India is recognized globally as a key industrial destination, largely due to its strategic position and growing economy. However, with its dense population and limited land availability, managing land resources effectively has always been a challenge. To assist in executing social and welfare schemes and to prevent land hoarding, the Urban Land Ceiling (ULC) Act was introduced in 1976. This legislation aimed to regulate the holding of vacant land by setting a ceiling limit, with the objective of promoting fair distribution and usage of land. Many states and union territories adopted the ULC Act, including Maharashtra, a major hub of industrial activity. In Maharashtra, the ceiling limit was set at 500 square meters. Despite its well-intended purpose, the act faced several challenges and was ultimately repealed in 2007 due to its limited success.
Maharashtra, as a center of industrialization, works closely with the Maharashtra Industrial Development Corporation (MIDC), which plays a crucial role in granting industrial land on a leasehold basis for 95 years. There are specific development norms and time frames that lessees must adhere to. However, in some cases, plot development within the stipulated period was not feasible. To address this, industrial plot holders were able to obtain ULC exemptions, allowing them to hold vacant land beyond the ceiling limit and to develop the land in phases as approved by the government. Unfortunately, it was observed that many plot holders did not comply with these phased development plans, leaving plots partly developed or entirely vacant.
When leaseholders face technical or financial challenges and seek to transfer their leasehold rights, MIDC imposes a transfer premium. For plots that were granted ULC exemptions, an additional fee is charged. Many Guidelines have been issued by the MIDC regarding ULC Transfer Fees. This article highlights the Salient features of the GRs issued by the departments over a period of time (Dated 3/2/2018, 1/8/2019, 23/6/2021 and 15/3/2024).
Government vide its GR dated February 3, 2018 reduced the ULC Transfer Fees. The highlights of the resolution are:
a.Reduction in ULC Transfer Fees: Transfer fee of 25% instead of 100% of prevailing Ready Reckoner rate will be applicable for transfer of ULC exempted plots. b.Transfer Fees on the Future Transaction:As per this government decision after benefit of 25% transfer charges for transfer of plot is taken for land and if the same land is again want to transfer for industrial or residential or any other purpose then the transfer fees shall be as per prevailing rule will be applicable. Note: The conditions set in the current government decision shall not applicable to lands already transferred for industrial purposes or for which transfer fees have been deposited before this GR came in to force.
Government vide its GR dated 1st August, 2019 has further reduced the ULC Transfer Fees.
In cases where an exemption for industrial purposes is granted under Section 20 of the Urban Land (Ceiling and Regulation) Act, a lump sum premium at the rate of 15% of the prevailing annual Ready Reckoner rate for the total area mentioned in the exemption order (without any deductions) is to be levied.
GR dated 23rd June 2021 On Transfer Fees on the ULC Exempted Plots
The amendment concerning changes in use or transfer fees on ULC exempted plots are as under:
a.Applicable ULC Transfer Fees in case of no CLU: If lands exempted for industrial purposes are to be transferred solely for industrial use without changing their purpose, and if there is no need to remove the remark of the area recorded under the exemption then the ULC transfer fees under Section 20 for such lands need not be collected. b.Applicable ULC Transfer Fees in case of CLU: If lands exempted for industrial purposes under Section 20 are to be used or transferred for other purposes, then according to the provisions of the Government Resolution dated 01.08.2019, ULC Charges at the rate of 15% of the prevailing annual Ready Reckoner rate will be charged.
GR dated 15th March 2024 on Transfer Fees on the ULC Exempted Plots
a.ULC Transfer Fees on plots transferred prior to 23/06/2021: If the transfer of land under ULC Clause 20 for industrial purposes has been done prior to 23.06.2021, then the transfer fee and interest shall be determined as per the transfer policy applicable on the date of transfer. b.ULC Transfer Fees on Final Transfer: If the transfer of land under ULC Clause 20 for industrial purposes has been done more than once prior to the date of 23.06.2021, and the ULC transfer fee for such transfer has not been recovered by the Corporation, then the transfer fee along with interest shall be recovered for the final transfer only.* *Final Transfer: Transfer prior to the Current/Latest Transfer. c.Revaluation/ Reassessment of ULC Charges: Any reassessment or revaluation of the exempted vacant land would be done by authority only on receipt of the Order by the Honorable Court. d. ULC Remark and Applicability: The land for which the transfer fee has been paid along with interest, the remark of ‘land exempted under Section 20 for industrial purposes’ from other rights for such land will be removed. However, the remark under Section 20 for the remaining land will continue to remain in effect e.Concession under Amnesty Scheme: If the benefit of the above provision is availed within 3 months from the date of the government’s decision, the landholder company should be permitted to pay 50% of the amount of the ULC fee, including interest, and 75% of the amount if paid within the following 3 months. f.ULC Charges on Company Takeover: For transfer occurred before 23.06.2021, if the controlling shareholding of the original company does not fall below 51%, ULC Fees for such cases involving merger, demerger, or transfer shall not be applicable. g.Non Refundable: The transfer fee and the interest accrued thereon under ULC shall not be refunded, and any requests related to this matter should not be considered in any circumstances.
Analysis by ASCC
The Urban Land Ceiling (ULC) Act of Maharashtra was repealed in 2007, but again it was brought back in the different form in 2015. Initially, the Maharashtra Industrial Development Corporation (MIDC) was imposing ULC Transfer Charges equal to the value of the plot, but later the charges were reduced to 25% in 2018, and later to 15% in 2019 for transfer of plots for other purpose. The Government has recently introduced an Amnesty Scheme that offers a 50% / 25% waiver on the ULC Charges.
The ULC Transfer Charges are comprised of two components: the principal amount and the interest accrued over the time. The ULC Charges are calculated from the date of last transfer, and the interest as per the current MIDC norms.
The current regulations stipulate that ULC Transfer Charges are not imposed on the present transfer but imposed on the most recent previous transfer of the property. This creates an inherently unfair situation for the current owners as they have to pay the liabilities of the previous owner.
MIDC is a Government entity which holds ownership of the MIDC Properties. Therefore, the lease holders should not be charged the ULC charges. If the charges were deemed necessary, the MIDC should have clearly spelt out the same in the original allotment order, Lease Deed and subsequent transfer order/s. If the MIDC has not spelt out the ULC charges earlier in any documents, then it is incorrect to charge the same to the current plot holder.
The MIDC is only considering the cases in Amnesty Scheme which involves the transfer, the other cases are not being considered. This refusal is causing the interest on ULC charges to accumulate, exacerbating the financial strain on these plot owners. In our view, the MIDC should expand the scope of the Amnesty Scheme to include the cases which do not involve transfer, so that the plot owners who wish to settle their ULC Charges can do so to save the interest.
Formula for calculation of Surplus Land for ULC charges is as follows:
Plinth Area + Required Appurtenant Area / Additional Appurtenant Area of the construction – Total plot area
Disclaimer:
Our company has neither been appointed nor authorized by MIDC to make this blog. However, we have done in-depth study of various MIDC circulars and provided information on this blog in the public interest especially for the people holding MIDC Plots. While every effort has been made to ensure the accuracy of the information provided by us but we still advice you to kindly go through the relevant MIDC Circulars or seek professional guidance before taking any decision. The information provided on this blog should not be construed as legal advice or a substitute for professional consultation.
ASCC (Ascent Supply Chain Consultants Pvt. Ltd.)
- Operating PAN India.
- A well-established Industrial Broking Company.
- One Stop Solution for all Industrial Consultancy related services.
- In-depth knowledge of Industrial Policies and Regulations.
- Served 50+ big MNCs which includes 22 Fortune 500 Companies.
- Assurance of Clear and Marketing Title.
- Time Bound and Hassle Free Transaction.
- A separate legal and Liasoning Team.
To know more about us, Click here
Reach Us at
Ascent Supply Chain Consultants Private Limited (ASCC),
406 Raheja Arcade, Sector-11, CBD Belapur,
Navi Mumbai – 400614, MH – India.
Tel: 022-4897-4888
Email: info@ascc.in
Leave a Reply