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The Andhra Pradesh Legislative Assembly has passed a bill reducing the vacant land tax to 50 per cent of the fixed tax value for plots that are actively under construction, aiming to incentivise timely development and curb land banking. The amendment, which received assent from the assembly earlier this week, applies to vacant plots where construction has commenced within the statutory period and infrastructure facilities are being developed. Members acknowledged that high vacant land levies had been discouraging early starts or continued construction, particularly in residential and commercial property sectors. The reduced levy is expected to support developers and individual plot owners by easing holding costs and encouraging efficient project delivery. The state government said detailed rules for implementation will be notified soon.
The Andhra Pradesh assembly has approved a legislative amendment that cuts the vacant land tax levy to 50 per cent for plots actively under construction, a move designed to encourage development and discourage speculative holding of undeveloped land. The bill, passed by state lawmakers earlier this week, aims to reduce holding costs for both developers and individual landowners who have commenced construction within the legally prescribed timeframe. Advertisement
Officials explained that the revised provision applies to vacant land that has been assessed for construction activity and where infrastructure works are in progress. By linking tax relief to active development, the state government intends to accelerate project execution and ensure that urban and peri-urban land parcels are brought into productive use rather than left idle.
During assembly discussions, members noted that high vacant land taxes in the absence of construction activity had been a deterrent to timely project starts and could discourage investment in infrastructure and real estate developments. By reducing the levy to 50 per cent of the fixed tax value for qualifying plots, the government hopes to strike a balance between maintaining revenue flows and supporting property sector growth.
The amended law is expected to benefit developers with ongoing residential, commercial and mixed-use projects, as well as individual plot owners undertaking building works. Lower holding costs may improve cash flows during construction phases and reduce financial pressure on projects affected by market slowdowns or delays in approvals.
Officials indicated that the state government will issue detailed implementation rules and guidelines that specify the criteria for determining eligibility, evidence of construction progress and timelines for the reduced levy. The bill does not alter the tax treatment for vacant land where no construction activity has commenced or where plots remain unused; in such cases, the full vacant land tax will continue to apply.
Industry representatives welcomed the move, saying it may encourage faster project delivery and reduce speculative land banking by ensuring that plot holders either advance development or face the standard tax burden. The amendment is part of the state's broader efforts to refine property taxation policies in order to support urban development and enhance the ease of doing business for real estate stakeholders.
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