17276final Report VCF Bhilai 12062018

Final Report
Technical Assistance in Generating Revenue through Value Capture Financing Tools for Bhilai
FINAL REPORT
TECHNICAL ASSISTANCE IN GENERATING REVENUE
THROUGH VALUE CAPTURE FINANCING TOOLS FOR
BHILAI
Client: State Urban Development Agency, Government of Chhattisgarh
1
Final Report
Table of Contents
TABLE OF CONTENTS ............................................................................................................................................ 2
LIST OF FIGURES ................................................................................................................................................... 6
LIST OF TABLES .................................................................................................................................................... 7
LIST OF ABBREVIATIONS ....................................................................................................................................... 8
1 BACKGROUND ............................................................................................................................................ 10
1.1 INTRODUCTION TO VALUE CAPTURE FINANCE ................................................................................................ 11

1.2 OBJECTIVE OF STUDY ............................................................................................................................... 13
1.3 SCOPE OF THE ASSIGNMENT ...................................................................................................................... 13
1.4 NEED OF VCF FOR BHILAI ...................................................................................................................... 14
2 VCF TOOLS ................................................................................................................................................. 17
2.1 STANDARD LAND BASED FISCAL TOOLS IN INDIA .................................................................................... 17
2.1.1 Land Value Tax ................................................................................................................................ 17

2.1.2 Development Charges (Impact Fee) ................................................................................................ 18
2.1.3 Betterment Levy .............................................................................................................................. 19
2.1.4 Vacant Land Tax.............................................................................................................................. 20
2.1.5 Fee for Changing Land Use ............................................................................................................. 20
2.1.6 Transfer of Development Rights (TDR) ............................................................................................ 21
2.1.7 Premium on Additional FSI/FAR ...................................................................................................... 22
2.1.8 Land Pooling System ....................................................................................................................... 22
2.1.9 Land Acquisition and Development ................................................................................................ 23
2.1.10 Tax Incremental Financing (TIF) ................................................................................................. 23
2.2 ADDITIONAL LAND BASED FISCAL TOOLS IN INDIA............................................................................... 25
2.2.1 Regularization of Unauthorized Development ................................................................................ 25
2.2.2 Property Development for Leasing ................................................................................................. 25
2.2.3 Charging Extra Stamp Duty ............................................................................................................. 25
2.2.4 Purchasable Development Control Regulations .............................................................................. 26
3 CITY PROFILE.............................................................................................................................................. 28
3.1 DEMOGRAPHIC PROFILE ............................................................................................................................ 29

3.2 CITY GROWTH ......................................................................................................................................... 32
3.3 ECONOMIC PROFILE ............................................................................................................................... 33
2
Final Report
3.4 REAL ESTATE SCENARIO ............................................................................................................................. 34

3.4.1 Housing ........................................................................................................................................... 35
3.4.2 Commercial ..................................................................................................................................... 37
3.5 INFRASTRUCTURE ..................................................................................................................................... 38
3.6 AMRUT ................................................................................................................................................ 40
3.7 SMART CITY ............................................................................................................................................ 41
3.7.1 Area Based Development ................................................................................................................ 42
3.7.2 Pan-City Solution ............................................................................................................................. 43
3.7.3 Funding ........................................................................................................................................... 44
3.8 MUNICIPAL PROPERTIES ............................................................................................................................ 44
4 EXISTING LAND BASED FISCAL TOOLS IN BHILAI ........................................................................................ 47
4.1 FINANCIAL POSITION OF MUNICIPAL CORPORATION BHILAI ............................................................................... 47

4.2 LEGISLATIVE BACKING ............................................................................................................................... 52
4.2.1 Legal Framework under the Chhattisgarh Municipalities Act, 1961 ............................................... 52
4.2.2 The Chhattisgarh Municipal Corporation and Municipalities (Registration of Colonizer, Term and
Conditions) Rules, 2013. ............................................................................................................................... 61
4.2.3 Notification No. F 7-8/2011/18 Dated 5th January, 2016 .............................................................. 62
4.2.4 The Chhattisgarh Municipal Corporation Act, 1956 ....................................................................... 64
4.2.5 The Chhattisgarh Nagar Tatha Gram Nivesh Adhiniyam, 1973 ...................................................... 65
4.2.6 The Chhattisgarh Nagar Tatha Gram Nivesh Niyam, 1975. ............................................................ 69
4.2.7 The Chhattisgarh Bhumi Vikas Rules, 1984 ..................................................................................... 70
4.2.8 The Chhattisgarh Land Revenue Code, 1959 .................................................................................. 73
4.2.9 Rules regarding Alteration of Assessment and Imposition of premium for the purpose of levy of
premium on Agricultural land ...................................................................................................................... 73
4.2.10 Chhattisgarh Griha Nirman Mandal Adhiniyam, 1972 ............................................................... 74
4.2.11 Chhattisgarh Anadhikrit Vikas Ka Niyamitikaran Adhiniyam, 2002. .......................................... 74
4.2.12 Chhattisgarh Anadhikrit Vikas Ka Niyamitikaran (Sanshodhan) Adhiniyam, 2003. ................... 75
4.2.13 The Chhattisgarh Anadhikrit Vikas Ka Niyamitikaran Niyam, 2002 ........................................... 76
4.2.14 Chhattisgarh Anadhikrlt Vikas Ka Niyamltikaran (Sanshodhan) Adhiniyam, 2016 .................... 77
4.3 VCF TOOLS IN PRACTICE IN CHHATTISGARH / BHILAI....................................................................................... 78
4.3.1 Property tax .................................................................................................................................... 78
4.3.2 Building Permission Fee (Bhawan Anugya Shulk) ........................................................................... 81
4.3.3 Development Charges (Vikas Shulk)................................................................................................ 84
4.3.4 Regularisation Charges (Samjhota / Rajinama Shulk) .................................................................... 85
4.3.5 Property Development and Leasing ................................................................................................ 87
5 IDENTIFICATION OF APPLICABLE VCF TOOLS FOR BHILAI ........................................................................... 90
3
Final Report
5.1 PROPERTY TAX........................................................................................................................................ 90

5.1.1 Revenue Potential from Property Tax/ Fee ..................................................................................... 90
5.1.2 Cost-Benefit Analysis....................................................................................................................... 93
5.2 REVENUE POTENTIAL FROM IMMOVABLE PROPERTIES UNDER MCB .................................................. 93
5.3 BUILDING PERMISSION FEE ......................................................................................................................... 97
5.4 DEVELOPMENT CHARGES .......................................................................................................................... 99
5.4.1 Cost-Benefit Analysis..................................................................................................................... 100
5.5 PREMIUM ON RELAXTION OF RULES OR ADDITIONAL FSI/FAR ........................................................................ 101
5.5.1 Revenue Potential from Premium on relaxation of rules or additional FSI/FAR ........................... 102
5.5.2 Cost-Benefit Analysis..................................................................................................................... 103
5.6 LAND MONETIZATION .............................................................................................................................. 104
5.6.1 Land Value Capture Options ......................................................................................................... 106
5.7 STAKEHOLDER CONSULTATIONS ............................................................................................................... 107
6 IMPLEMENTATION FRAMEWORK ............................................................................................................... 109
6.1 IDENTIFICATION OF CLAUSES TO BE AMENDED ................................................................................ 109

6.1.1 Rationale for Change in Area Based Rates of Building Related Fee .............................................. 109
6.1.2 Power of Government to abolish, suspend or reduce the amount or rate of any tax under the
Chhattisgarh Municipalities Act, 1961. ...................................................................................................... 110
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) ..................................................................................... 111
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: 113
6.1.5 Rationale for change in Rates of Betterment Charges under the Chhattisgarh Griha Nirman
Mandal Adhiniyam, 1972 ........................................................................................................................... 116
6.1.6 Rationale for enacting new provisions for levy of Infrastructure development tax on big residential
properties/complexes and on non-residential properties. ......................................................................... 118
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: ........................................................ 120
6.1.8 Rationale for making provision in law for charging Premium on Additional FAR/FSI: .................. 122
6.1.9 Rationale for levy of Certain Fee/Charges in Chhattisgarh levied by the State Government in
Rajasthan ................................................................................................................................................... 126
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. ........................................................ 129
6.2 PROPOSED AMENDMENTS ........................................................................................................................ 131
4
Final Report
6.3 ACTS/SECTIONS/RULES/BYE-LAWS /NOTIFICATIONS TO BE AMENDED ............................................................... 131

6.3.1 Amendment of Section 187A of The Chhattisgarh Municipalities Act. 1961- ............................... 131
6.3.2 Amendment of Section 339B of the Chhattisgarh Municipalities Act. 1961 ................................. 132
6.3.3 Amendment of Rule 8 of The Chhattisgarh Municipal Corporation and Municipalities (Registration
of colonizer, term and conditions) Rules, 2013. ......................................................................................... 133
6.3.4 Amendment of Rule 11 of The Chhattisgarh Municipal Corporation and Municipalities
(Registration of colonizer, term and conditions) Rules, 2013 .................................................................... 133
6.3.5 Amendment in section 349 of the Chhattisgarh Municipalities Act, 1961 .................................... 134
6.3.6 Amendment of Section 163-A of The Chhattisgarh Municipal Corporation Act, 1956. ................ 134
6.3.7 Amendment of Section 308-B of the Chhattisgarh Municipal Corporation Act, 1956. ................. 134
6.3.8 Amendment of Rule 12 of The Chhattisgarh Nagar Tatha Gram Nivesh, Niyam, 1975. ............... 135
6.3.9 Amendment of Section 59 of The Chhattisgarh Nagar Tatha Gram Nivesh Adhiniyam, 1973 ..... 136
6.3.10 Amendment of Rule 21(3) of The Chhattisgarh Bhumi Vikas Rule, 1984 ................................. 136
6.3.11 Amendment of Rule 95 of The Chhattisgarh Bhumi Vikas Rules, 1984 .................................... 139
6.3.12 Amendment of section 258 of The Chhattisgarh Land Revenue Code, 1959 regarding premium
on diversion of land use. ............................................................................................................................ 139
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............................................................ 140
6.3.14 Amendment of Section 51 of the Chhattisgarh Griha Nirman Mandal Adhiniyam, 1972 relating
to Betterment charges. .............................................................................................................................. 141
6.4 NEED FOR SEPARATE ACCOUNTING FOR DIVERSION CHARGES, CONVERSION CHARGES, BETTERMENT CHARGES AND
BETTERMENT LEVY: ............................................................................................................................................. 141
6.5 TIMELINE FOR IMPLEMENTATION ................................................................................................................ 142
6.5.1 Short term action: ......................................................................................................................... 142
6.5.2 Medium term action plan: ............................................................................................................ 142
6.5.3 Long term actions: ........................................................................................................................ 144
6.6 CONTRACTUAL AGREEMENTS/ MOU ETC. (TO BE ADDRESSED DURING HANDHOLDING PHASE IN CONSULTATION WITH
STAKEHOLDERS) ................................................................................................................................................. 145
6.7 ACTUAL DRAFTING IN CONSULTATION WITH STAKE-HOLDERS ........................................................................... 145
5
Final Report
List of Figures
Figure 1 : Diagrammatic Presentation of the Concept of VCF .............................................................................. 12

Figure 2: Diagrammatic Presentation of the Concept of VCF ............................................................................... 13
Figure 3: Regional Setting Bhilai ........................................................................................................................... 28
Figure 4: Municipal Extents map of Bhilai ............................................................................................................. 29
Figure 5: Population Growth of Bhilai from 1971 to 2011...................................................................................... 30
Figure 6: Spatial Growth Bhilai.............................................................................................................................. 33
Figure 7: Sector-wise Employment of Bhilai ......................................................................................................... 34
Figure 8: DLC Rates in Bhilai ................................................................................................................................ 35
Figure 9 : Investment under AMRUT during 2015-2020 ....................................................................................... 40
Figure 10 : Sector-wise Investment under AMRUT ............................................................................................... 41
Figure 11 : Source-wise Investment under AMRUT .............................................................................................. 41
Figure 12: Area under Smart City Project ............................................................................................................. 42
Figure 13: Revenue Receipt (in Rs. Lakh) Trends for Municipal Corporation Bhilai ............................................. 49
Figure 14: Tax Revenue Receipt (INR Lakh) Trends for Municipal Corporation Bhilai ......................................... 50
Figure 15: Non-Tax Revenue Receipt (in Rs. Lakh) for FY 2015-16 for Municipal Corporation Bhilai .................. 50
Figure 16: Rental income from Municipal properties and civic amenities (in Rs. Lakh) trends for Municipal
Corporation Bhilai.................................................................................................................................................. 51
Figure 17: Revenue Expenditure (in Rs. Lakh) Trends for Municipal Corporation Bhilai ...................................... 52
Figure 18 : Estimated Revenue from User Charges and Fee in ABD Area......................................................... 105
Figure 19 : Estimated Revenue from Land Monetization in ABD Area ............................................................... 105
6
Final Report
List of Tables
Table 2-1: Summary of Provision of Standard VCF Tools in various States in India..................................................... 24
Table 3-1: Ward-wise Population of Bhilai ..................................................................................................................... 30
Table 3-2: Industrial Areas in Bhilai ............................................................................................................................... 34
Table 3-3: Ward-wise number of residential properties in Bhilai ................................................................................... 35
Table 3-4: Ward-wise number of commercial properties in Bhilai ................................................................................. 37
Table 3-5: Zone-wise Water Supply Network of Bhilai .................................................................................................. 38
Table 3-6: Zone-wise Sewerage Network of Bhilai ........................................................................................................ 39
Table 3-7: Drainage Infrastructure of Bhilai ................................................................................................................... 39
Table 3-8: Road Length of Bhilai ................................................................................................................................... 40
Table 3-9: Projects under Area Based Development .................................................................................................... 42
Table 3-10: Projects under Pan City Proposal............................................................................................................... 44
Table 3-11: Funding of Smart City Project..................................................................................................................... 44
Table 3-12: Municipal Properties Rented by Municipal Corporation of Bhilai ................................................................ 45
Table 4-1: Revenue Receipts Status at a Glance – Nagar Palik Nigam Bhilai (in INR Lakhs) ...................................... 48
Table 4-2: Expenditure Status at a Glance – Nagar Palik Nigam Bhilai (in INR Lakhs) ................................................ 51
Table 4-3 : Property tax revenue (in Rs. lakhs) ............................................................................................................. 79
Table 4-4 : Annual letting value for land/ building (Rs. per sqft) .................................................................................... 79
Table 4-5 : The property tax rate is defined as under (applicable since year 2016-17) ................................................. 79
Table 4-6 : Revenue from building permission charges (In Rs. lakhs) .......................................................................... 81
Table 4-7 : Revenue from Renting of Municipal Properties (In Rs. lakhs) ..................................................................... 87
Table 5-1: Annual Letting Value vis-à-vis Computation of Property Tax for various sizes of Commercial Properties ... 91
Table 5-2: Annual Letting Value vis-à-vis Computation of Property Tax for various sizes of Residential Properties .... 91
Table 5-3: Property Tax amount as percentage of Land Values for Commercial properties ......................................... 91
Table 5-4: Property Tax amount as percentage of Land Values for Residential properties .......................................... 92
Table 5-5: Cost – Benefit Analysis for Property Tax/ Fee.............................................................................................. 93
Table 5-6: Monthly Lease Rent viz-a-viz Prevailing Market Rent of Shops owned by MCB.......................................... 94
Table 5-7: Potential Revenue from Shops under MCB.................................................................................................. 95
Table 5-8 : Cost – Benefit Analysis for Leasing of Immovable Properties of MCB ........................................................ 96
Table 5-9 : Building Permission Fee amount as percentage of Land Values ................................................................ 97
Table 5-10: Cost – Benefit Analysis for Building Permission Fee.................................................................................. 99
Table 5-11: Analysis of currently charged Development charges as a percentage of value of underlying asset ........ 100
Table 5-12: Cost – Benefit Analysis for development charges .................................................................................... 100
Table 5-13: Revenue Potential from Purchase-able FAR............................................................................................ 102
Table 5-14: Cost – Benefit Analysis for purchasable FAR........................................................................................... 103
7
Final Report
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
MCB Municipal Corporation of Bhilai
MMRDA Mumbai Metropolitan Region Development Authority
MoUD Ministry of Urban Development
NH National Highway
PPP Public Private Partnership
PSM Per square metre
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
8
Final Report
CHAPTER 1 :
BACKGROUND
9
Final Report
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 Challenge Proposals, apart from mission grants, cities have identified multiple other sources of
10
Final Report
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).
11
Final Report
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.
12
Final Report
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 Bhilai, 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.
• Provide any other suggestions for effective use of VCF Tools
13
Final Report
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 BHILAI
The total revenue and expenditure of Municipal Corporation Bhilai (MCB) for the 2015-16 was INR 121.5 crores
and INR 127.6 crores respectively, while the revenue and expenditure figure for 2014-15 was INR 119 crores
and INR 112.6 crores respectively. It may be noted that while the ULB made a profit in 2014-15, the expenditure
exceeded the revenue in 2015-16.
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 INR 266.73 crore out of which about
INR 53 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.
Furthermore, the Government of Chhattisgarh will develop Rajnandgaon, Bhilai and Korba as Smart Cities on
their own with a budget allocation of INR 3,908 crore. The total projected cost for the Smart City Proposal (SCP)
for Bhilai which includes both the Area Based Development Plan and the Pan-City Plan is INR 814.96 Crores. Of
14
Final Report
this, INR 564.07 crores is to be sourced from land monetization. VCF tools could prove beneficial in generating
this revenue. Break-up of capex is given below:
Land Monetisation INR 564.07 crores
GoI Convergence (AMRUT) INR 3.08 crores
GoI Convergence (PMAY) INR 28.95 crores
CSR & Private Sector INR 16.7 crores
PPP INR 202.16 crores
In order to fund the AMRUT and Smart City Area Based and PAN City projects and to carry out other functions,
the ULB has to scout for avenues for alternate sources of income to meet the demand for the infrastructure. This
necessitates development of Value Capture Financing Framework so that dependence of ULB on grants can be
reduced.
15
Final Report
CHAPTER 2 :
VALUE CAPTURE FINANCE TOOLS
16
Final Report
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.
17
Final Report
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
18
Final Report
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.
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
19
Final Report
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.
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.
20
Final Report
Internationally United Kingdom, France, Singapore, China and many other countries permit change of land use
against a charge/ fee by following a process.
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
21
Final Report
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.
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
22
Final Report
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.
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.
23
Final Report
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
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
24
Final Report
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.
25
Final Report
Government of Maharashtra has implemented a 1% surcharge on all property transactions within the Nagpur
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
26
Final Report
CHAPTER 3 :
CITY PROFILE
27
Final Report
3 CITY PROFILE
The present day Bhilai (a part of Durg district) is recognized by its steel plant, which was set up in 1959. Bhilai
city is located on 21013’ North latitude and 81026’ East longitude and is spread across an area of 142.32 sq km
(Municipal Corporation and the outgrowth areas).
The city lies on the South Eastern Railway corridor and is well connected to all major towns. Furthermore, NH
53, connecting Mumbai-Jabalpur-Kolkata, passes through the city. Closest airport is at Raipur, 45 kms from
Bhilai. Figure 3 depicts Bhilai’s regional setting while Figure 4 depicts the municipal extent of Bhilai.
Figure 3: Regional Setting Bhilai
Source: District Census Handbook
28
Final Report
Figure 4: Municipal Extents map of Bhilai
3.1 DEMOGRAPHIC PROFILE
The Municipal Corporation embraces an area of 142.32 sq km with 68 numbers of wards. According to census
2011, the total population of city is 627,734. The population increased from 556,366 in 2001, observing a
decadal growth of 12.82%. The population growth in Bhilai is depicted in Figure 5.
29
Final Report
Source: Census of India
Figure 5: Population Growth of Bhilai from 1971 to 2011
As per the census 2011 there are 323,479 (51.53%) males and 304,255 (48.47%) females in the city. The child
population (0 – 6 years) of the city is 69,478 (11.07%). Sex ratio of the city is 941, which is better than the India
urban sex ratio of 926 but lower than the sex ratio in Chhattisgarh. The city has an average literacy of 86.62%,
higher than India’s literacy rate of 74.4%. The total share of Schedule Caste (SC) population within MCB limits is
14.13% and Schedule Tribe (ST) population within MCB limits is 5.0%. The gross population density within the
municipal limits works out to 44 persons / hectare. Ward-wise population distribution in Bhilai is presented below
in Table-3-1:
Table 3-1: Ward-wise Population of Bhilai
Ward No Name of Ward Total HH Total Total

2011 Population Population
2011 2016
WARD NO.-0001 Junwani 4889 22004 9042
WARD NO.-0002 Smriti Nagar 3897 16828 12962
WARD NO.-0003 Kosanagar 3439 15730 16820
WARD NO.-0004 Radhika Nagar 3430 16583 15830
WARD NO.-0005 Lakshmi Nagar 2013 9750 16579
WARD NO.-0006 Supela Bazar 2256 10716 10051
WARD NO.-0007 Farid Nagar kohaka 2413 11820 19453
WARD NO.-0008 Rani Avantibai kohaka 3843 19542 10251
WARD NO.-0009 Kohaka Purnai Basti 1235 5566 11820
WARD NO.-0010 Shanti Nagar Kohaka 1160 5607 7941
WARD NO.-0011 Ambedkar Nagar Kohaka 1598 7950 5561
WARD NO.-0012 Supela Purani Basti Contracter colony 2735 12326 10714
WARD NO.-0013 Rajiv Nagar Supela 1660 7946 7941
WARD NO.-0014 Ram Nagar Muktidhaam 2730 13918 12300
WARD NO.-0015 Vaishali Nagar 2426 10729 5606
WARD NO.-0016 Kurud 3207 14110 13913
WARD NO.-0017 Virnda Nagar 3175 15057 11623
WARD NO.-0018 Prem Nagar Durga Chownk Camp 1 2430 11551 6824
WARD NO.-0019 Shastri Nagar Camp 1 2531 11628 11620
WARD NO.-0020 Pragatri Nagar Camp 1 1386 6824 12053
WARD NO.-0021 Sunder Nagar Camp 1 2474 12040 14623
WARD NO.-0022 Shyam Nagar Camp 2 2945 14622 8520
WARD NO.-0023 Ravidas Nagar Camp 2 2207 10861 6955
WARD NO.-0024 Sharda Para Gandhi Chowk Camp 2 2135 10849 10861
WARD NO.-0025 Santoshi Para Camp 2 1370 6968 10845
WARD NO.-0026 Housing Board Chhawani 1687 8524 14113
WARD NO.-0027 Ghasidas Nagar 2186 10860 10730
30
Final Report

2011 2016
WARD NO.-0028 Chhawani Basti 2373 10429 15044
WARD NO.-0029 Khursipar Zone 2 Bapu Nagar 1377 6792 8603
WARD NO.-0030 Khursipar Zone 2 Balaji Nagar 1519 7644 10220
WARD NO.-0031 Khursipar zone 3 Durga Mandir 1525 7094 10584
WARD NO.-0032 New Khursipar Radhakrishan Mandir 2262 10223 9129
WARD NO.-0033 Khursipar zone 3 1825 8597 4272
WARD NO.-0034 Khursipar zone 2 Netaji Subhash 859 4272 7094
WARD NO.-0035 Khursipar zone 2 Shashtri Nagar 2149 10585 7637
WARD NO.-0036 Khursipar zone 1 Goutam Nagar 1761 9137 6791
WARD NO.-0037 Khursipar zone 1 Chandrashaker Azad 774 3454
10739
Nagar
WARD NO.-0038 Khursipar zone Shahid Veernarayan 1254 6133
10429
Singh Nagar
WARD NO.-0039 Purena 1171 5545 9118
WARD NO.-0040 Joratarai 1441 6794 3122
WARD NO.-0041 Dundera 617 2811 7097
WARD NO.-0042 Newai Bhatta 1752 8022 6985
WARD NO.-0043 Station Maroda 1339 6187 12623
WARD NO.-0044 Maorda Camp Mohari Bhatta 1467 6377 9919
WARD NO.-0045 Maroada Sector* 1060 4676 5848
WARD NO.-0046 Sector 3* 2517 10819 2722
WARD NO.-0047 Sector 1, Dakshin* 2190 9218 6133
WARD NO.-0048 Sector 1, Uttar * 1373 6275 3451
WARD NO.-0049 Sector 2, Purav* 1487 7330 5544
WARD NO.-0050 Sector 2, Pashchim * 1455 6444 6756
WARD NO.-0052 Sector 4, Pashchim* 1620 6572 6185
WARD NO.-0056 Sector 6, Madhay* 1505 6734 9221
WARD NO.-0058 Risali Sector Uttar* 1396 6292 6292
WARD NO.-0059 Risali Sector Dakshin* 1283 5793 5783
WARD NO.-0060 Risali Basti 1400 5850 13439
WARD NO.-0061 Pragatri Nagar Risali 2259 9919 12902
WARD NO.-0062 Ruabandha Sector * 3007 12631 6169
WARD NO.-0063 Ruabandha Basti 5962 26341 9528
WARD NO.-0064 Sector 10* 1615 6982 8609
WARD NO.-0065 Sector 7 Purav* 1515 7099 7890
WARD NO.-0066 Sector 7 Pashchim* 2052 9123 6447
31
Final Report

2011 2016
WARD NO.-0067 Sector 8* 767 3121 4670
WARD NO.-0068 Sector 9 Hospital Sector * 405 2034 6553
WARD NO.-0069 Shahid Koushal Dakshin 4375
WARD NO.-0070 Shahid Koushal Uttar 6722
Total 135,569 627,734 635,665
Source: District Census Handbook
Note:
1. Ward numbers 69 and 70 were carved out after 2011.
2. The 2016 population estimates are based on the ULB data.
3.2 CITY GROWTH
Bhilai being one of the premier steel city had experienced a rapid rate of growth over the period of time. This
spatial growth dynamics reveals the occurrence and spatial distribution of the urban spatial growth mainly in the
duration before 1991 from the initial setup of the steel township which further extended higher in the later stage
during 1991-2001and 2001-2011. Figure 6 reveals that there is a continuous increase in built up area around the
core city i.e. the steel township area along the transit corridors especially the national and state linkages. The
spatial growth of the city in last two decades has been along the major road network corridors in the different
directions towards north as well as south. Presently, the trend for growth of city is towards South due to the
present of transit corridor and near to the steel township as well as the Industrial setup.
32
Final Report
Figure 6: Spatial Growth Bhilai
3.3 ECONOMIC PROFILE
Of the total population, 205,520 persons constitute the workforce. The work force participation rate works out to
36.81%. Of this, about 1.96 lakhs (95 per cent) are main workers, while the remaining 9,516 (5 per cent) are
marginal workers. Sector-wise bifurcation of main workers reveals that 97 per cent are employed as Other
Workers (employed other than cultivator, agricultural worker or household industry worker). A sector-wise
bifurcation of work-force is given in Figure 7.
33
Final Report
Figure 7: Sector-wise Employment of Bhilai

Known for steel production, Bhilai is also home to several other industries and manufacturing units. The steel
plant itself supports many micro and small units through backward and forward linkages. As per the DIC report,
199 ancillary units to steel plant exist. Table 3-2 below gives details of industrial areas in the city:
Table 3-2: Industrial Areas in Bhilai
Name of Industrial Area Land Developed No. of Units in Production

Industrial Estate, Bhilai 221.52 acres 278
Light Industrial Area 716.14 acres 551
Heavy Industrial Area 823.52 acres 256
Source: DIC Durg
3.4 REAL ESTATE SCENARIO
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 Bhilai land DLC rates reveal that it is having varied emphasis and focal points.
Land price map (Refer Figure 8) reveal peak values closer to the city core/ centre, Major transit nodes, and
institutional areas with a gradual reduction in land values as we move towards the periphery of the city.
34
Final Report
Figure 8: DLC Rates in Bhilai
Source: District Revenue Office
The major areas observed to have peak land values are Radhika Nagar, Kosa Nagar – Rs 86100 per square
meter, Supela Bazaar Rs 113000 per square meter, Shashtri Nagar, Indira Nagar- Rs 122700 per square meter
etc. whereas city peripherals such as Ghasidas Nagar, Kurud are observed to have value ranges of Rs 12000 to
17000 per square meter. The locations covered by better urban infrastructure, connectivity are observed to have
relatively higher land values.
3.4.1 Housing
Wards with maximum number of properties include Ward No. 2, Ward No. 60 and Ward No. 61. Ward-wise
details of residential properties have been given below:
Table 3-3: Ward-wise number of residential properties in Bhilai
Ward No. Number of Residential Properties Ward No. Number of Residential Properties
1 818 26 1809
35
Final Report
Ward No. Number of Residential Properties Ward No. Number of Residential Properties
2 3895 27 1686
3 2803 28 1627
4 2721 29 1280
5 1507 30 639
6 1093 31 1512
7 925 32 1239
8 2033 33 75
9 1582 34 42
10 1366 35 87
11 683 36 588
12 1289 37 900
13 989 38 1359
14 1724 39 666
15 753 40 50
16 2313 41 232
17 1697 42 171
18 412 43 1532
19 1606 45 871
20 1271 46 1
21 1786 60 3268
22 673 61 2846
23 601 63 1713
24 1212 68 2
25 1318 69 834
Others 9 70 6
Total
Residential 62,114
Properties
In addition, 9,934 houses have been sanctioned under Pradhan Mantri Awas Yojna. Of these, 3,072 are
beneficiary led construction, 2656 under affordable housing program, 4181 under in-situ slum rehabilitation and
25 are approved by banks for credit linked subsidy scheme.
36
Final Report
3.4.2 Commercial
Ward-wise list of registered commercial properties in Bhilai has been given in the Table 3-4 below. Maximum
commercial development is witnessed in wards 6, 23, 4 and 22.
Table 3-4: Ward-wise number of commercial properties in Bhilai
Ward No. Commercial Office Shops

1 20 - 5
2 172 1 88
3 151 4 46
4 218 10 389
5 92 2 252
6 319 2 427
7 19 - 11
8 57 2 25
9 87 1 37
10 58 - 5
11 87 7 94
12 149 4 81
13 56 1 39
14 66 3 29
15 54 - 32
16 88 1 46
17 53 - 22
18 26 1 27
19 125 1 53
20 99 8 215
21 85 - 29
22 165 8 378
23 96 2 558
24 40 - 12
25 45 2 24
26 42 1 10
27 127 1 69
28 71 7 109
29 26 - 15
30 29 - 1
31 47 23
32 48 7 44
33 4 - -
34 - - 3
35 7 - 2
36 17 3 7
37
Final Report
Ward No. Commercial Office Shops

37 104 4 276
38 92 - 198
39 30 1 13
40 3 - -
41 6 - -
42 8 - -
43 53 - 19
44 3 - -
45 75 - 60
51 1 - -
53 2 - -
60 120 1 54
61 193 1 101
63 44 2 37
69 15 - 16
Others 18 2 3
Grand Total 3612 90 3984
Source: Municipal Corporation Bhilai
3.5 INFRASTRUCTURE
Water Supply
At present, the MCB’s water supply connections coverage stands at 50 per cent, with a distribution network of
930 km. Supply of water, which is currently obtained from surface sources like Shivnath River and Maroda Tanks
and underground reserves, stands at 115 LPCD. Against this, the treatment capacity is only 79.72 (used only for
surface water). Zone-wise coverage of water supply system is given below:
Table 3-5: Zone-wise Water Supply Network of Bhilai
Zone No Street length with Total No of Households with Households without

water distribution Households Water tap water tap connections
pipeline Connection
1 403 km 30857 16142 14715
2 253.21 km 23167 13031 10136
3 129.92 km 18603 9206 9397
4 108.75 km 23069 6772 16297
5 674 km (BSP Area) 18177 18177 0
6 35.65 km 22894 8716 14178
Total 930 km 136767 72044 64723
38
Final Report
Source: SLIP Report
Sewerage
As per the SLIP report, 64 MLD of sewerage is generated in Bhilai. While the entire city is covered under
septage management through a network of 594.3km, there is no treatment facility. Zone-wise status of sewerage
network is given below:
Table 3-6: Zone-wise Sewerage Network of Bhilai
Zone No Total No of Households Households with Sewerage Network Households with Septic Tank
1 30857 5946 11840
2 23167 5689 5340
3 18603 5257 2940
4 23069 3610 2842
5 18177 18177 -
6 22894 7732 8388
TOTAL 136767 46411 31350
Source: SLIP Report
Storm Water Drainage

The city is covered with 601.6 kms of drainage system out of which 305.2 kms are pucca drains and 296.4 kms
are kutcha drains. Drain water mainly flow east and west sides of the city. The total road length is 950 kms.
Given below is the demand-gap assessment of storm water drainage in the Bhilai Municipal Area
Table 3-7: Drainage Infrastructure of Bhilai
Component Benchmark Present Status Future Demand Gap
Extension of open 130 Percentage of 601.6 km 1252 km 650.4 km

Drainage System Extension of Road
60 Percentage of
Closed Drainage Extension of Total 87.6 km 751 km 663.4 km
System Drainage
Source: City Development Plan
Solid Waste Management

As per the City Sanitation Plan, the total waste generated stands at 267 MT. Of the 70 wards, 55 had 100 per
cent door to door collection facility. Thus, the waste collection figure stands at 261.6 MT
Streetlights
According to the City Development Plan, there are 20,905 streetlights in the city, spaced at an average distance
of 33 m. Based on the total road length and the number of street lights spaced at 33 nos in 1kms, there is a
deficit of 8,228 streetlights.
39
Final Report
Roads and Bridges

The total road network in Bhilai Municipal Area is estimated around 963.3 km. Break-up of this network is given
below:
Table 3-8: Road Length of Bhilai
Road Length
B.T. Road 375.6 (39.9 per cent of total network)
C.C Road 321.5 (33.3 per cent of total network)
WBM Road 198.1 (20.56 per cent of total network)
Kutcha Road 68.1 (7.06 per cent of total network)
The total road length in the township area is around 535 kms length out of which 22 kms are kutcha and 513 kms
are pucca.
3.6 AMRUT
Bhilai is projected to witness a total investment of INR 266.73 crores under the AMRUT mission. This is the third
highest investment amount across the states.
Figure 9 : Investment under AMRUT during 2015-2020

Source: State Annual Action Plan 2017-2020
In terms of sector, the maximum allotment has been done to water projects (approximately 91 per cent), followed
by sewerage and open space projects. Sector-wise allotments of funds under AMRUT for a period of 2015-2020
are given below:
40
Final Report
Figure 10 : Sector-wise Investment under AMRUT

It may be noted that Bhilai has already received major chunk of investments during 2015-2017. A break-up of
source wise investment is given below:
Figure 11 : Source-wise Investment under AMRUT

While centre and state do contribute in funding of the project, ULBs also have to bring in their own funds.
Presently, the urban local bodies still struggle 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.
3.7 SMART CITY
The Super Smart City Project Bhilai aims to leverage its unique cultural and industrial legacy by investing in
inclusive and transformative solutions that enhance the quality of life for its citizens. Majority fund is State funded
and rest is through convergence.
41
Final Report
3.7.1 Area Based Development
The Smart City Area Based Development (ABD) has been shown in Figure 12.
Figure 12: Area under Smart City Project
According to the proposal, under the ABD retrofitting of 1252.83 acres would be undertaken at a cost of INR
640.41 crores. The area under ABD includes ward nos. 17, 18, 19, 22, 23, 29, 30, 31, 32, 34, 35, 38 and 44. In
all a total of 51 projects (refer Table 3-9) have been identified under the smart city.
Table 3-9: Projects under Area Based Development
Theme Details Cost (INR crores)

Lake development and recreational zone (4 projects)
Dredging and cleaning of lakes
Theme 1 Promenade development 7.69
Food courts around periphery of water body
Walking trails
42
Final Report
Theme Details Cost (INR crores)

Seating spaces, information centres, visitor facilities, signage
Solar lighting
Central business district and market area (4 projects)
Theme 2 Connecting CBD with public transport and NMT corridor with smart 126.97
market place
Sustainable liveable Bhilai (15 projects)
Development/improvement of basic infrastructure, imporved
Theme 3 197.83
streets/walkways, streetlights, drainage, etc.
Housing in slum areas, water supply, sewerage, sanitation, etc.
Smart urban mobility (8 projects)
Improvement of public transit corridors
Development of multi-modal intelligent transit system
Theme 4 96.46
Non-vehicle street/NMT corridors
Retrofitting of other roads
Smart bus stand and signage
Green Bhilai (5 projects)
Provision of solar energy
Theme 5 Solar street lighting 55.79
Retrofitting of government buildings to make them green
Solar umbrellas
Environmentally committed city (6 projects)
Regeneration and cleaning of 2 lakes
Theme 6 10 environment quality monitoring stations 14.88
Rain water harvesting in all government buildings and institutions
Development of open spaces
Smart central Bhilai (9 projects)
Safe and assured electricity supply
Smart electric meters
Theme 7 140.79
Robust IT connectivity and Wi-fi zones
CCTV city safety and monitoring system
GPS enabled shuttle system
Source: Super Smart City Project Proposal
3.7.2 Pan-City Solution
43
Final Report
Under the pan city solution, Bhilai City Integrated Operation Control Centre and System would be set-up at a
cost of INR 139.16 Crores. Key components of the same include:
Table 3-10: Projects under Pan City Proposal
Component Details Cost (INR Crores)

Component 1 Integrated City Operations Control Centre 42.37
Component 2 Intelligent Transit System 15.76
Component 3 Parking Management System 11.85
Component 4 Area Traffic Control System 13.46
Component 5 Safety & Security Program 11.85
Component 6 Fibre Optic Network and City Communication System 31.60
Component 7 Common City Payments & Services Processing 12.28
System
3.7.3 Funding
The total cost of Super Smart City project stands at INR 814.96 crores. Of this, INR 640.41 crores would be
needed for ABD, INR 139.16 crores for pan city solution and INR 35.39 crores for technical and administrative
support. The funding pattern is as follows:
Table 3-11: Funding of Smart City Project
Source Amount (INR Crores)

Land Monetization 564.07
GoI Convergence (AMRUT) 3.08
GoI Convergence (PMAY) 28.95
CSR & Private Sector 16.7
PPP 202.16
Total 814.96
The Municipal Corporation will infuse capital through land monetization scheme from its various vacant land
through long term lease model after obtaining the necessary approvals from the state government authorities.
3.8 MUNICIPAL PROPERTIES
Municipal Corporation Bhilai has several municipal properties/shops/land blocks that have been rented /
allocated to various users. Details of rented Properties by ULB have been given below:
44
Final Report
Table 3-12: Municipal Properties Rented by Municipal Corporation of Bhilai
S.No. Total No.

Lease rent Rented
Type of
starting year Properties
Properties
1. Shitla Camp lake Commercial shop 1989 150 118
2. Pragati Camp Commercial shop 1990 27 14
3. Akash Ganga Rain Basera Commercial shop 1993 13 13
4. Uttar Gangotri Commercial shop 1987 58 55
5. Akash Ganga Commercial Complex shops 1981 216 213
6. Chandra Maurya Commercial Complex shops 1989 16 16
7. Power House Small Shops 1987 58 58
8. Moti Lal Nehru Nagar Shops 1980 12 12
9. Supela School shops 1985 25 25
10. Kohka Sirsa Marg shops 1988 09 09
11. Nagar Nigam Main Office Complex Shops 1978-79 22 22
12. Akash Ganga Sabzi Mandi Platform (Chabutra) 1994 456 441
13. Power House Mandi Platform (Chabutra) 1991 107 102
14. Akash Ganga Pakki (Gumti) 1984 30 30
15. Nigam Area Limit Allotted (Gumti) 1992 92 92
16. Deen Dayal Upadhay Sports Complex Shops 2004 62 00
17. Power House Bus Stand shops 2007 05 00
Shops- Shops-
673 553
Total Chabutra- Chabutra -
560 543
Gumti- 122 Gumti- 122
45
Final Report
CHAPTER 4 :
EXISTING LAND BASED FISCAL TOOLS IN
BHILAI
46
Final Report
4 EXISTING LAND BASED FISCAL TOOLS IN BHILAI
This chapter analyses various land based fiscal tools with specific reference to Bhilai 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 Municipal Corporation Bhilai
This chapter presents the financial position of Municipal Corporation of Bhilai, the existing land-based fiscal tools
(LBFTs) being used in Bhilai 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
47
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
Revenue Income Trends

The revenue receipts of Nagar Palik Nigam Bhilai have increased from INR 11,884.76 Lacs in 2014-15 to over
INR 12,151.88 Lacs in 2015-16, registering a growth rate of 2.25 per cent. The details of year-wise municipal
income under various income heads from FY 2014-15 to FY 2015-16 is as under:
Table 4-1: Revenue Receipts Status at a Glance – Nagar Palik Nigam Bhilai (in INR Lakhs)
Particulars 2014-15 2015-16
Tax Revenues 3,911.27 4,061.78
Property Tax 1,980.90 2,364.77
Water Tax 632.47 106.76
Lighting Tax - 353.60
Vehicle Tax - 0.14
Tax on Animals 0.45 1.95
Advertisement Tax 0.12 58.92
Octroi & Toll 0.54 0.54
Export Tax 425.08 357.29
Other Taxes 871.72 817.81
Assigned Revenues & Compensation 3,595.46 2,604.64
Taxes & Duties Collected by others 1,123.28 504.95
Compensation in lieu of Taxes & Duties 2,472.18 2,099.70
Rental Income from Municipal Properties 786.62 772.63
Rent from Civic Amenities 648.75 632.74
Other Rents 137.87 139.89
Fees and User Charges 1,670.96 2,387.51
Empanelment & Registration Charges 9.00 4.57
Licensing Fees 506.94 947.15
Fees for Grant of Permit 68.59 53.88
Fees for Certificate or Extract 0.49 0.27
Development Charges 438.46 541.68
Regularisation Fees 106.08 259.15
Penalties and Fines 142.44 107.77
Other Fees 317.47 282.66
User Charges 81.49 151.40
48
Final Report

Service / Administrative Charges - 0.38
Rent Remission and Refunds - 38.60
Sale & Hire Charges 57.73 58.33
Sale of Products 5.68 5.92
Sale of Forms & Publications 36.74 52.36
Sale of Stores & Scrap 0.05 0.05
Hire Charges for Vehicles 15.23 -
Hire Charges for Equipment 0.02 -
Revenue Grants, Contribution, Subsidies 1,714.96 2,235.53
Revenue Grants 1,714.96 2,235.53
Interest Earned 43.72 3.47
Interest from Bank Accounts 43.06 3.47
Other Interests 0.66 -
Other Income 104.05 28.00
Lapsed Deposits 15.42 -
Recovery from Employees 38.86 12.25
Excess Provisions Written Back 0.04 -
Miscellaneous Income 49.70 15.76
Pension Fund 0.03 -
Total Revenue 11,884.76 12,151.88
According to the financial documents, the share of tax revenue increased from 32.91 percent of total revenue in
2014-15 to 33.43 percent in 2015-16. Meanwhile, Grants (Revenue Grant & Compensation of Octroi) continue to
form a major part of the revenue. Rental income from municipal properties shows a steady share of around 6
percent of the total revenue receipts. Moreover, it is observed that the interest income of urban local body has
dropped down from 0.37 percent (FY 2014-15) to 0.03 percent (FY 2015-16).
Assigned Rental Revenue

Fees and
Tax Revenues & Income from Sale & Hire Grants, Interest Total
User
Revenues Compensatio Municipal Charges Contribution, Earned Revenue
Charges
n Properties Subsidies
2014-15 3,911.27 3,595.46 786.62 1,670.96 57.73 1,714.96 43.72 11,884.76
2015-16 4,061.78 2,604.64 772.63 2,387.51 58.33 2,235.53 3.47 12,151.88
Figure 13: Revenue Receipt (in Rs. Lakh) Trends for Municipal Corporation Bhilai
49
Final Report

The tax revenue income consists primarily from Property Tax which is around 58 percent of the total tax revenue
in 2015-16. The property tax increased by 19.38 percent from 2014-15 to 2015-16. The Export Tax consist of 10
percent of the total tax revenue on average for the years under analysis.
Tax Property Lighting Vehicle Tax on Advertisem Octroi & Other

Water Tax Export Tax
Revenues Tax Tax Tax Animals ent Tax Toll Taxes
2014-15 3,911.27 1,980.90 632.47 - - 0.45 0.12 0.54 425.08 871.72
2015-16 4,061.78 2,364.77 106.76 353.60 0.14 1.95 58.92 0.54 357.29 817.81
Figure 14: Tax Revenue Receipt (INR Lakh) Trends for Municipal Corporation Bhilai
The non-tax revenue income consist of rental income, fees & user charges, interest earned, and other income.
The non-tax revenue is generally is on rising trend from 2014-15 that is 22 per cent to 27 per cent in 2015-16.
Rental Income from

Fees and User Charges Sale & Hire Charges Interest Earned
Municipal Properties
2014-15 786.62 1,670.96 57.73 43.72
2015-16 772.63 2,387.51 58.33 3.47
Figure 15: Non-Tax Revenue Receipt (in Rs. Lakh) for FY 2015-16 for Municipal Corporation Bhilai
50
Final Report
One of the steady source of income is from letting out of properties by the Nagar Nigam. It is generally 6 per cent
of the total revenue income. The rent from civic amenities is the maximum contributing income which is around
82 per cent of the rental income.
Rental Income from Municipal

Rent from Civic Amenities Other Rents
Properties
2014-15 786.62 648.75 137.87
2015-16 772.63 632.74 139.89
Figure 16: Rental income from Municipal properties and civic amenities (in Rs. Lakh) trends for Municipal
Corporation Bhilai
Revenue Expenses Trends
The revenue expenditure of Nagar Palik Nigam Bhilai has increased significantly from INR 11,261 Lacs in 2014-
15 to INR 12,763 Lacs in 2015-16 registering an increase of 13.33 percent whereas the revenue receipts during
the same period is 2.25 percent. The establishment expense increased from 44 percent in 2014-15 to 45 percent
in 2015-16 of the total expenses and Administrative Expenses increased from 16 percent in 2014-15 to 18
percent in 2015-16 of the total expenses. Moreover, the Revenue Grants, Contribution and Subsidies expenses
increased from 11 percent to 17.5 percent of the total expenses over the same period. An analysis is presented
below.
Table 4-2: Expenditure Status at a Glance – Nagar Palik Nigam Bhilai (in INR Lakhs)
Establishment Expenses 4,970.84 5,745.14
Administrative Expenses 1,813.10 2,302.59
Operations & Maintenance 3,184.59 2,361.87
Program Expenses 46.65 118.08
Revenue Grants, Contribution and Subsidies 1,246.47 2,235.53
Total Expenditure 11,261.66 12,763.21
Excess of Income over Expenditure 623.10 (611.33)
51
Final Report
Revenue
Establishment Administrative Operations & Program Grants, Total
Expenses Expenses Maintenance Expenses Contribution Expenditure
and Subsidies
2014-15 4,970.84 1,813.10 3,184.59 46.65 1,246.47 11,261.66
2015-16 5,745.14 2,302.59 2,361.87 118.08 2,235.53 12,763.21
Figure 17: Revenue Expenditure (in Rs. Lakh) Trends for Municipal Corporation Bhilai
The Nagar Palik Nigam has in these years of analysis shows revenue surplus in 2014-15 but in 2015-16 there is
revenue deficit due to 13 percent increase in revenue expenses without corresponding increase in revenue.
4.2 LEGISLATIVE BACKING
4.2.1 Legal Framework under the Chhattisgarh Municipalities Act, 1961
The Chhattisgarh Municipalities Act, 1961 is an Act to consolidate and amend the law relating to
municipalities and to make better provision for the organisation and administration of Municipalities in
Chhattisgarh. It extends to the whole of Chhattisgarh.
(A) Section 3(5-d) defines "Colonizer" to mean Development Authority

Constituted under the Chhattisgarh Nagar Tatha Gram Nivesh Adhiniyam, 1973 (No. 23 of 1973), any
Society or Co-operative Society registered by the Registrar, Firms and Societies or the Registrar,
Cooperative Societies or any other registered institution which includes any such person or institution who
intends to take up the work of establishment of the colony by developing that area of the purpose of
dividing any land, including agricultural land, into plots or group housing and intends to transfer such plots
to persons desirous of constructing residential or non-residential or joint residence for inhabitation and
who is registered as colonizer by the competent authority under the Act.
(B) Section 3 (11) defines "erect or re-erect any building" to include-

i. any material alteration or enlargement of any building;
52
Final Report
ii. the conversion by structural alteration into a place for human habitation of any building not
originally constructed for human habitation;
iii. the conversion of one or more places of human habitation into a greater number of such places;
iv. the conversion of two or more places of human habitation into a lesser number of such places;
v. such alterations of building as effect a change in its drainage or sanitary arrangements or
materially affect its security; and
vi. the addition of any rooms, buildings, out-houses or other structures to any buildings;
(C) Section 6 - lays down the procedure for publication of notifications.

That Every notification under Section 5 or Section 5-A shall be published in the Official Gazette and in at
least one Hindi newspaper having circulation in the area to which it relates and also by pasting a copy
thereof--
a. in a conspicuous place in the office of the Collector;
b. in a conspicuous place in the office of the Municipality, if any, affected by the notification; and
c. in such conspicuous place in the area affected by the notification as the Collector may deem fit.
(D) Section 127 - Taxes to be imposed under this Act.
Section 127(1) provides for mandatory taxes which the Council 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. Those are the following taxes, namely:
(E) 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 lands, called the property tax, subject to the provisions of
Sections 126, 127-A and 129;
Section 126(1) provides for determination of Annual letting value of land or building. That
Notwithstanding anything contained in this Act or any other law for the time being in force, the annual
letting value of any building or land, whether revenue paying or not, shall be determined as per the
resolution of the Council adopted in this behalf, on the basis of per square meter of the built-up area of
a building or per square feet of the 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
use, quality of construction of the building and other relevant factors and subject to the rules, as may be
made by the State Government in this behalf.
Section 126(2) further provides for filing of Self-Assessment Return by every owner. On the basis of the
resolution adopted by the Council under sub-section (1), every owner of land or building shall assess the
annual letting value of his land or building and deposit the amount of property tax along with a return in
53
Final Report
this behalf, in the prescribed form, on or before the date fixed by the Council, failing which a surcharge at
the rate, as may be determined by the Council, shall be charged. If the self-assessment statement is not
submitted by a person liable to submit it before 31st March, a penalty of one thousand rupees shall be
imposed for the lapse under section 126(2-A).
(F) Section 127(1) (b) provides for levy of a water tax, in respect of lands and buildings to which a water
supply is furnished from or which are connected by means of pipe with municipal water works;
(G) Section 127(1) (c) provides for levy of a general sanitary cess, for the construction and maintenance of
public latrines and for removal and disposal of refuse and general cleanliness of the city;
(H) Section 127(1) (d) provides for levy of a general lighting tax, where the lighting of public streets and
places is undertaken by the Council;
(I) Section 127(1) (e) provides for levy of a general fire tax, for the conduct and management of the fire
service and for the protection of life and property in the case of fire;
State government Notification no.53-18-3-,97 dated 5th May,1997 issued under powers vesting under
section 132(4) and (5) of MP Municipal Corporation Act,1956 and section 127(4) and (5) of MP Municipal
Corporation Act,1961 fixing the minimum rates of water tax, general sanitation tax, general light tax and
general fire tax in Municipal Corporation areas as under-
Water tax (a) Municipal Corporations with less than 3 lakh population = Rs.50/- per month; (b) Municipal
Corporations with more than 3 lakh population = Rs.60/- per month. General sanitation tax, general light
tax and general fire tax @ Rs.120/- per year.
(J) Section 127(1) (f) provides for levy of a local body tax on the entry of such goods as may be declared
by the State Government by notification in the Official Gazette into the municipal area for consumption,
use or sale therein at a rate not exceeding four percent of the value of goods.;
(K) Section 127(6) provides that in addition to the taxes specified in sub-section (1), the Council may, for the
purpose of this Act, subject to any general or special order which the State Government may make in this
behalf, impose any of the following taxes, namely:
54
Final Report
a. a latrine or conservancy tax payable by the occupier or owner upon private latrines, privies or
cesspools or open premises or compounds cleansed by Council agency;
b. a drainage tax, where a system of drainage has been introduced;
c. a tax on persons exercising any profession or art or carrying on any trade or calling within the
city;
d. a tax payable by the owners on all or any vehicles or animals used for riding, driving draught or
burden or on dogs, where such vehicles, animals or dogs are used within the city, whether they
are actually kept within the city or not;
e. a toll on vehicles and animals used as aforesaid entering the city but not liable to taxation
under clause (d);
f. fees on the registration of cattle sold within the city;
g. market dues on persons exposing goods for sale in any market or in any place belonging to or
under the control of the Government or of the Council;
h. a betterment tax on properties whose value may have improved as a result of town planning
scheme undertaken by the Council;
i. a tax on pilgrims resorting periodically to a shrine within the limits of the Council;
j. a tax on persons occupying, houses, buildings or lands within the limits of the Council according
to their circumstances and property;
k. a toll on new bridge constructed by the Council;
l. a tax on advertisements other than advertisements published in newspapers;
m. a tax on theatres, theatrical performances and other shows for public amusement;
n. a terminal tax on goods or animals exported from the limits of the Council; and
o. any other tax which the State Government has power to impose under the Constitution of India,
within the prior approval of the State Government;
(L) Section 127B - Imposition of User Charges. Section 127B (1) provides that notwithstanding anything
contained in Section 127, the Council or the Nagar Panchayat, as the case may be, shall, subject to any
general or special order which the State Government, may make in this regard, levy user charges for the
services mentioned in sub-section (2) in the following circumstances, namely:
a. when it introduces a new system or project for improved service delivery;
b. when a service is improved in terms of service levels.
Section 127B (2) specifies that The user charges under sub-section (1) may be levied severally on one or
more of the following services, namely:
a. water supply;
b. drainage or sewerage disposal and/or treatment;
c. door-to-door collection of solid waste and/or scientific system for disposal of municipal waste;
55
Final Report
d. any other new service rendered by the Council or the Nagar Panchayat, as the case may be.
(M) Section 131 - 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.
(N) Section 132A - 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 Municipalities 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 Municipalities shall be such as may be prescribed.
(O) 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:
a. if the construction relates to a plot of one hundred square meter, ten percent of the rate of sale in
respect of residential buildings and fifteen percent of the rate of sale in respect of non-residential
houses/buildings;
b. if the construction relates to a plot exceeding one hundred square meter, but does not exceed two
hundred square meter, twenty percent of the rate of sale, in respect of residential buildings and
thirty percent of the rate of sale, in respect of non-residential buildings;
c. if the construction relates to a plot exceeding two hundred square meter, but does not exceed
three hundred fifty square meter, thirty percent of the rate of sale, in respect of residential buildings
and forty five percent of rate of sale, in respect of non-residential buildings;
d. if the construction relates to a plot exceeding three hundred fifty square meter, fifty percent of the
rate of sale, in respect of residential building and seventy-five percent of the rate of sale, in respect
56
Final Report
on non-residential buildings: (i) 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; (ii) Provided also that nothing contained in this section
shall apply to any person who does not have any right over the building or the land on which such
construction has been made.
(2) The compounding fee under sub-section (1) shall be charged on the unauthorised construction and
not on the entire building.
(P) Section 334 - Dispute between Council and other local body
(1) In the event of any dispute arising between a Council and any other local authority established under
any State Act on a matter in which they are jointly interested, such dispute shall be referred to the State
Government, whose decision shall be final.
(2) The State Government may, by rules made under this Act, regulate the relations between Councils
and other local authorities as aforesaid in matters in which they are jointly interested.
(Q) Section 339A - Registration of Colonizer or Builder, (1) Any person who (a) as a colonizer intends to
undertake the; establishment of a colony or colonies in the area of Municipal Council or Nagar Panchayat
for the purpose of dividing the land into plots, with or without developing the area, transfers or agrees to
transfer gradually or at a time, to person desirous of settling down on those plots by constructing
residential or non-residential or composite accommodation; or (b) as a builder constructs or causes to be
constructed on any land in a municipal area or Nagar Panchayat area, whether held by him or any other
person, independent buildings or a single building with apartments; or converts or causes to be converted
an existing building or any part of such building into apartments, for the purpose of transfer by sale or
otherwise all or some of them to persons other than members of his; family and includes his assignees
shall apply to the Chief Municipal Officer for the grant of a Registration Certificate. Exemption -
Chhattisgarh Housing Board, Urban Development Authorities constituted under Chhattisgarh Nagar Tatha
Gram Nivesh Adhiniyam, 1973 (No. 23 of 1973) and other bodies created by the Government of
Chhattisgarh shall be exempted from the requirement of obtaining Registration Certificate. (2) On receipt
of the application for registration under sub-section (1) the Chief Municipal Officer shall, subject to the
rules made in this behalf, either issue or refuse to issue the Registration Certificate within thirty days. (3)
The State Government shall have power to make rules prescribing the form of application, amount of
fees for registration and other terms and conditions for issue of the Registration Certificate. (4) Every
person who has been issued the Registration Certificate under subsection (2) shall become eligible to
establish one or more colonies in the area of the Municipal Council or Nagar Panchayat area, as the case
may be, and shall not be required to apply for Registration Certificate in respect of every colony
57
Final Report
separately but it shall be mandatory for such person to obtain approval of layout plans and all other
approvals separately from the competent authority in respect of each colony. (5) No authority involved in
grant of permission or approval of any aspect or task or component of development of colony under any
law in force shall entertain an application of any person for grant of such permission or approval unless
such application is accompanied by a valid Registration Certificate as required in this section.
(R) 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: (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.
(S) Section 350 - Contribution by State Government to Municipal fund in certain cases
All fines imposed by a Council under the provisions of this Act, or any rule or bye-law framed there under
or under any other enactment which may be notified by the State Government in this behalf, in respect of
offences committed within a Municipality shall be credited to the revenue of the State and the total
amount so credited during any financial year shall, after making such deduction on account of cost of
collection and other incidental expenses as the State Government may determine, be contributed by the
State Government to the fund of the Council of such Municipality.
(T) Section 355 - Power to make rules
58
Final Report
(1) 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.
(U) Section 356 - General provision regarding rules

(1) All rules for which provision is made in this Act, shall be made by the State Government and shall be
consistent with this Act.
(2) 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 direct.
(3) All rules shall be subject to publication in the gazette.
(4) All rules shall be laid on the table of the Assembly.
(5) In making any rule the State Government may direct that a breach thereof shall be punishable with
fine which may extend to five hundred rupees.
(V) Section 357 - General provision regarding bye-laws

(1) 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.
(2) 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.
(3) 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.
(3-a) The State Government may cancel its confirmation of any such bye-law and thereupon such bye-law
shall cease to have effect.
(4) 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.
(5) In making any bye-law the Council may direct that a breach thereof shall be punishable with fine which
may extend to five hundred rupees, and where the breach is a continuing breach with further fine which
may extend to five rupees for every day after the first during which the breach is proved to have been
persisted in.
(W) Section 358 of The Chhattisgarh Municipal Act,1961 - Power to make bye-laws
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;
59
Final Report
(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;
(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
(X) Section 359 - Model bye-laws

(1) The State Government may, from time to time, make model bye-laws for any matter in respect of
which a Council is empowered to make bye-laws under this Act and publish them in the Gazette for the
guidance of Councils.
(2) If it appears to the State Government that any Municipality bye-laws are necessary for any matter in
respect of which model bye-laws have been published under sub-section (1), it may require the Council to
adopt such model bye-laws modified to suit local conditions.
(3) If any Council fails to comply with a requisition made under sub-section (2) within six months of the
making thereof the State Government may apply to such Municipality the model bye-laws modified as it
thinks fit.
60
Final Report
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 and under section 339-A of the
Municipalities Act,1961 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 lakh Rs.20000/- Rs.20000/-
C Municipal Councils Rs.10000/- Rs.10000/-
D Nagar Palikas Rs.5000/- Rs.5000/-
Source: The Chhattisgarh Municipal Corporation and Municipalities (Registration 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-
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 lakh Rs.25000//-per hectare
C Municipal Councils Rs.10000//-per hectare
D Nagar Palikas Rs.50000//-per hectare
Source: The Chhattisgarh Municipal Corporation and Municipalities (Registration of Colonizer, Term and Conditions) Rules,
2013
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.
61
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
62
Final Report
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
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.
63
Final Report
4.2.4 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.
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.
64
Final Report
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.
4.2.5 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
65
Final Report
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, 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.
66
Final Report
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 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)
67
Final Report
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 installments not exceeding five, and fix a date by which each
installment 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.
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.
68
Final Report
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.
4.2.6 The Chhattisgarh Nagar Tatha Gram Nivesh Niyam, 1975.
Rule12. 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
For a ground floor area up to 1200 sq.ft Rs.20/- Rs.15/-per storey
i.
For a ground floor area of more than 1200 sq.ft. but Rs.25/- Rs.20/-per storey
ii.
not exceeding 3000 sq.ft.
For a ground floor area of more than 3000 sq.ft. but Rs.50/- Rs.40/-per storey
iii.
For a ground floor area more than 6000 sq.ft. & Rs.75/- Rs.50/-per storey
iv.
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.
69
Final Report
4.2.7 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 hectare Rs. 5000/-
(iii) For development of area 'exceeding 2.5 hectare but not exceeding 5 hectare Rs. 10000/-
(iv) For development of area exceeding 5 hectare for every hectare or part thereof additional fee
at Rs. 2500/-
Source: The Chhattisgarh Bhumi Vikas Rules, 1984
B. For permission for building other than high rise buildings
S.No. Type of construction Built up area Fees chargeable in

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
70
Final Report

Rupees
Sq. meter Sq. meter
601 750 6250
751 1000 8750
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
71
Final Report

Rupees
Sq. meter Sq. meter
Rule 14.
8 ln case of addition alteration in the Up to 5% Nil. above 5% to 10% - Rs. 125/-. Above I0%
proposed plan. fresh 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.
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, Bhilai, 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.
72
Final Report
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.
4.2.8 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.
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.
4.2.9 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
73
Final Report
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/-per
Corporation sqm. sqm sqm sqm per sqm sqm
and Nagar
Palika area
5 km within Rs.10/-per Rs.15/-per Rs.20/-per Rs.15/-per Rs.15/- Rs.10/-per
Municipal sqm sqm. sqm sqm per sqm sqm
Corporation
and Nagar
Palika area
Source: The Chhattisgarh Land Revenue Code, 1959
4.2.10 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 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.
4.2.11 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.
74
Final Report
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.
4.2.12 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
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
Source: The Chhattisgarh Anadhikrit Vikas Ka Niyamitikaran (Sanshodhan) Adhiniyam, 2003
75
Final Report
4.2.13 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,
(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 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.
76
Final Report
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.
Source: The Chhattisgarh Anadhikrit Vikas Ka Niyamitikaran Niyam, 2002
(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.
4.2.14 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,”
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.
77
Final Report

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"
Source: The Chhattisgarh Anadhikrlt Vikas Ka Niyamltikaran (Sanshodhan) Adhiniyam, 2016
(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 / Bhilai
Summary of land based fiscal tools currently being levied in Chhattisgarh / Bhilai:
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.
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 4-2 shows the annual revenue collected by Municipal Corporation of Bhilai from Property Tax.
78
Final Report
Table 4-3 : Property tax revenue (in Rs. lakhs)
Year 2012-13 2013-14 2014-15 2015-16 2016-17 CAGR

Demand 2679 3613 3124 3308 3087 3%
Collection 2461 3619 3033 3010 3645 8%
Collection efficiency 92% 100% 97% 91% 118% 5%

4.3.1.1 Rate of property tax in Bhilai:

Bhilai 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 4-3, Table 4-4 and Table 4-5 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 8.9.2016.
Table 4-4 : Annual letting value for land/ building (Rs. per sqft)
Land / building located on
Pacca Semi-Pacca Katchha Open land
Zone main road/market
No. Resid Comm Resid Comm Resid Comm Resid Comm
Residential Commercial
ential ercial ential ercial ential ercial ential ercial
1 30 50 24 44 18 30 8 10 40 60
2 24 44 18 40 14 24 6 8 34 50
3 18 33 14 25 12 20 4 6 28 40
4 - 20 - 15 - 10 - 2.5 - -
Table 4-5 : The property tax rate is defined as under (applicable since year 2016-17)
S.No. Annual letting value (Zone 1 – 15) Property tax rate on annual letting value of
residential / industrial / commercial building
and land
1 All katchha houses with BUA less than 500 sqft Nil
and all houses occupied by HH below poverty
line
2 Annual letting value up to 12,000/- 6%
3 Annual letting value INR 12,001/- to 20,000/- 8%
8 Annual letting value more than INR 100,001/- 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 Bhilai.
79
Final Report
4.3.1.3 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
b) For properties not exempted from property tax, INR 600/- annually
4.3.1.4 Education Cess:

An education cess of 2% of annual letting value will be applicable on all properties along with the property tax.
4.3.1.5 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.
• 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 MCB 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 19% 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 corporation resources.
Samekit Kar interval of times. create a distinction come from property
Education Cess The efficiency of between deferring tax including vacant
collection is very low. values across the land tax, Samekit kar
city. and Jal Kar.
Legal provision: The legal provisions for all of these exists.

Remarks
80
Final Report
• 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.
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 4-6 shows the annual revenue
collected by Municipal Corporation of Bhilai from Building Permission Fee.
Table 4-6 : Revenue from building permission charges (In Rs. lakhs)
Parameter 2014-15 2015-16

Building Construction Permission Charges 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 @
81
Final Report
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
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 additional charge of 50% of such amount of fees
business 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 Seating capacity 800 – INR 22,500/-
theatre. 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
7 Addition or alteration with built up area or Rs. 150/- in each case of building mentioned in
external addition or alteration which does not item 1, 3 and 6, Rs. 750/- in each case of building
add to the built up area such as Court yard mentioned in item No. 2. 4 and 5.
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 proposed Up to 5% Nil. above 5% to 10% - Rs. 200/-. Above
plan. I0% fresh application according to the rule shall be
82
Final Report
S.No. Type of construction Fees chargeable

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

In addition to building permission charges, an additional road blockage charge is applicable on new construction
at the below mentioned rates:
S.No. Land area (sq ft) Sadak Badha Shulk (in Rs.)
1 0 – 500 Nil
2 501 – 1000 500
3 1001 – 2000 1000
3 2001 – 5000 2000
4 5001 – 10000 4000
6 More than 10000 10000
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 total BUA in sq.ft x 1000 = Amount x 1%

The appropriateness of existing LBFTs of building permission fee for MCB 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 4.46% 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
83
Final Report
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%.
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.

The development charges are levied at Rs. 42.1 per sqft on plot area in Bhilai. However, for few specific wards
such as ward no. 1, 11, 7, 14, and 63, the prescribed development charges are different and charged at a rate
ranging from Rs. 28.93 – 38.19 per sq ft of plot area.

The appropriateness of existing LBFTs of development charges for MCB in terms of their efficiency, equity,
Development It is not buoyant as Not equitable. The About 4.46% of the The charges are
charges there is no provision charges are linked revenues of the Municipal levied at the point
of an automatic with the area of the corporation come from of building plan
annual increase nor land building permission fee, approval for which
84
Final Report
it is linked with any which includes the there is an existing

index development charges as setup
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.
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:

1 Up to 100 sq meters 15 times of building permission fees
4 Above 300 sq meters but less than 400 sq meters 30 times of building permission fees.
85
Final Report
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

The appropriateness of existing LBFTs of regularisation charges for MCB 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
86
Final Report
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.
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 4-7 shows the annual revenue collected by Municipal Corporation of Bhilai from
rental income of Municipal Properties.
Table 4-7 : Revenue from Renting of Municipal Properties (In Rs. lakhs)
Parameter 2014-15 2015-16

rental income from Municipal Properties (in lakhs) 786.62 772.63

The appropriateness of existing LBFTs of property development and leasing for MCB in terms of their efficiency,
equity, adequacy, manageability, and legal feasibility is presented below:
87
Final Report

Property The property lease Property rents, when Approx. 6.36% 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 corporation use the existing
specialised asset percentage of the come from the rental administrative set
management team. property value, are income from up being utilised to
Existing leases are equitable. The municipal properties. manage the
managed by ULB property owners with The leases lack existing property
itself. With suitable higher property value buoyancy and market leases without any
capacity building are charged more correction incremental cost
exercises the rent as compared to mechanism leading expenditure.
existing setup can be those with lesser to sub-optimal rent
enhanced to property value. collection, and
increase the missed opportunity to
efficiency of the tool. capture property
value appreciation
benefits.
Legal provision: The legal provisions for exists.
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.
88
Final Report
CHAPTER 5:
IDENTIFICATION OF APPLICABLE VCF
TOOLS FOR BHILAI
89
Final Report
5 IDENTIFICATION OF APPLICABLE VCF TOOLS FOR BHILAI
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 Bhilai 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 year 2016-17.
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 92% - 100%.
5.1.1 Revenue Potential from Property Tax/ Fee
The revenue (collection) from property tax for the year 2015-16 is Rs. 2364 lakhs, which is approx 19% of total
revenue of MCB.
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.
90
Final Report
Table 5-1: Annual Letting Value vis-à-vis Computation of Property Tax for various sizes of Commercial Properties
Annual Letting Applicable

Annual Letting Property Tax
Pucca Commercial (area Rate (Rs. Per Property Tax Rate
Value (in Rs.) For Commercial
in sq ft) sqft) for for Commercial
for Commercial Property (in Rs.)
Commercial Property
400 50 20000 8% 1600
500 50 25000 8% 2000
1000 50 50000 12% 6000
1250 50 62500 15% 9375
2000 50 100000 18% 18000
3000 50 150000 20% 30000
4000 50 200000 20% 40000
5000 50 250000 20% 50000
Table 5-2: Annual Letting Value vis-à-vis Computation of Property Tax for various sizes of Residential Properties
Annual Letting Applicable

Annual Letting Property Tax
Pucca Residential (area Rate (Rs. Per Property Tax Rate
Value (in Rs.) For Residential
in sqft) sqft) for for Residential
for Residential Property (in Rs.)
Residential Property
500 30 15000 8% 1200
750 30 22500 10% 2250
1000 30 30000 10% 3000
1250 30 37500 12% 4500
1500 30 45000 12% 5400
2000 30 60000 15% 9000
2500 30 75000 15% 11250
3500 30 105000 20% 21000
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 Property Tax on

Value of
Pucca Tax For Commercial
Land Value Commercial
Locality Commercial Commercial Building as
(in Rs/sqm) Land (in
(area in sq ft) Property (in %age of Land
Rs.)
Rs.) Value
1 Khamaria Basti 6500 400 1600 241546 0.66%
2 Krishna Nagar Residential 10800 500 2000 501672 0.40%
91
Final Report

Value of
Locality Commercial Commercial Building as
Rs.)
Rs.) Value
3 Kosa Nagar/Dixit Colony 21600 1000 6000 2006689 0.30%
4 Pushpak Nagar 24800 1250 9375 2879970 0.33%
5 Junvani Kohka Road 37700 2000 18000 7004831 0.26%
6 Surya Dhejar Island Mall 67800 3000 30000 18896321 0.16%
7 Pradarshini Compound West 91500 4000 40000 34002230 0.12%
Supela Chowk - M.C. Office
113000 5000 50000 52489781 0.10%
8 GE Road
Table 5-4: Property Tax amount as percentage of Land Values for Residential properties

Value of
Locality Residential Commercial Building as
Rs.)
Rs.) Value
1 Khamaria Basti 6500 500 1200 301932 0.40%
4 Pushpak Nagar 24800 1250 4500 2879970 0.16%
113000 3500 21000 36742847 0.06%
8 GE Road
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. 6500 per sqm is
paying property tax @ 0.66% of the land value whereas the properties with highest land value of Rs. 113,000 per
sqm is paying property tax @ 0.1% 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. 6500 per sqm is paying property tax @ 0.4% of the land value whereas the properties with highest land value
of Rs. 113,000 per sqm is paying property tax @ 0.06% 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
92
Final Report
pay less tax. This land value based property tax may be fixed at a rate which the owners of least value property
are paying. This will help MCB in increasing its revenue base from property tax significantly.
5.1.2 Cost-Benefit Analysis
The Cost Benefit Analysis is presented in Table 5-5.

Table 5-5: 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. The city is divided in
only 4 zones for calculating the annual letting value.
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.
Equity Property tax based on prevailing market value will ensure equity.
Adequacy The additional revenue potential could be sizeable.
Manageability Online system for assessment and collection may be introduced to reduce
administrative costs.
Legal Feasibility Chhattisgarh Municipal Corporation Act, 1956
Timelines GIS Mapping of all properties – A Short Term Measure (1-2 years)
Move from area based method to value based method will need amendment in Act –
A Short Term Measure (1-2 years).
Introduction of on-line system for demand and collection of property tax may be
targeted in Medium Term (3-5 years).
Remark Strict enforcement to improve efficiency of collection
5.2 REVENUE POTENTIAL FROM IMMOVABLE PROPERTIES UNDER MCB
List of immovable properties (shops) available with MCB has been presented earlier in Section 3.8. Rental
income from municipal properties is through leasing of shops/properties owned by MCB. During FYs 2015-16
and 2014-15, MCB has collected Rs 772 lakh and Rs. 787 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 5-6.
93
Final Report
Table 5-6: Monthly Lease Rent viz-a-viz Prevailing Market Rent of Shops owned by MCB
S.No. Location of Shop Number of Average area Average Lease Average Market
Shops per shop (in Rent Rent
sqm) (Rs/Sqm/Month) (Rs/ sqm/
Month)
1. Shitla Camp lake 150 10 20 340-500
Commercial shop
2. Akash Ganga Rain 13 5.7 22 325-375
Basera Commercial shop
3. Uttar Gangotri 58 15 20 1000-1200
Commercial shop
4. Akash Ganga 216 18 17 1000-1200
Commercial Complex
shops
5. Chandra Maurya 16 13 20 325-375
Commercial Complex
shops
6. Moti Lal Nehru Nagar 12 11 17 475-550
Shops
7. Supela School shops 25 12 17 500-650
8. Kohka Sirsa Marg shops 9 10 17 500-650
9. Nagar Nigam Main Office 22 23 380 500
Complex Shops
10. Deen Dayal Upadhay 62 50 30 275-325
Sports Complex Shops
11. Power House Bus Stand 5 8 100 215-325
shops
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 generally for a period
of 3 years and the lease rent on expiry of the lease period is increased by 15 per cent.
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
94
Final Report
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.
A broad analysis of the potential revenue to MCB from above mentioned approach is presented in Table 5-7.
Table 5-7: Potential Revenue from Shops under MCB
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
(Rs/ sqm/Month)
Average Area of
Existing Annual
Revenue (in Rs.
shop @ 50% of
sqm/ Month)
S.No.
Shop (sqm)
Lakh)
Shitla Camp lake 150 10 20 3.60 340-500 42.84
1.
Commercial shop
Akash Ganga Rain 13 5.7 22 0.20 325-378 2.02
2.
Basera Commercial
shop
Uttar Gangotri 58 15 20 2.09 1080-1253 73.08
3.
Commercial shop
Akash Ganga 216 18 17 7.93 1080-1253 326.59
4.
Commercial Complex
shops
Chandra Maurya 16 13 20 0.50 325-378 5.68
5.
Commercial Complex
shops
Moti Lal Nehru Nagar 12 11 17 0.27 486-540 5.27
6.
Shops
Supela School shops 25 12 17 0.61 540-650 12.60
7.
Kohka Sirsa Marg 9 10 17 0.18 540-650 3.78

8.
shops
Nagar Nigam Main 22 23 380 23.10 540 21.25
9.
Office Complex
Shops
95
Final Report
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
(Rs/ sqm/Month)
Average Area of
Existing Annual
Revenue (in Rs.
shop @ 50% of
sqm/ Month)
S.No.
Shop (sqm)
Lakh)
DDU Sports Complex 62 50 30 11.16 270-324 71.61
10.
Shops
Power House Bus 5 8 100 0.48 215-325 0.72
11.
Stand shops
Total 588 50.12 565.44
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 588 properties to Rs. 565 lakh per annum against the existing revenue of Rs. 50 lakh. This approach if
scaled up to all the municipal properties can further augment the revenues.
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 5-8.
Table 5-8 : Cost – Benefit Analysis for Leasing of Immovable Properties of MCB
Instrument Name Leasing of Immovable Properties of MCB
Existing Status Shops are given on lease by MCB. 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. 565 lakh against existing revenue
stream of approximately Rs. 50 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. 565 lakh from lease rent will increase the share of
revenue from rentals from the current levels substantially in coming FYs.
96
Final Report
Instrument Name Leasing of Immovable Properties of MCB
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 MCB.
5.3 BUILDING PERMISSION FEE
The Building Fee in Bhilai 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 Bhilai varies from Rs. 6,500 per sqm to Rs. 113,000 per sqm. The averaged
out building fee rate for residential development works out at Rs. 20 per sqm while that for commercial
development works out at Rs. 30 per sqm.
An analysis of land values in different localities of Bhilai vis-à-vis current building permission fee for same size of
property is presented in Table 5-9:
Table 5-9 : Building Permission Fee amount as percentage of Land Values

Building
Land Area of Building Value of
permission
Locality Value (in property permission Land (in
charge as %age
Rs/sqm) (sq ft) fee @Rs.20 Rs.)
of Land Value
1 Khamaria Basti 6500 1200 2230 724638 0.31%
97
Final Report
Building
Land Area of Building Value of
permission
Locality Value (in property permission Land (in
charge as %age
Rs/sqm) (sq ft) fee @Rs.20 Rs.)
of Land Value
4 Pushpak Nagar 24800 1200 2230 2764771 0.08%
Pradarshini Compound
91500 1200 2230 10200669 0.02%
7 West
113000 1200 2230 12597547 0.02%
8 GE Road
This analysis reflects that the Building Fee on low valued plots is 15 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. 6,500/- per sqm) to all land parcels.
During the FY 2015-16, MCB collected INR 541 lakh from building fee. Going by the analysis as presented in the
previous para, the potential revenue can be enhanced by 2 to 3 times thereby resulting in potential revenue of
about INR 1000 lakh to INR 1500 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
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.
98
Final Report
Table 5-10: 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 2 to 3 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 1000 lakh to INR 1500 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 (1-2 years).
Introduction of on-line system for collection of building construction fee may be
targeted in Medium Term (3-5 years).
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.
The Development Charges in Bhilai are currently levied at INR 42.1 per sqft on plot area for all type of
developments / properties excluding few wards. 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 5-11 below.
99
Final Report
Table 5-11: Analysis of currently charged Development charges as a percentage of value of underlying asset
Development Development
Area of Value of
Land Value charge charge as
Locality development Land (in
(in Rs/sqm) @Rs.42.1 per %age of Land
(sqft) Rs.)
sqft Value
1 Khamaria Basti 6500 1200 50520 724638 6.97%
4 Pushpak Nagar 24800 1200 50520 2764771 1.83%
113000 1200 50520 12597547 0.40%
8 GE Road
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.
Table 5-12: 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
100
Final Report
Instrument Name Development charge

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 The revenue potential could be sizeable.
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).
Introduction of on-line system for collection of development charges may be targeted
in Medium Term (3-5 years).
Remark Effective tool to increase revenue of MCB.
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
101
Final Report
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 Bhilai. 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 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
Some of the key assumptions made to estimate revenue from sale of FAR are as follows:
(a) Overall sale-able FAR is kept at 0.25 over the base FAR of 1.5. The percentage proposed increase in
FAR therefore works out at 16%.
(b) Only 25% people will go for purchase-able FAR thereby resulting in selling of 4% area.
(c) Assuming the purchasable FSI to be charged at 50% of circle rate.
(d) Average circle rate for plots in Bhilai is Rs. 49,000 per sqm.
(e) The purchase-able FAR cost therefore works out at Rs. 24,500 per sqm
Based on the above assumptions the potential revenue from purchase-able FAR has been worked out and
presented in Tables 5.13.
Table 5-13: Revenue Potential from Purchase-able FAR
Average Sellable
Estimated Building Saleable Area @ 4% Revenue from Sale of
FY Rate of FAR (Rs
Permission Area (in sq mt) (in sq mt) FAR (in Rs Lakh)
per sq mt) *
2017-18 24500 20,000 800 196.00
2018-19 25235 20,000 800 201.88
102
Final Report
Average Sellable
Estimated Building Saleable Area @ 4% Revenue from Sale of
FY Rate of FAR (Rs
Permission Area (in sq mt) (in sq mt) FAR (in Rs Lakh)
per sq mt) *
2019-20 25992 20,000 800 207.94
2020-21 26772 20,000 800 214.17
2021-22 27575 20,000 800 220.60
2022-23 28402 20,000 800 227.22
2023-24 29254 20,000 800 234.03
2024-25 30132 20,000 800 241.06
2025-26 31036 20,000 800 248.29
2026-27 31967 20,000 800 255.74
Note: * The annual increase in Circle Rate have been assumed at 3%
If MCB introduces concept of purchase-able FAR, they can generate potential revenue of Rs. 201 lakh during the
FY 2018-19 based on the assumptions considered herein.
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 annual revenue potential of Rs. 201 lakhs in 2018-19
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
103
Final Report
Instrument Name Premium on Relaxtion of Rules or Additional FSI/FAR

or The Chhattisgarh Municipal Act,1961.
Timelines Require concurrence from State Legislative Assembly – A Medium Term Measure (3-
5 years).
Remark Effective tool to increase revenue of ULB and will also help in curtailing the practice of
unauthorised construction.
5.6 Land Monetization
The present Policy on Value Capture is restricted to enabling capture of value from increases in private land
valuation from public investments and public policy actions, and does not cover direct monetization (sale/leasing)
of government land. However, land monetization options can help converting under-utilized and/or vacant land
parcels into an income generating ones. A process driven approach could help derive significant annuity
revenues for BMC.
As per Smart City Proposal for Bhilai, to meet the capital cost of implementation of smart city proposal Rs.
564.07 crore will be mobilized through land monetization and Rs. 202.16 crore will be generated through PPP
channel.
The total area for smart city intervention is 507 Ha. The total population with in ABD area is 119,123 distributed
amongst 25516 households. and It is anticipated that 145 acre of land will be made available for redevelopment.
The possible land based revenue options for realization of revenues could be as under:
1. Option 1 – User Charges and Fee from ABD area in Lieu of Increase in Land Values due to Interventions
The total Area under ABD is 507 Ha. Assuming that from the 507 Ha of land, about 40% area in under private
ownership, if Rs. 1200 per sqm of area is collected per year the resultant revenue per year would be Rs. 243.6
crore (refer Figure 18). If this amount is collected over a period of 10 years the resultant revenue of Rs. 2436
crore will not only sustain the O&M expenses but will generate surplus revenue for replication of smart city
initiatives in other areas.
104
Final Report
Figure 18 : Estimated Revenue from User Charges and Fee in ABD Area
2. Option 2 – Monetization of Land Parcels
It is understood that 21.18 Ha of land is available for monetization with in ABD area. Assuming that 25% of the
land can be carved out for commercial exploitation, the sellable area could be 5.30 Ha. For optimization of
revenues if FAR of 4 is permitted this will result in sellable area of 212,000 sqm. Assuming rate of Rs. 30000 per
sqm of land, the potential revenue could be Rs. 636 crore (refer Figure 19).
Figure 19 : Estimated Revenue from Land Monetization in ABD Area

105
Final Report
5.6.1 Land Value Capture Options
The potential land value can be captured by

various methods as depicted in the adjoining
figure.
The models adopted include direct sales of the

land parcels, Land Lease models as annual lease
rentals or hybrid model involving upfront payment
along with annual lease, joint development with a
PPP partner on revenue share model or complete
self-development and lease option.
The option-1 of direct sales and upfront premium based long lease options would lead to short term gains and
may not be considered as long term value capture options. However all other options would help generate long
term value capture for the urban local body.
The option-2 of Land lease on Annual lease rentals are simply a lease of the land only. The land lease is usually
for a longer duration to the tenant that constructs a building on the property.
The option-3 of Hybrid-Upfront along with annual lease rentals involves payment of a major amount upfront by
the developer and then a certain amount is paid on an annual basis as lease rentals.
The option-4 of Revenue Share - The vacant land parcels can also be co-developed with a private developer
partner on a revenue /area sharing model.
The option-5 of Jointly Developing the proposed land parcel on a profit share model.
Option-6 refers to the complete development of the land parcel by the ULB and then handed over to the tenant
on short term lease model.
The choice to adopt a particular option would depend on the following considerations:-
• Need for Capital generation viz creating long term sources of revenue
• Anticipated upside potential of the identified asset
• Complexity of the development identified
• Bidder preference for a particular transaction structure
• Competitive forces in the real estate industry at the point of transaction
• Transaction timeframe
106
Final Report
5.7 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.
107
Final Report
CHAPTER 6 :
IMPLEMENTATION FRAMEWORK
108
Final Report
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.
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.
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.ft. Rs.75/- Rs.50/-per storey
& 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.
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.
109
Final Report
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
110
Final Report
revenue 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.
111
Final Report
The land rates however should be regularly monitored and revised annually as is done for stamp duty
purpose.
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 Khamaria Basti will work out
to 0.38% {(25*100)/(6500)} of the market value of land of Rs.6500/- per square meter. However in case of
Krishna Nagar Talab - Supela Chowk area where the land rate is Rs.82900/- per square meter, the
Diversion Premium will come to only 0.03% of the market value of land. Similarly in case of Pradarshini
Compound West area where the land rate is @ Rs.91500/- per square meter the Diversion Premium
works out to 0.027% (25*100/91500) 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. 6500/- 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.
112
Final Report
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 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
113
Final Report
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.
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
114
Final Report
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 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
115
Final Report
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
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”.
116
Final Report
Section 51(2) of the Chhattisgarh Griha Nirman Mandal Adhiniyam, 1972, further states that “Such
half of such increase in value”.
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
117
Final Report
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 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
118
Final Report
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.
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
119
Final Report
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 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-
120
Final Report
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 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-
121
Final Report
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
supervision charge with the Municipality
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.
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.
122
Final Report
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:
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
123
Final Report
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 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
124
Final Report
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 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 Bhilai is similar as there is no provision for charging any premium or fees or betterment
levy for grant of any additional FSI in the Bhilai Development Authority Act, 1982 although the
Development Authority has power to regulate the location, height, number of storey and size of buildings
125
Final Report
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 Bhilai
Development Authority Act 1982, similar to the one inserted by Maharashtra into Section 14(1) of the
MRTP Act 1966 as under:-
“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
126
Final Report
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 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
127
Final Report
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 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
128
Final Report
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:
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:
129
Final Report
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.
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 Bhilai was about 6.27 lakh. At an average size of 5 per property the
estimated number of properties in Bhilai would be 125400 as in 2011 and can be estimated at 1.50 lakh in
2018. If the smaller plots, say, smaller than 200 square meters estimated to be 30000 are excluded, from
the levy of Land and Building Tax and estimate average size of the balance taxable plots numbering
120000 to be 200 square meters each and the average market price of land to be Rs.20000/- per square
meter (the minimum being Rs.6500/- per square meter and going up to Rs.91500/- per square meter) an
average plot of 200 square meters would be values at Rs.4000000/- and the annual Land and Building
Tax for each property @ 1% of the market value would come to Rs 40000/-. Thus collection of Rs. 480
crores from the levy of Land and Building Tax from 120000 properties can be envisaged.
130
Final Report
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.
• 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:--
131
Final Report
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:--
(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
132
Final Report
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-
S.No. Area Fee for development of colony
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
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
supervision charge with the Municipality
(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.
133
Final Report
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
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.
134
Final Report
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 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
iii For a ground floor area of more than 3000 sq.ft. but Rs.50/- Rs.40/-per storey
iv For a ground floor area more than 6000 sq.ft. & Rs.75/- Rs.50/-per storey
above.
The rates are area based which may be amended and made market value of land based.
135
Final Report
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 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:-
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 hectare Rs. 5000/-
(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/-
136
Final Report

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
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
137
Final Report

Rupees
Sq. meter Sq. meter
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%
proposed plan. fresh 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

1 Raipur, Naya Raipur Rs. 200 per sq. rneter
138
Final Report

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.
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
139
Final Report
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
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/-per
Corporation sqm. sqm sqm sqm per sqm sqm
and Nagar
Palika area
5 km within Rs.10/-per Rs.15/-per Rs.20/-per Rs.15/-per Rs.15/- Rs.10/-per
Municipal sqm sqm. sqm sqm per sqm 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.
140
Final Report
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
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
141
Final Report
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.
6.5 Timeline for Implementation
6.5.1 Short term action:
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:
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
142
Final Report
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 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--
143
Final Report
(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;
(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:
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.
144
Final Report
6.6 Contractual Agreements/ MOU etc. (to be addressed during handholding phase in consultation
with stakeholders)
6.7 Actual drafting in consultation with stake-holders
The actual drafting of the amendments will be done in consultation with the concerned authorities during
the handholding period.
145
Final Report
Key Contact
Ajay Agrawal
Director – Planning & Infrastructure Advisory
Phone: +91 9599620019
Email: [email protected]
146

17276final Report VCF Bhilai 12062018

Uploaded by

Copyright:

Available Formats

17276final Report VCF Bhilai 12062018

Uploaded by

Document Information

Original Title

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

17276final Report VCF Bhilai 12062018

Uploaded by

Copyright:

Available Formats

Final Report

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

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

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

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

1.1 INTRODUCTION TO VALUE CAPTURE FINANCE ................................................................................................ 11

2 VCF TOOLS ................................................................................................................................................. 17

2.1 STANDARD LAND BASED FISCAL TOOLS IN INDIA .................................................................................... 17

2.1.1 Land Value Tax ................................................................................................................................ 17

3.1 DEMOGRAPHIC PROFILE ............................................................................................................................ 29

3.4 REAL ESTATE SCENARIO ............................................................................................................................. 34

4 EXISTING LAND BASED FISCAL TOOLS IN BHILAI ........................................................................................ 47

4.1 FINANCIAL POSITION OF MUNICIPAL CORPORATION BHILAI ............................................................................... 47

5 IDENTIFICATION OF APPLICABLE VCF TOOLS FOR BHILAI ........................................................................... 90

5.1 PROPERTY TAX........................................................................................................................................ 90

6 IMPLEMENTATION FRAMEWORK ............................................................................................................... 109

6.1 IDENTIFICATION OF CLAUSES TO BE AMENDED ................................................................................ 109

6.3 ACTS/SECTIONS/RULES/BYE-LAWS /NOTIFICATIONS TO BE AMENDED ............................................................... 131

6.7 ACTUAL DRAFTING IN CONSULTATION WITH STAKE-HOLDERS ........................................................................... 145

Figure 1 : Diagrammatic Presentation of the Concept of VCF .............................................................................. 12

AMRUT Atal Mission for Rejuvenation and Urban Transformation

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

Value without public

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 BHILAI

2.1 STANDARD LAND BASED FISCAL TOOLS IN INDIA

2.1.1 Land Value Tax

2.1.2 Development Charges (Impact Fee)

Development Charges (Impact Fee) is imposed by a local government on a new or

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

2.1.8 Land Pooling System

Internationally, it is a common feature in Germany and Japan.

2.1.9 Land Acquisition and Development

2.1.10 Tax Incremental Financing (TIF)

√ Provision Exists: Φ No Clear Provision

2.2 ADDITIONAL LAND BASED FISCAL TOOLS IN INDIA

2.2.1 Regularization of Unauthorized Development

2.2.2 Property Development for Leasing

2.2.3 Charging Extra Stamp Duty

2.2.4 Purchasable Development Control Regulations

Figure 3: Regional Setting Bhilai

Source: District Census Handbook

Figure 4: Municipal Extents map of Bhilai

Source: Knight Frank Research

3.1 DEMOGRAPHIC PROFILE

Source: Census of India

Figure 5: Population Growth of Bhilai from 1971 to 2011

Ward No Name of Ward Total HH Total Total