Under levying of betterment fee cost state Rs 1K cr in 20 yrs: Audit

'Defective rules in town planning act benefitted realtors'

Nexus between the officials and a section of real estate developers has caused huge revenue losses to Urban Development Authorities (UDAs) and Local Planning Authorities (LPAs) in the state.

Consider this: the authorities have incurred an estimated Rs 1,000 crore loss by under levying betterment fee on layouts in the past two decades. Though the Karnataka Town and Country Planning Act, 1963 stipulates that 33% of the guidance value should be collected as the betterment fee from the developers, the authorities have been collecting less than 1%.

These shocking details have come to fore following a thorough scrutiny of documents of UDAs and LPAs in and around Bengaluru, by the Karnataka State Audit and Accounts department (KSAAD) recently. Officials in these authorities have made use of loopholes in the KTCP Act to under-levy the betterment fees in order to benefit the layout developers.

For instance, the Bangalore International Airport Area Planning Authority (BIAAPA) which sanctioned approvals for development of 17 layouts (2,46,927 sqmt) in 2016-17 could have charged a betterment fee of Rs 22.12 crore. It, however, chose to levy a betterment fee of Rs 20 per sqmt, which has fetched it a mere Rs 81 lakh.

Similarly, the Anekal Planning Authority could have realised a revenue of Rs 138.55 crore in 2016-17. Instead, it chose to levy a betterment fee of Rs 2.28 crore for approving the development of 80 layouts (15,70,281 sqmt). The estimated revenue loss is Rs 136.27 crore.

Around 40 UDAs and LAPs across the state continue to levy a betterment fee ranging from Rs 2 to Rs 20 per sqmt, when they can actually charge anywhere between Rs 1,500 to Rs 2,000 per sqmt, as per the audit report.

Attributing the losses to defective rules in the Act, senior auditors said that UDAs and LPAs are charging fees as prescribed under Rule 37, which is in complete contradiction with Section 18 of the Act.

Though this was entirely benefiting realtors/developers, the government was not changing the  rule, they said. Questioning the very validity of the rule, KSAAD has stated that it restricts the power of authorities while charging betterment fees. Seeking a policy change, it has recommended the said rule be struck down.

Officials said that instead of borrowing crores of rupees from banks to implement infrastructure projects such as roads, ring roads and flyovers in the proposed layouts, authorities can raise their own financial resources by levying a higher betterment fee.