Brief Background:

Under sections 42, 42A, 42B, 42C, 42D, and section 44-A of the Code, provisions were enacted from time to time in the years 1994, 2014, 2017, and 2018 providing that, in certain cases, no permission was required for the use of land for non-agricultural purposes. Under these provisions, landholders were required to obtain a deemed non-agricultural use Sanad (certificate) upon payment of non-agricultural tax in order to put the land to non-agricultural use. It was brought to the notice of the Government that the procedural requirements and the time involved in obtaining such Sanad were similar to those required for obtaining non-agricultural permission itself.

Further, as per the provisions of Maharashtra Regional and Town Planning Act, 1966 (“MRTP Act”) if the Planning Authority had granted development permission or approved building plans on the land, the requirement of separate permission from the Revenue Department for non-agricultural use, as well as the provision for a non-agricultural use Sanad was rendered redundant. Accordingly, it had become a necessity of the time to amend these provisions for the convenience of citizens. To that end, it was necessary to eliminate the dual permission requirement one from the Planning Authority under the MRTP Act and another from the Revenue Department under the Code.

While obtaining non-agricultural permission, landholders within the jurisdiction of Municipal Corporations and Class “A” Municipal Council areas across the State were required to pay a one-time conversion tax to the Government. Additionally, the Revenue Department levied an annual non-agricultural tax on land with non-agricultural use throughout the State. Over and above this, local self-government bodies also levied Property Tax on properties constructed on such lands. Due to such dual taxation, there was a persistent demand for the abolition of non-agricultural tax.

Salient Features of the Amendment:

1. By virtue of the Amendment the previously incorporated complex sections namely, sections 42, 42A, 42B, 42C, and 42D of the Code relating to the procedure for non-agricultural use permission and Sanad have been repealed and a new simplified section 42 has been substituted in their place.
2. In connection with the abolition of the conversion tax for non-agricultural use of land and the annual non-agricultural tax levied thereon, the erstwhile section 47, section 47A, and Chapter VII (sections 108 to 120) of the Code have been repealed and a new provision has been substituted under section 47, providing for the levy of a one-time conversion premium based on the current market value of the land as determined pursuant to the current Annual Statement of Rates, calculated on a slab basis according to the area of the land.

Key Directives of the GR issued in accordance with the Amendment:

1. No requirement of separate non-agricultural use permission: Pursuant to the newly substituted section 42 of the Code, where the concerned Planning Authority permits development or approves building plans on any land for any purpose permissible under the provisions of MRTP, a separate non-agricultural permission from the District Collector under the Code shall not be required.
2. Application procedure: For the non-agricultural use of land, the concerned landholder may directly apply to the relevant authority designated under section 18 of the MRTP Act. Such application may be submitted online through the Building Permission Management System (BPMS), Auto DCR, or any other computerized system as may be prescribed by the Government from time to time.  Where no online computerized system is in operation, the application may be submitted offline in accordance with the procedure prescribed by the Urban Development Department. Whether the applicant’s land is Class-I or Class-II occupancy land, there shall be no bar on applying for building/development permission.  However, mere grant of construction permission shall not result in any change in the status of Class-II occupancy or leasehold land.
3. Lands held under restricted tenures: Lands other than those held by Class-I occupants are held under restricted tenure, and such lands are held subject to specific conditions for specified purposes in accordance with the relevant laws, rules, or government orders. Where any change in the purpose of use of such land is sought or construction is proposed thereon, prior to obtaining development/building permission from the Planning Authority under the MRTP Act, the landholder shall, where necessary, obtain the approval of the Government or the concerned competent officer/authority and pay the prescribed nazarana/premium in accordance with the provisions of the relevant laws, rules, or government orders pertaining to such lands. In the event of failure to do so, nothing herein shall preclude the District Collector or the concerned competent authority from initiating action against the said landholder in accordance with the provisions of the relevant laws, rules, or government orders.
4. Applicable Premium: At the time of granting permission for non-agricultural use of land by the Planning Authority under the provisions of the MRTP Act, a one-time Conversion Premium shall be recovered from the said landholder at the rates specified below, and thereafter, development/building permission shall be granted by the Planning Authority.

5. No requirement of Sanad for availing loan: Since a separate non-agricultural permission shall no longer be required where the concerned Planning Authority has granted development permission/building/layout plan approval for any purpose permissible under the MRTP Act, for the purpose of sanctioning any loan or other facility by any bank/financial institution on such land, a non-agricultural use Sanad (certificate) shall not be required. No bank or financial institution shall insist upon the same. The District Collector shall bring this provision to the notice of all banks and financial institutions within their respective jurisdictions.
6. Annual N.A. Tax: As per the Amendment, the annual non-agricultural tax levied on properties that have been converted to non-agricultural use shall not be levied. Furthermore, exemption is hereby granted from the recovery of outstanding annual non-agricultural tax accrued up to the date of the Amendment. However, in respect of properties that were converted to non-agricultural use on or before December 31, 2001, in lieu of the annual non-agricultural tax, the concerned property holder shall be required to pay the premium amount (as specified in Paragraph 4 above), within one year from the date of issuance of this GR. Thereafter, the said amount shall be recovered along with penalty and interest. In respect of properties that were converted to non-agricultural use on or after January 1, 2002, in lieu of the annual non-agricultural tax, the concerned property holder shall be required to pay the premium amount (as specified in Paragraph 4 above), on the current market value of the land as determined pursuant to the Annual Statement of Rates for the year in which development/building permission was granted, within one year from the date of issuance of this GR. Thereafter, the said amount shall be recovered along with penalty and interest.

Comparative Analysis:

The Takeaway:

The Amendment represents a meaningful step forward in simplifying land conversion administration in Maharashtra by eliminating the Collector’s role, doing away with the NA permission, abolishing the layered structure of conversion-related levies, and introducing a one-time premium. The substitution of section 42 vests the planning authority with the power of granting development approvals. Further, through amendment of section 47 replaced non-agricultural assessment with a single one-time premium determined on the basis of plot area and Annual Statement of Rates based market value which helps to remove the cost unpredictability and ease of project planning for landowners and developers.

Contributed by – Arati Sawant, Group Head – Real Estate & Infrastructure, Mumbai & Pune and Sushma Gowda, Associate- Real Estate & Infrastructure, Mumbai.

We hope you find the above informative and in case of any queries or clarifications kindly feel free to reach out to us at – mumbai@foxmandal.in

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*Disclaimer: This article is for informative purposes only and no part of it shall be construed as legal advice.