Haryana Builders Can Pay Development Charge Dues In Installments

Providing real estate developers of the state the last chance to pay outstanding external and internal development charges (EDC and IDC), the Haryana Town and Country Planning Department has amended a policy to enable them to pay the dues in installments. The department has to recover dues to the tune of Rs 20,000 crore from as many as 300 builders engaged in developing 700 projects across Haryana. The change in the policy was notified by the department on September 21.

While EDC is a charge a developer pays to the civic authorities for the maintenance of civic amenities, IDC is the amount a builder pays to civic authorities to get their approval for offering facilities inside a project. This burden is transferred to homebuyers ultimately.

The Haryana Cabinet also approved an amendment in the Haryana Development and Regulation of Urban Areas Rules, 1976, on September 25 to make sure the money generated through levying these charges is spent within a city and not sent to the state pool.

Also read: What are external development charges?

An Explainer: Internal Development Work

What is the scheme?

Developers opting for the scheme will have three options to make the payment.

They could make an upfront payment of 20 per cent and clear the remaining amount in eight half-early installments. They could make an upfront payment of 15 and clear the remaining amount in five half-yearly installments. They could also make an upfront payment of 10 per cent and clear the remaining amount in four half-yearly installments. However, builders who opt for the scheme will have to deposit 25 per cent of the outstanding dues as bank guarantee with the department initially.

Once a developer accepts the terms of the scheme, the department will create a repayment schedule accordingly. To provide further ease to builders, the department also plans to offer them a one-year time window between the payment of the upfront amount and the start of the repayment cycle. It must be noted here that developers will have to pay an interest on the installments. If a developer fails to stick with the repayment cycle, the bank guarantee initially submitted will be forfeited.

Should builders opt for it?

Apart from the fact that the scheme provides defaulting real estate developers a chance to pay up, opting for it is also crucial for them owing to several other reasons. The department will not be issuing completion certificates to projects where the builder has defaulted on external development charges. Also, this is the last chance such defaulters are getting since the department is planning licence cancellation in case the default continues. A good response from builders would also ensure the department has enough funds to develop city infrastructure, which is lying in tatters as exposed by the recent monsoon mayhem.  

It is worth a mention here that the department had launched two similar schemes in 2016 and 2017, too, which received a cold response from the builders.