Builders Urge Government to Scrap NALA Tax

Published: 12th September 2015 04:42 AM  |   Last Updated: 12th September 2015 04:42 AM   |  A+A-

HYDERABAD: The demand for scrapping of non-agricultural land assessment (NALA) tax in Telangana, a long-standing demand, is once again being voiced by developers and builders.

It has been more than a year since Chief Minister K Chandrasekahar Rao promised the NALA tax waiver during the last Hyderabad Property Show. But, much to the dismay of realtors and builders, the  High Court has recently upheld payment of the tax.

NALA tax is the charge collected by the government for converting agricultural land for non-agricultural use. A section of builders had approached the court against the tax, citing double taxation.

NALA tax, about 5 per cent of the land registration value, has to be paid in Greater Hyderabad Municipal Corporation (GHMC) limits, 9 pc in HMDA limits and 10 pc in municipalities.

If NALA tax is in force, realtors and builders have to shell out huge amounts of money. “We are not against paying conversion charges for converting agricultural land for use as non-agricultural purposes. But even in areas which are declared as residential zones, the government is levying the tax which will place a huge burden on developers and builders,” said Gummi Ram Reddy, president of the Telangana chapter of Confederation of Real Estate Developers’ Associations of India (CREDAI).

Till now builders have carried on their activities drawing comfort from the stay granted by the court on the levy of NALA tax but the recent court ruling has made builders panicky. They fear that the already struggling realty sector may receive further jolt if the tax is enforced. Not just builders but even home buyers have to face the music as the builders will pass on the additional financial burden to customers.

“The tax should go because NALA tax will deal a serious blow to the Hyderabad real estate sector which is showing signs of recovery just now,” says C Shekar Reddy, ex-president of Confederation of Real Estate Developers’ Association of India (CREDAI).

As realtors and builders have to shell out more towards NALA tax, the cost of homes and villas will obviously rise, thus further impacting the buyers or decreasing the property sales, both of which are undesirable, worry builders.

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