132A of The Chhattisgarh Municipal Act, 1961 relates to Creation of Infrastructure Development
Fund by the state government. Section 132A(1) state that Notwithstanding anything contained in this Act
or any other Act for the time being in force, the State Government may create an Infrastructure Development
Fund with a view to assist the Municipalities in developing the infrastructure.
Section 132A (2) further provides that The sources of the infrastructure fund and the procedure and manner
in which the amount from the fund shall be provided to Municipalities shall be such as may be prescribed.
However the levy and collection of diversion charges, conversion charges/Betterment charges and
Betterment levy is presently not required to be deposited into any such Fund and not directly linked to
incurring of actual expenditure on infrastructure .The Corporation Act, the Development Authority Act and
the Housing Board Act do not make explicit provisions for a direct nexus between the payment of these
Charges and levy and its use only for creation of infrastructure by reserving the collections and putting it
into separate bank accounts and prohibiting its use for other purposes. As a result the same may be used
for paying salaries to the detriment of development of infrastructure.
There is a need for making it mandatory for the Corporation, the Development Authority and the
Housing Board to keep the collections from these Charges and levy in separate Infrastructure
Development Fund and deposited in separate Bank account so as to use it exclusively for up
gradation and creation of infrastructure.
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6.5 Timeline for Implementation
6.5.1 Short term action (less than 1 year):
Short term action plan will include – firstly, issuance of Administrative Instructions like annual notification of
land and building rates for all localities and secondly, amendment of the different Rate Schedules for making
the tax rates value based in place of area based as suggested in this chapter. The amendment of the Rate
Schedules by the Government through issuance of notifications is authorized in the various Acts. It is
permissible for the Government under the present law to amend the same by issuance of notifications in
the official Gazette. It can also be done by amendment of Bye-law. For instance Section 349 of The
Chhattisgarh Municipalities Act, 1961 relating to Fees for licenses and permissions provides that “The
Council may charge such fee as may be prescribed by bye-laws for (i) any license granted under this Act;
and (ii) any permission granted under this Act”.
Section 366(3) of The Chhattisgarh Municipal Corporation Act, 1956 - Licenses and Permissions, provides
that “Except when it is otherwise expressly provided in this Act or in any rule or bye law made there under,
a fee for every such license or written permission may be charged at such rates as may be fixed by the
Corporation and such fee shall be payable by the person to whom the license is granted”.
Section 29 (2) of the Chhattisgarh Nagar Tatha Gram Nivesh Adhiniyam, 1973 provides for “Application for
permission for development by any person, not being the Union Government, State Government, a local
authority or a special authority constituted under this Act, intending to carry out any development on any
land, and that such application shall also be accompanied by such fee as may be prescribed.
6.5.2 Medium term action plan (1 to 3 years):
Medium term action plan will include amendment of the Rules, Regulations and Bye-laws which normally
require to be placed on the table of the Legislative Assembly and which are subject to modifications which
may be made by the Assembly. For instance, Section 355 of The Chhattisgarh Municipalities Act, 1961
relates to Power to make rules and provides under section 355 (1) that in addition to any power specially
conferred by this Act, the State Government may prescribe forms and make rules generally for the purpose
of carrying into effect the provisions of this Act.
Section 356 of The Chhattisgarh Municipalities Act, 1961 makes General Provision regarding rules and
section 356 (1) states that All rules for which provision is made in this Act, shall be made by the State
Government and shall be Consistent with this Act. Section 356(2) further provides that All rules may be
general for all Municipalities or for all Municipalities not expressly exempted from its operation, or may be
special for the whole or any part of any one or more Municipalities, as the State Government may
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direct. Section 356 (3) mandates that All rules shall be subject to publication in the gazette and section 356
(4) makes it mandatory that All rules shall be laid on the table of the Assembly.
Section 357 of The Chhattisgarh Municipalities Act, 1961 contains General Provision regarding bye-laws.
Section 357 (1) provides that All bye-laws for which provision is made in this Act shall be made by the
Council and shall be consistent with this Act, and with the rules made there under. Section 357 (2) further
states that A bye-law may be general for the whole Municipality under the jurisdiction of the Council making
it, or special for any part of such Municipality, as the Council may direct. Section 357 (3) makes it clear that
Unless specially excepted in this Act from the operation of this subsection no bye-law shall take effect until
it has been confirmed by the State Government. Also section 357 (4) further stipulate that Unless specially
excepted in this Act, from the operation of this subsection, no bye-laws shall take effect until it has been
published in the manner prescribed by rules made under this Act.
Section 358 of The Chhattisgarh Municipalities Act, 1961 relating to Power to make bye-laws states that in
addition to any power specially conferred by this Act, the Council may, and if so required by the State
Government shall, make bye-laws for--
(1) Municipal administration--
(h) determining the rates of fees for notice, warrant or maintenance of livestock under Chapter VIII;
(i) regulating entry and inspection for the purposes of this Act;
(j) generally for the guidance of Municipal Officers and servants in all matters relating to municipal
administration;
(2) Taxation--
(e) the submission of returns by person liable to pay any tax under this Act;
(h) any other matter relating to the levy, assessment, collection, refund or remission of taxes under this Act;
(3) Buildings--
(a) the regulation or restriction of the use of sites for building for different areas;
(b) the regulation or restriction of buildings in different areas;
(c) the form of notice of erection of any building or execution of any work and the fee in respect of the same;
(d) the plans and documents to be submitted together with such notice and the information and further
information to be furnished;
(e) the level and width of foundation level of lowest floor and stability of structure;
(f) the construction of buildings and the materials to be used in the construction of building;
(g) the height of buildings whether absolute or relative to width of streets or to different areas;
(h) the number and height of storey's composing a building and height of rooms and the dimensions of
rooms intended for human habitation;
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(i) the height and slope of the roof above the uppermost floor upon which human beings are to live or
cooking operations are to be carried;
(j) the provision of open spaces, external and internal, and adequate means of light and ventilation;
(v) the supervision of buildings
The procedure for making the Rules is very simple in as much as every rule made under these Acts/Sections
shall be laid before the Legislative Assembly and unless modified or dropped by the Assembly the rule shall
have effect.
The medium term actions will include amendment of Bye-laws and Rules.
6.5.3 Long term actions (more than 3 years):
Long term actions would basically include amendment of Acts/ Laws. This is a time–consuming and difficult
process which requires legislative intervention and approval. For instance, amendment of the Municipalities
Act and the Housing Board Act for amending the basis of levy of betterment charges, and the Development
Authority Act, for providing legal authority for charging premium for grant of additional FAR. Also new
provisions for levy of Infrastructure Development Charges and Infrastructure Augmentation Charges will be
required to be added into the Development Authority Act. Further, it would be better in a long term
perspective, to lay down the share of various Urban local bodies out of taxes, charges, fees and duties to
be collected – to be distributed amongst all Urban local bodies in a rational manner keeping in view their
respective duties and responsibilities for providing civic services and modern infrastructure to the citizens
of the city or lay down the principles for sharing of revenues between the Municipal Corporation, Councils
,and Development Authorities, and the Authorities administering the Revenue code in the respective areas
by amending the provisions in the Development Act, the Municipal Act and the Revenue Code.
6.6 RECOMMENDATIONS:
• Property Survey with GIS enabled mapping for reclassification of institutions with such as private hospitals,
coaching institutes, hotels, guest houses and plots owned by NGOs that are currently being run on commercial
lines on residential use property as commercial use property for the purpose of application of tax collection.
• GIS mapping will enable real-time tracking of urban services provided along with details of tax/fee collection
from properties within the municipal limits. This will improve the ULBs’ ability to enforce better tax rules and
will have a positive impact on collection efficiency.
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Final Report
Example: Bhubaneshwar.one portal has provides a detailed GIS map for Bhubaneshwar city containing details
of infrastructure facilities, social amenities, ward and property details. There is a proposal to include tax collection
details in the GIS mapping framework.
Services provided and available ward wise.
Details of particular ward with mapping of all the properties and details.
• It is also suggested to generate a common monthly utility bill containing the combined total of the
electricity bill, water & sewerage bill and the monthly Property tax. This will ensure that access to
utilities could be cut in case of non-payment of the combined utility bill. The collection agency for
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Final Report
such a combined utility bill can (through an escrow mechanism) further subdivides the money received
between the electricity provider (Chhattisgarh State Power Distribution Company Limited) and Raigarh
Municipal Corporation which collects property tax, water and sewerage charges as per the individual claims.
This will ensure higher collection efficiency for property tax. (Refer Annexure A for the draft MOU for
Generation And Collection of Combined Utility Bill)
• In order to improve the tax collection efficiency, the Commissioner (RMC) should be given the sufficient powers
to enforce and recover taxes/ fees/ charges as charged by the Corporation. The detailed provisions/ powers
would be discussed and drafted during the handholding phase.
• As suggested by the municipal authority for Change in the criterion of leasing for the municipal shops, and
also corrections or changes required if any in the present lease deed template, will covered and looked on in
compliance to the handholding stage.
• NOC from RMC should be made mandatory at the time of application for water supply, sewerage, electricity
connection or building plan sanction or any other allied.
6.7 Contractual Agreements/ MOU etc. (to be addressed during handholding phase in consultation with
stakeholders)
The drafting of the amendments will be done in consultation with the concerned authorities during the
handholding period.
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Final Report
ANNEXURE
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Final Report
ANNEXURE A – DRAFT MOU FOR GENERATION AND COLLECTION OF COMBINED UTILITY

BILL
Memorandum of Understanding between Raigarh Municipal Corporation and Chhattisgarh State Power
Distribution Company Limited for collection of Property Tax, Water and Sewerage Charges, and Electricity
Bills
This Memorandum of Understanding (MoU) is signed on ---Day of ----2018 by and between Raigarh Municipal
Corporation acting through (Name of Commissioner of Chandigarh), Municipal Corporation of Chandigarh
(hereinafter called RMC which expression shall unless repugnant to the context include its successors in ULB,
business administrators and assigns or legal representative) of the FIRST PARTY.
AND
Chhattisgarh State Power Distribution Company Limited (CSPDCL) acting through (Name of Officer),
(Designation) (hereinafter called CSPDCL which expression shall unless repugnant to the context include its
successors in CSPDCL business administrators and assigns or legal representative) of the SECOND PARTY
In MoU, henceforth, RMC & CSPDCL shall individually referred to as “PARTY” and collectively as “PARTIES”.
OBJECTIVE OF THE MOU

This Memorandum of Understanding is for collection of Property Tax, water and sewerage charges on behalf of
the RMC and on behalf of Electricity Department for collection of electricity charge on behalf of CSPDCL by a
common collection agency. This MoU will improve the collection efficiency of the RMC and CSPDCL and support
in operational efficiency to improve the cash flow.
Now this Memorandum of Understanding witnesses as follows:

1. In consideration of the due observance and performance of all the terms and conditions mentioned in this
Memorandum of Understanding, RMC and CSPDCL agree to sign this Memorandum of Understanding for
enabling collection of the tax and user charges within the boundary limit of the RMC.
2. This Memorandum of Understanding shall remain in force till ---day of ------ 20—or till such date as agreed
between the Parties. This MoU can be extended through mutual consent after the completion of the period
on such terms as may be then mutually agreed.
3. RMC and CSPDCL hereby agree and unequivocally undertake to fully comply with all the terms and
conditions stipulated in the MoU without any deviation or reservation of any kind, unless mutually agreed
between the Parties at any given time.
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Final Report
4. RMC and CSPDCL hereby agree to develop a model agreement which may thereafter be executed between
the concerned ULB and (Name of Distribution Company) for collection of tax and user charges as envisaged
under this MoU.
5. The laws of India and Chhattisgarh State as promulgated/modified/amended or replaced from time to time
shall govern this MoU.
6. The responsibility of appointing the collection agency will rest on the RMC.
7. RMC shall follow a transparent procurement/contract policy/ies and adhere to the applicable
contract/procurement rules.
8. This Memorandum of Understanding shall not be amended or modified or altered or changed in any way
except in writing and duly executed by the authorized representatives of each Party.
9. The Parties shall open an Escrow Account in a Commercial Bank which would be operated on joint basis;
10. The commission to be paid to the collection agency will be in the ratio of collection for each of parties in the
preceding month.
11. This MoU shall be subject to the jurisdiction of the Courts at Bilaspur/ Raipur.
In witness whereof the parties hereto have caused this Memorandum of Understanding to be executed through
their authorized representatives on the ----day of -------, 20--.
SCOPE OF WORK
As a part of this Memorandum of Understanding, the following services shall be provided by the collection agency
under the jurisdiction of the RMC:
1. The collection agency shall collect the bills from the two Parties within 3 days of the billing cycle and collect
the tax or user charge within 21 days from the date of billing cycle.
2. The collection agency shall deposit the amount so collected in an Escrow Account to be jointly operated by
the Parties.
3. The collection agency shall be responsible to deposit the counterfoil of the receipt against bill to the respective
parties on a daily basis.
COMMERCIAL TERMS AND CONDITIONS

1. The money so credited in the Escrow Account will be partly utilised for payment to collection Agency.
2. An amount equals to 0.5% (zero point five percent) will be first paid from the Escrow Account to the collection
agency as commission on actual amount collected in the preceding month.
3. The collection agency shall raise invoice of the preceding month within 5 days of the month.
4. Such invoice should include any indirect tax which would be paid additionally from the Escrow Account.
5. Such commission will be paid to the collection agency within first 15 days of the month.
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6. Statutory deductions will be made applicable before making payment to collection agency.
OTHER TERMS AND CONDITIONS

1. The collection agency will provide name and contact details of its nodal officers for each party for smooth
coordination and operation.
2. Similarly each of the party shall nominate a nodal officer on their behalf.
SUSPENSION, REVOCATION, AND TERMINATION

1. Any party reserves the right to suspend the operation of the services under this MoU, at any time, due to
change in its own license conditions or upon directions from the competent government authorities. Further,
suspension of the MoU will not be a cause or ground for extension of the period of the MoU and suspension
period will be taken as period spent.
2. Breach or non-fulfilment of MoU conditions may come to the notice of any party through complaints or as a
result of the regular monitoring. Wherever considered appropriate any party may conduct inquiry either suo-
moto or on complaint to determine whether there has been any breach in compliance of the terms and
conditions of the MoU by the other party or not. Other party shall extend all reasonable facilities and shall
endeavour to the hindrance of every type upon such inquiry.
3. On expiry of the agreement, the Parties shall ensure the clearance of outstanding dues if any which is liable
to be paid to the collection agency. In case of failure to pay the amount of dues to collection agency, the
outstanding amount shall be realized through pending bills dues for each of the parties in proportionate
amount of outstanding without prejudice to any other actions for recovery of amount due to collection agency.
DISPUTE SETTLEMENT
1. In the event of any disputes, controversies or claims arising out of or in connection with this MoU or the
breach, termination or invalidity thereof the parties shall at first instance endeavor to amicably
resolve/reconcile by mutual discussion/reconciliation in good faith. If the dispute, difference,
controversies/differences of opinion, breaches and violation arising cannot be resolved within 60 (sixty) days
of commencement of reconciliation/discussions, in such case, the same shall be finally referred by any party
to the arbitration under the Arbitration and Conciliation Act, 1996. The award of the Arbitrator shall be binding
upon to the parties, provided, however, any Party aggrieved by such award may make a further reference for
setting aside on revision of award to the Court of Law. Upon such reference, the dispute shall be decided by
the Court whose decision shall bind the parties finally and conclusively. The parties in dispute will share
equally the cost of arbitration or cost of court as intimated by the Arbitrator or Court respectively.
2. The venue of Arbitration or Court proceeding shall be Bilaspur/ Raipur.
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FORCE MAJEURE
1. If at any time, during the continuance of this MoU, the performance in whole or in part, by parties, of any
obligation under this is prevented or delayed, by reason of war, or hostility, acts of the public enemy, civic
commotion, sabotage, Act of State or direction from Statutory Authority, explosion, epidemic, quarantine
restriction, strikes and lockouts, fire, floods, natural calamities or any act of God (herein referred to as event),
provided notice of happenings of any such event is given by affected party to the other, within 21 calendar
days from the date of occurrence thereof, neither party shall, by reason of such event, be entitled to terminate
the MoU, nor shall either party have any such claims for damages against the other, in respect of such non-
performance or delay in performance. Provided obligation under the MoU shall be resumed as soon as
practicable, after such event comes to an end or ceases to exist. The term of this MoU shall be extended
corresponding to the period of force majeure event.
INDEMNIFICATION
1. Parties agreed to protect, defend, indemnify and hold harmless the other party and its employees, officers,
directors, agents or representatives, from and against any liabilities, damages, fines, penalties and cost
(including legal cost and disbursements) arising from or relating to:
a. Any breach of statute, regulation, direction, orders or standards from any governmental body,
agency or regulator applicable to such party;
b. Any breach of terms and conditions in this MoU by RMC and CSPDCL.
c. Any claim of infringement of any intellectual property right or any other right of any third party or
of law by RMC and CSPDCL as attributable to the party’s role in services herein;
d. Any claim made by any third party arising out of the services;
e. Any breach or non-performance or of any of its undertaking, warranty or obligation including any
loss or damage or claims due to any compromise in data integrity and such lapse directly
attributed to the fraud, negligence or willful misconduct.
2. This above clause shall survive the terminations or expiry of the MoU.
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Final Report
Key Contact
Ajay Agrawal
Director – Planning & Infrastructure Advisory
Phone: +91 9599620019
Email: ajay.agrawal@in.knightfrank.com
143

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Final Report

TABLE OF CONTENTS ....................................................................................................................................... 2

LIST OF FIGURES .............................................................................................................................................. 6

LIST OF TABLES ............................................................................................................................................... 7

LIST OF ABBREVIATIONS .................................................................................................................................. 8

EXECUTIVE SUMMARY .................................................................................................................................... 10

1.1 INTRODUCTION TO VALUE CAPTURE FINANCE ................................................................................................ 18

2 VCF TOOLS ............................................................................................................................................ 23

2.1 STANDARD LAND BASED FISCAL TOOLS IN INDIA ................................................................................ 23

3.1 ADMINISTRATIVE PROFILE ............................................................................................................... 35

3.2 DEMOGRAPHIC PROFILE ............................................................................................................................ 35

4 EXISTING LAND BASED FISCAL TOOLS IN RAIGARH ............................................................................... 49

4.1 FINANCIAL POSITION OF RAIGARH MUNICIPAL CORPORATION ........................................................................... 49

5 IDENTIFICATION OF APPLICABLE VCF TOOLS FOR RAIGARH .................................................................. 84

5.1 PROPERTY TAX........................................................................................................................................ 84

5.2.1 Cost-Benefit Analysis....................................................................................................................... 91

6 IMPLEMENTATION FRAMEWORK .......................................................................................................... 100

6.1 IDENTIFICATION OF CLAUSES TO BE AMENDED ................................................................................ 100

6.3.4 Amendment of Rule 11 of The Chhattisgarh Municipal Corporation and Municipalities

Figure 1 : Diagrammatic Presentation of the Concept of VCF .............................................................................. 19

AMRUT Atal Mission for Rejuvenation and Urban Transformation

• Plan work for the assignment

Deliverable – Inception Report

• Collection of relevant data for Raigarh City.

• Efficacy of existing land based fiscal tools

• Short, medium and long term implementation plan

Deliverable – Draft Report 1

• Presentation of ULB officials

• Incorporation of changes suggested indicated by the ULB officials.

Deliverable – Draft Report 2

• Presentation of ULB officials

• Incorporation of changes suggested indicated by the ULB officials.

Deliverable – Final Report

IDENTIFICATION OF APPROPRIATE VCF TOOLS FOR RAIGARH

• All the properties to be mapped and linked to GIS.

• Online system of demand and collection to be introduced.

• GIS Mapping of all properties – A Short Term Measure (0-1 year).

Rental Income from Immovable Properties

Building Permission Fee

• Rationalization of Building Permission Fee based on the Collector Rate of land.

• Rationalization of Development Charges based on the Collector Rate of land.

Premium on Relaxation of Rules or Additional FSI/FAR

1.1 INTRODUCTION TO VALUE CAPTURE FINANCE

Figure 1 : Diagrammatic Presentation of the Concept of VCF

Source: Knight Frank Research

Net Increase in value after public investments and

Value without public investments

Figure 2: Diagrammatic Presentation of the Concept of VCF

Source: Knight Frank Research

1.2 OBJECTIVE OF STUDY

1.3 SCOPE OF THE ASSIGNMENT

The scope of the assignment covers:

• Provide any other suggestions for effective use of VCF Tools

1.4 NEED OF VCF FOR RAIGARH

2.1 STANDARD LAND BASED FISCAL TOOLS IN INDIA

2.1.1 Land Value Tax

2.1.2 Development Charges (Impact Fee)

2.1.3 Betterment Levy

2.1.4 Vacant Land Tax

2.1.5 Fee for Changing Land Use

2.1.6 Transfer of Development Rights (TDR)

2.1.7 Premium on Additional FSI/FAR