Betterment fee from April 1 if house prices are up

NEW DELHI: From the next financial year, you may have to shell out extra to municipal bodies or local development authorities if you are buying or selling a property or going for new construction.

The government plans to collect special charges or "betterment fee", if any major infrastructure project with public investment such as Metro rail, expressway, industrial corridor or special export zone has pushed property prices in that locality. Sources said this scheme known as Value Capture Finance (VCF) would be rolled out in 2017-18.

Though the Centre will come out with the scheme offering options of how betterment fee can be tapped, these will be collected by municipal or development authorities.


Already, the government levies a variety of cesses on petrol purchases to finance large projects apart from charging toll for highway construction and their maintenance. The government has justified these levies on the grounds that users need to pay a fee even if there are no toll-free options, which is the norm in developed countries.

The latest weapon for raising funds, the "betterment fee" or impact fee on land sale will be in addition to the stamp duty paid by buyers. The government has justified the proposal on the ground that infrastructure development results in increase in the value of land.

Officials claimed it would be a non-budgetary source to fund major infrastructure projects. "The value capture assessment for each city or urban body can be project specific or for an area. While preparing the feasibility of projects such as Metro, speed rail or a highway, the possible impact of that infrastructure on property prices will be assessed. A part of the fund for these projects can come from the additional charge that will be collected from property owners when they sell a property or seek construction permission," a central government official said.