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The Bangalore Development Authority has replaced its uniform 10 per cent penalty on vacant sites with a graded penalty structure ranging from 2.5 per cent to 10 per cent of the guidance value, following concerns from allottees. The change applies to plot owners who did not commence construction within the stipulated five-year period under their lease-cum-sale agreements. Penalty rates will be determined by site size and, where applicable, based on the guidance value prevailing at the time of construction or the lower of alternative calculations involving Marginal Cost of Funds-based Lending Rate (MCLR) plus 2 per cent interest. Plot owners may opt to surrender sites instead of paying penalties, with 12.5 per cent of the amount already paid withheld before any refund. The revised structure aims to better reflect proportionality and ease financial burden on smaller plot holders, though certain layouts are excluded from the new regime. Allottees who have already paid the earlier flat penalty are not eligible for refunds.
The Bangalore Development Authority has overhauled its penalty regime for vacant sites in Bengaluru, introducing a graded slab system to replace the previously imposed uniform 10 per cent levy on the guidance value of land where construction has not commenced within five years of allotment under lease-cum-sale agreements. The authority's board approved the revised structure following representations from site owners who objected to the one-size-fits-all penalty, arguing that it failed to account for differences in site sizes and financial capacities. Advertisement
Under the revised framework, penalties will vary according to the size of the plot, with lower percentages applied to smaller sites and higher percentages to larger ones, up to a maximum of 10 per cent. The new structure is designed to offer proportionality, reducing the financial burden on smaller holders while maintaining incentives for timely development.
Where construction is undertaken after the five-year deadline, the penalty calculation may be based on the guidance value prevailing at the date of construction. If such guidance value data is unavailable, the penalty may be derived from the value mentioned in the lease agreement with interest charged at the Marginal Cost of Funds-based Lending Rate (MCLR) plus 2 per cent from the date of the agreement. In either scenario, the payable amount will be the lower of the two calculated figures.
Plot allottees who prefer not to pay the penalty may choose to surrender their sites to the authority. In such cases, the authority will retain 12.5 per cent of the amount already paid by the allottee and refund the balance. Payments are expected to be settled within 90 days of notification; failure to do so could attract interest at MCLR plus 2 per cent.
The revised penalties will not apply to allotments in certain layouts such as Nadaprabhu Kempegowda Layout and Arkavathy Layout. The authority has also clarified that those who have already paid the earlier flat 10 per cent penalty are not entitled to any refunds under the new structure.
The introduction of graded penalties is aimed at encouraging acceleration of construction activity on vacant plots and addressing long-standing concerns over land banking in the city's real estate landscape.
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