[The Viewpoint] Regulation surrounding integrated townships in Maharashtra

The Housing for All Mission 2022 is certainly a challenge, requiring assistance from all quarters and a holistic outlook and approach to address the complex issues prevalent within the real estate industry in India. One of the concepts which has emerged as a catalyst to achieve the objectives is the idea of integrated townships.

An integrated township is a ‘city within a city’, a combined cluster of housing facilities, commercial businesses, education and healthcare facilities with corresponding physical infrastructure facilities viz. water supply, sewage disposal facilities, roads, and power supply. The development of core and allied infrastructure facilities forms an integral part of township development. Integrated townships are well-defined and well-designed residential, commercial, retail and recreational areas having their own integrated waste management systems, water resource management and other amenities in place.

The state governments of Gujarat, Karnataka, Uttar Pradesh and Maharashtra, finding merit in the idea, have adopted the integrated townships concept by forming their own state policies. In this article, we shall examine briefly the regulations and concessions introduced within the State of Maharashtra to promote the construction of integrated townships.

Integrated Township Projects (earlier referred to as Special Township Projects, amended by the Maharashtra Village Panchayat and Maharashtra Regional Town Planning Amendment Act, 2014) are regulated by a special set of regulations that are formulated by the Regional Planning Board under the Maharashtra Regional and Town Planning Act, 1966 from time to time and amended periodically. The new regulations are applicable to regions under the jurisdiction of various authorities like municipal corporations, special town planning authorities etc. Regional plans are prepared in accordance with the provisions of Sections 3 to 20 of the 1966 Act, to govern the development and construction of Integrated Township Projects.

The Maharashtra government, like other state governments, actively promotes the construction of integrated townships by granting various concessions towards such development. By virtue of Regulation 14.1.1.13 of the Unified Development Control and Promotion Regulations for Maharashtra (UDCPR), read with other rules and regulations enacted from time to time in this regard, the State government has provided certain concessions as incentives to developers to construct and develop Integrated Township Projects. A few of these concessions/exemptions are briefly highlighted below for quick reference.

Concession on Stamp Duty

Stamp duty concession of 50% is granted to a project developer for the purchase of land for a township project, or for the first transaction with a purchaser of any unit in the constructed township project under the approved Master Layout Plan vis-à-vis what is originally leviable under the Maharashtra Stamp Act,1958 in respect of transactions of a similar nature. It shall be noted that such a concession is available only during any such first transaction.

Exemption in payment of development charges

Section 124F (3) of 1966 Act partially exempts (maximum up to 50%) the project developer from paying development charges, which are otherwise payable on the development of any Integrated Township Project.

Exemption from ceiling for holding agricultural land

The State government further grants an exemption from the ceiling for holding agricultural land, as prescribed under Section 3 of the Maharashtra Agricultural Lands (Ceiling on Holdings) Act, 1961, for acquisition of agricultural land for the purpose of developing an Integrated Township Project.

Deemed conversion for non-agricultural land

All land under the Master Layout Plan for development of the Integrated Township Project is deemed to be non-agricultural land and therefore no separate permission for non-agricultural use of the land is required under the provisions of Maharashtra Land Revenue Code, 1966. Further, an exemption to the extent of 50% of the normal rate for non-agricultural assessment is granted in respect of the land being developed under the Integrated Township Project.

Transfer of agricultural land for the purpose of townships

Section 63 of the Maharashtra Tenancy and Agricultural Lands Act, 1948 (MTAL) allows only agriculturists to purchase agricultural land in the State of Maharashtra. However, UDCPR grants relaxation from this requirement in the case of development of Integrated Township Projects. Section 63-1A of MTAL stands as an exception to Section 63 of MTAL and allows an individual to transfer agricultural land without requiring prior permission from the District Collector, for the purpose of development of Integrated Township Projects. Additionally, government land, if surrounded by the lands owned by the developer, may preferably be granted to the developer in accordance with the rules and regulations to that effect, by the Revenue and Forest Department of the State government.

Other Concessions

Foreign Direct Investment up to 100% has been permitted in Integrated Township Projects in accordance with Press Note No.4 (2001 series) issued by the Union Ministry of Commerce & Industry Department of Industrial Policy & Promotion SIA (FC Division) subject to the prescribed guidelines in this regard.

Integrated townships have emerged as the sustainable, efficient and economical solution to the problems surrounding real estate development within India. Integrated Township Projects are beneficial to the growth of the nation as they not only provide employment, but also help in systematic development and widening of towns. While providing a great opportunity for foreign investment in the real estate sector and a better lifestyle, adequate housing is still not amply available. Moreover, townships are not subject to various challenges and impediments.

Land acquisition is one of the biggest hurdles in such projects. The long-drawn due diligence process, and the absence of titles, wills and disputes, which to an extent are addressed by the land aggregators, are still problems which could potentially delay completion of such projects by years. However, if appropriate laws and regulations are enacted by the state governments to improve the ground-level situation, township projects could be a ray of hope for a sizeable population who aspire to lead a quality life, without any hardships that are prevalent in the real estate sector in the present scenario.

Gunjan Nandu is an Associate Partner at the Mumbai offices of Krishnamurthy & Co.