The Union government has dropped the 'no profit no loss' principle that long governed land transfers between Central government departments and Union Territories, replacing it with a structured pricing framework that explicitly accounts for market and guideline values.
The change comes through an amendment to the General Financial Rules, 2017, notified by the Department of Expenditure on May 5. The existing Rule 310, which stipulated that inter-departmental and Union Territory-to-department land transfers be conducted on a 'no profit no loss' basis, has been replaced in its entirety. In its place, a new Appendix 7A lays down a tiered pricing matrix depending on the nature of the transfer and the parties involved.
Under the old rule, 'no profit no loss' did not mean zero cost — transfers could be on mutually agreeable terms or in exchange for equivalent land — but the principle held that no party should profit from the transaction. The amended rules make no such stipulation. Transfers between Central government departments will now be priced either through book transfer at nominal rental value, or through budget allocation at guideline value. Transfers to CPSEs and state governments carry their own pricing logic, tied to whether the purpose is public or commercial.
The shift reflects a broader policy direction toward treating government land as a productive asset with measurable monetary value, rather than a resource to be exchanged at cost. The amendment assigns valuation responsibility to the National Land Monetisation Corporation (NLMC), which will determine both guideline and market values for each transaction.
For transfers between Central Government departments or to State Governments for public purposes, pricing will generally be based on the Guideline Value or Guideline Rental Value. The Guideline Value is defined as the minimum value notified by the government for a land parcel, encompassing terms like 'Circle Rate' or 'Ready Reckoner Rate' used by various State governments.
Transactions involving private entities must now be conducted through transparent competitive bidding with a reserve price based on market value. Inter-departmental transfers within the Central Government may still occur via book transfer or at a Nominal Rental Value, set at ₹1 per square meter per annum.
To ensure land is used effectively, the Ministry now requires that proposals for land transfer be supported by concrete plans or projects with clear timelines for execution. The Secretary (Expenditure) may carry out inter-ministry consultations to consider opportunity costs and competing demands for specific land parcels.
These guidelines apply to all land transfers unless specific provisions exist under other statutes or if the land is covered by existing departmental policies as of March 1, 2026. While these rules modernize the commercial aspects of land management, the constitutional provisions regarding land succession between the Union and States under Articles 294 and 295 remain unchanged.