Bengaluru: Karnataka Government Revokes Key Provisions in Revised Master Plan 2015
The Karnataka state government has issued a notification regulating the framework governing Premium Floor Area Ratio (PFAR). The notification, dated April 21, withdraws key provisions related to impact zone PFAR under the Revised Master Plan (RMP)–2015.
PFAR vs TDR: Which Option Offers Higher Revenue Realisation?
- A comparison between PFAR and Transferable Development Rights (TDR) indicates that the state may witness significantly lower revenue realisation by promoting PFAR over TDR.
- Advocate Prashanth Mirle noted that across multiple FAR scenarios (1.75, 2 and 2.50) for a representative site area of about 5 acres, the state's realisation under PFAR remains materially lower when compared to TDR.
Differential in Revenue Realisation
Explaining a scenario with FAR 1.75, Mirle said, "For a plot area of about 2,17,800 sq. ft. (approximately 5 acres), with a guidance value of Rs 12,542 per sq. ft., the allowable total built-up area works out to 3,81,150 sq. ft. The additional FAR area to be constructed through PFAR is 2,61,360 sq. ft. with a corresponding notional land component of 1,49,348 sq. ft. While the final realisation under PFAR is Rs 91.7 crore, the equivalent value under TDR is Rs 187 crore. This results in a differential of about Rs 95 crore, with PFAR yielding more than 50 per cent lower value compared to TDR."
Why PFAR Operates on a Capped Levy Mechanism
He added that PFAR operates on a capped levy mechanism, primarily linked to a percentage of guidance value, whereas TDR reflects the full notional land value aligned with market dynamics, leading to comparatively lower revenue realisation under PFAR.
Impact on Ancillary Revenue Streams
He further pointed out that PFAR does not trigger ancillary revenue streams such as stamp duty (5%), registration fee (2%) and GST (5%) to the same extent as TDR-linked transactions, resulting in additional indirect revenue implications for the State.
Policy Implications
"The policy would result in dilution of revenue potential despite identical development capacity. At the same time, the TDR mechanism would be disincentivised, which could impact road widening and land acquisition processes for public infrastructure," Mirle said.
PFAR vs TDR Scenario
FAR – 1.75
- Area of plot – 2,17,800 sqft (approx 5 acres)
- Guidance Value (GV) – `12,542 per sqft
- Allowable total FAR area – 3,81,150 sqft
- Additional FAR (PFAR) – 2,61,360 sqft
- Notional TDR equivalent – 1,49,348 sqft
- PFAR realisation – `91.7 crore
- TDR equivalent value – `187 crore
- Indicative differential – `95 crore