Govt Withdraws Impact Fee For Residential Bldgs Along Highways, ET RealEstate

June 26, 2023

VIJAYAWADA: The state government has decided to withdraw the ‘impact fee’ on residential buildings along highways and major roads in the cities, towns and villages.

The decision has been taken keeping in view the hardships faced by the real estate sector. However, the impact fee rule will continue for commercial establishments, but the percentage has been reduced.

The government introduced the impact fee rule last August to mop up more revenues from realtors and individuals taking up construction of buildings along major roads and highways in the state.

The civic bodies were directed to collect 2% of property value as impact fee in cities, 1% in towns, and 0.5% in villages while granting the plan approvals for construction of buildings coming up adjacent to roads with more than 60ft width.

The government imposed the charge as appreciation of property values along big roads are usually high, and wanted the building owners to take some additional load and contribute for infrastructure development in the respective cities and towns. Local bodies were asked to collect the impact fee and remit the same into escrow account which would be shared between the civic bodies proportionately. With development particularly picking up along the upcoming state and national highways, the government wanted to take advantage from the growth by imposing the additional fee.

However, real estate bodies, including CREDAI and NAREDCO, approached the government with representations explaining the slump in the market and urged it to withdraw the impact fee at least on residential buildings to help them survive.

They said building owners/buyers were already paying building license fee, betterment fee, development charges, drainage and water cess in the regularised layouts and an additional 14% open space fee in unauthorised layouts. The impact fee would be additional burden on buyers and further cripple the construction sector, the real estate bodies argued.

After going through their appeals, the government has decided to withdraw the impact fee rule with immediate effect. The impact fee on commercial buildings has also been reduced to 2% from 3% in cities, 1% (from 2%) in towns, and 0.5% (from 1%) in village panchayats.

  • Published On Jun 26, 2023 at 12:00 PM IST

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