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Introduction
The Government of Maharashtra has taken a significant step towards enhancing ease of doing business by rationalising the framework governing agricultural land conversion. As per the recent amendment to the Maharashtra Land Revenue Code, 1966 (MLRC), notified on 31 December 2025, and the Government Resolution dated 10 February 2026, the requirement of obtaining a separate sanad or non-agricultural permission from the Collector has been abolished for permissible non-agricultural uses under the Development Plan or Regional Plan under the Maharashtra Regional and Town Planning Act, 1966 (MRTP).
The annual non-agricultural assessment, also known as the conversion tax, has been replaced with a one-time conversion premium payable to the Planning Authority. This change eliminates redundant approvals, simplifying land conversion and development processes in Maharashtra.
Position Prior to the Amendment
Historically, the conversion of agricultural land for non-agricultural use under the Maharashtra Land Revenue Code (MLRC) required prior permission from the Collector, as stipulated in Section 42. Although amendments introduced in 1994, namely Sections 42-A, 42-B, 42-C, 42-D, and 44-A, relaxed this requirement for specific cases, including land reserved for non-agricultural use under development plans, land acquired for industrial use, and integrated township projects, landowners still had to navigate a dual approval process.
They were required to obtain a sanad or non-agricultural use certificate from the Collector and pay annual non-agricultural assessments, while also seeking development permission and building plan approvals from the Planning Authority under the Maharashtra Regional and Town Planning Act (MRTP Act). This led to interactions with two separate authorities: the Revenue Department for conversion
Position After the Amendment
The revised Section 42 of the Maharashtra Land Revenue Code (MLRC) stipulates that no permission from the Collector is required for changing land use from agricultural to non-agricultural purposes, provided such use is permissible under the applicable Development Plan or Regional Plan. The Planning Authority is empowered to grant development permission and approve building plans for such land, effectively consolidating conversion and development approvals within its framework. Upon approval, no separate non-agricultural permission is required, and the change in land use is reflected in revenue records pursuant to such approval.
Introduction of One-Time Conversion Premium
The revised Section 47 of the Maharashtra Land Revenue Code (MLRC) introduces a one-time conversion premium, payable upon grant of development permission, replacing the erstwhile annual non-agricultural assessment. The premium is calculated as a percentage of the current market value, as per the Annual Statement of Rates, as follows:
- 1% for land areas up to 1,000 square meters;
- 25% for land areas between 1,000 and 4,000 square meters;
- 5% for land areas exceeding 4,000 square meters.
For land already converted to non-agricultural use, a one-time premium is levied and recovered at the aforementioned rates, calculated on the Annual Statement of Rates for the relevant year. This marks a paradigm shift from a practical standpoint, this reduces recurring compliance burdens and allows developers to better predict upfront project costs.
Financial and institutional implications
The elimination of dual approvals reduces procedural delays, enhancing project timelines and certainty. By capitalising conversion costs, the reform enables clearer project underwriting and financial planning. Furthermore, it consolidates institutional authority, shifting conversion powers from the Revenue Department to the Planning Authority, thereby streamlining the process.
From a development perspective, replacing the annual assessment with a one-time premium enhances financial modelling clarity, potentially boosting project viability and financing structures. This change is poised to have a positive impact the real estate and industrial sectors, fostering a more conducive environment for investment and growth.
Maharashtra Government Waives NA Tax and Outstanding Dues for Urban Housing
The Maharashtra Government has announced a significant policy shift, abolishing the non-agricultural (NA) tax on urban housing societies, effective immediately. As announced by Revenue Minister Chandrashekhar Bawankule in the state legislative assembly, this move is expected to provide relief to flat owners and housing societies across the state, waiving all pending dues, arrears, penalties, and interest. The move is expected to simplify procedures, alleviate financial burdens, and resolve long-standing disputes.
Simultaneously, the Government has introduced a revised framework for land conversion charges through amendments to the Maharashtra Land Revenue (Second Amendment) Act, 2025. A one-time conversion premium will replace the annual NA tax, calculated based on Ready Reckoner rates. The new structure comprises:
- 10% conversion charge for plots up to 1,000 sq. m built before 2001;
- 25% charge for plots up to 4,000 sq. m;
- 15% charge for larger land parcels.
This reform aims to stimulate real estate and industrial activities while promoting transparency. Housing societies await a formal Government Resolution (GR) to clarify implementation details.
Conclusion
The Maharashtra Government's recent reforms mark a significant shift towards simplifying land conversion processes and alleviating the burden on property owners. The abolition of non-agricultural (NA) tax on urban housing societies, coupled with the introduction of a one-time conversion premium, is expected to provide substantial relief to thousands of flat owners and housing societies across the state. The revised framework, which replaces the annual NA tax with a one-time premium, will not only simplify procedures but also resolve long-standing disputes.
The correlation between these reforms is clear: by streamlining land conversion processes and reducing the financial burden on property owners, the Government aims to stimulate real estate and industrial activities in the state. The new structure of conversion charges, ranging from 0.10% to 0.15% of the Ready Reckoner rates, provides clarity and transparency, making it easier for developers and landowners to navigate the process.
As the Government awaits the formal Government Resolution (GR) to clarify implementation details, housing societies and developers are optimistic about the positive impact of these reforms. With the elimination of dual approvals and the introduction of a one-time premium, Maharashtra is poised to become a more attractive destination for investment and growth, fostering a conducive environment for the real estate and industrial sectors to thrive.
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