BENGALURU: The state government has issued a notification regulating the framework governing the Premium Floor Area Ratio (PFAR). The notification issued by the Urban Development Department (UDD) dated April 21 withdraws key provisions related to impact zone PFAR under the Revised Master Plan (RMP)–2015.
However, a comparison between PFAR and Transferable Development Rights (TDR) indicates that the state may witness significantly lower revenue realisation by promoting PFAR over TDR.
“In exercise of powers conferred under the Karnataka Town and Country Planning Act, 1961, Clause 3.4(vi) relating to impact zone Premium FAR in the Zonal Regulations of RMP–2015, notified in June 2021, has been withdrawn. Further, the provisions in Chapter-10 relating to Transferable Development Rights (TDR) stand withdrawn with reference to the earlier framework,” according to the notification.
Comparing PFAR and TDR across multiple FAR scenarios (1.75, 2 and 2.50) for a representative site area of about 5 acres, advocate Prashanth Mirle noted that across scenarios, the state’s realisation under PFAR remains materially lower when compared to TDR.
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.”
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.
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.
“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 – A 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