BDA cuts vacant plot penalty: New graded slabs from 2.5% to 10% bring major relief

After public objections, the Bangalore Development Authority revises its flat 10% penalty rule, introducing a size-based graded system and clearer payment options for delayed construction cases.

In a key decision impacting thousands of plot owners in Bengaluru, the Bangalore Development Authority (BDA) has revised the penalty imposed on allottees who failed to complete construction within the mandatory five-year period specified in the lease-cum-sale agreement.

Earlier, a notification issued on September 23, 2024, had introduced a uniform 10% penalty on the prevailing guidance value of vacant plots. However, the move drew strong objections from the public, who termed it excessive and unfair, especially for small plot owners. Following detailed discussions at its governing body meeting, the BDA decided to withdraw the flat-rate system and introduce a graded penalty structure ranging from 2.5% to 10%.

Under the revised policy, the penalty will now depend on the size of the plot. For plots measuring up to 600 sq ft (20x30), the penalty is fixed at 2.5%. Plots between 601 and 1,200 sq ft (30x40) will attract a 5% penalty, while plots between 1,201 and 2,400 sq ft (40x60) will be charged 7.5%. Larger plots measuring 2,401 sq ft and above will continue to attract a 10% penalty.

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The revised penalty will be calculated based on the guidance value prevailing on the date of construction, if construction is undertaken after the stipulated five-year period. In cases where guidance value data is unavailable, the allottee must pay interest at the Marginal Cost of Funds Based Lending Rate (MCLR) plus 2% on the value mentioned in the lease-cum-sale deed, calculated from the execution date to the present.

Alternatively, the payable penalty on a vacant plot will be the lower of the two computed amounts, offering some financial relief. Importantly, the revised rule does not apply to plots allotted in Nadaprabhu Kempegowda Layout and Arkavathy Layout.

Allottees unwilling to pay the penalty can choose to surrender their plots. In such cases, BDA will refund the amount paid after deducting 12.5%. If the penalty amount is not cleared within 90 days of receiving the official notice, interest at SBI’s MCLR plus 2% will be charged.

The BDA clarified that those who have already paid the earlier vacant plot penalty are not eligible for refunds under any circumstances.