Charges for Institution and Change of Land Use: Andhra Pradesh

By Accommodation Times News Services

Section 28 of the Andhra Pradesh Urban Areas (Development) Act, 1975 prescribes for the imposition of Development Charges on persons instituting or changing any land use, and undertaking or carrying any development. The use of land and buildings are classified into the following categories: Industrial, Commercial, Residential, Agricultural and Miscellaneous. It is further stipulated that:
(a) the development charges payable in respect of any land or building shall be a

first charge on such land or building, subject to the prior payment of land revenue, if any, due to the Government thereon; and
(b) all development charges payable in respect of any land or building by any person shall, together with interest due up to the date of realisation, be recoverable from such person or his successor in-interest in such land or building as arrears of land revenue.
In spite of the above legal provisions, the State Government had not evolved systematic procedures for the determination of Development Charges till recently. In fact, there are some Urban Development Authorities/Municipal Corporations in the country today which do not levy charges to tap a part of the increments in land values due to planning permissions by way of institution of or change to higher value use.
The Government of Andhra Pradesh took some important initiatives in the urban development sector in 1996 for using urban land as resource, especially by streamlining the levy of Development Charges. Order No.51 of the Municipal Administration and Urban Development Department, dated 5th February, 1996, streamlined the levy of Development Charges in the large cities of the State to cover all possible cases of institution and change of land use, say, from residential to commercial, vacant to residential, etc. The rates were enhanced significantly to bring in some correspondence between the value gains due to planning permissions and the development charges paid. Further, the Government ordered that the amounts of Development Charges, which are to be collected by the concerned Urban Development Authorities, be kept in a separate account. Also 85% of the income from these charges would have to be spent on the implementation of Master Plan provisions, viz., (a) traffic improvement, (b) construction of bridges, (c) development of green belts and parks, etc. The remaining 15% only could be utilised for administration and maintenance expenses. Each Urban Development Authority was required to prepare an action plan every year for the implementation of Master Plan proposals, utilising the amounts received on account of Development Charges.
The rates of Development Charges as fixed by the Government of Andhra Pradesh for various categories of institution and change of land use are shown in Annexure 1. These provide indicative guidelines for the levy of charges in connection with institution and change of land use in other cities/States of the country. The concept of betterment due to planning permission is well-grounded in the Town Planning Acts of many countries and there is a strong case for tapping a part of the unearned increments in land values due to planning gains and using the same for decongestion programmes, acquiring and developing land for conservation purposes, etc. This way, funds can be generated for programmes such as flyovers, outer and inner ring roads, LRTS and MRTS and creation of lung space including city forests and preservation of ecologically-sensitive resources. The Hyderabad Urban Development Authority is able to mobilise about Rs.15 crores per annum from Development Charges made possible on account of the Government Order issued in 1996. Most of the 16 flyover construction works that were started by MCH are completed and the flyovers have become functional.

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