Overview

The Maharashtra Land Revenue Code (Second Amendment) Act, 2025 abolishes the annual nonagricultural (NA) tax and replaces it with a one-time premium payable on conversion of agricultural land to non-agricultural use in Maharashtra. It also dispenses with the requirement of obtaining a separate non-agricultural use permission (sanad) from the Collector where the proposed non-agricultural use is permissible under applicable planning instruments, thereby integrating fiscal recovery with the development permission process and significantly simplifying the land conversion framework in the State.

Introduction

The Maharashtra Legislature introduced a transformative reform in land revenue administration through the Maharashtra Land Revenue Code (Second Amendment) Bill, 2025, tabled on 8th December 2025. This landmark legislation fundamentally restructures the fiscal framework governing the conversion of agricultural land to non-agricultural use in Maharashtra, replacing the recurring annual non-agricultural assessment with a simplified one-time premium mechanism.

Revenue Minister Chandrashekhar Bawankule tabled the Maharashtra Land Revenue Code (Second Amendment) Bill, 2025, in the Legislative Assembly to completely remove the annual non-agricultural (NA) tax and requirement of obtaining a “Sanad” (non-agricultural use certificate). The Bill was passed by the Maharashtra Legislative Assembly in December 2025.

The Maharashtra Land Revenue Code (Second Amendment) Act, 2025 was officially issued by the Government of Maharashtra on December 31, 2025.

Legislative Background And Policy Rationale

Historical Framework Under The Maharashtra Land Revenue Code, 1966

Historically, Section 42 of the Maharashtra Land Revenue Code, 1966 mandated obtaining permission from the Collector before agricultural land could be utilised for non-agricultural purposes. Section 47A imposed conversion tax for change of land use, whilst various provisions levied annual non-agricultural assessment on converted lands.

To streamline procedures, Sections 42A, 42B, 42C and 42D were inserted to provide that land comprised in areas for which a draft or final Development Plan or Regional Plan was published under the Maharashtra Regional and Town Planning Act, 1966 shall be deemed converted to nonagricultural use as shown in such Plans, eliminating the requirement for separate permission under the Land Revenue Code, provided conversion tax, non-agricultural assessment, nazarana, premium or other government dues were paid.

Procedural Complexities And Public Grievances

Despite the deemed conversion provisions, occupants were required to submit applications to the Collector for assessment of conversion tax, non-agricultural assessment, nazarana, premium and other government dues in respect of both Class-I and Class-II occupancy lands. Following payment of such impositions, the Collector issued a sanad to the applicant, whereupon necessary entries reflecting conversion to non-agricultural use were made in the Record of Rights.

This procedural regime engendered significant difficulties for land occupants, including bureaucratic delays, administrative complexities in application filing, examination by the Collector, calculation of multiple taxes and dues, and issuance of sanads. The Government received numerous representations from Members of the State Legislature, local authorities and citizens seeking cancellation of non-agricultural assessment and conversion tax on grounds of dual taxation, given that various other development-related taxes are chargeable under Municipal laws.

Furthermore, requests were received for waiver of non-agricultural assessment for industrial and tourism purposes, including solar power projects, tourism projects, and warehouses for agricultural produce. Significantly, owing to widespread public demand, the Government had not revised rates of non-agricultural assessment for many years. After constituting a Committee to study recovery of non-agricultural assessment and carefully examining issues of non-agricultural permissions and hardships faced by the public, the Government determined it expedient to eliminate provisions requiring non-agricultural permissions, issuance of sanads by the Collector, non-agricultural assessment and conversion tax.

Substantive Amendments Effected By The 2025 Act

Abolition Of Non-Agricultural Permission Requirement

The Amendment substitutes Section 42 of the Maharashtra Land Revenue Code, 1966 to categorically provide that no permission of the Collector for change in use of land from agricultural to non-agricultural is required if such use is permissible under the draft or final Development Plan or Regional Plan prepared and published pursuant to the Maharashtra Regional and Town Planning Act, 1966 or Development Control Regulations or any other rules, regulations, orders or guidelines issued under that Act. The concerned Planning Authority may grant development permission or approve building plans on such land without obtaining prior non-agricultural conversion permission from revenue authorities.

Significantly, the occupancy status of land other than Class-I occupancy land shall not be altered merely because development permission is granted or building plan is approved by the Planning Authority. This provision preserves tenure rights whilst facilitating development.

Deletion Of Conversion-Related Provisions

The Amendment deletes Sections 42A, 42B, 42C and 42D, which previously governed deemed conversion for lands covered by Development Plans and Regional Plans. Additionally, Sections 44, 44A, 45 and 46—which dealt with various aspects of non-agricultural assessment and related fiscal impositions—are deleted entirely. Section 47A, which imposed conversion tax, is also repealed.

Introduction Of One-Time Premium Under Substituted Section 47

Section 47 of the Maharashtra Land Revenue Code is substituted to introduce a one-time premium for non-agricultural use of land, replacing the annual non-agricultural assessment. The premium is structured progressively based on land area:

• For area up to 1,000 square meters: 0.1 per cent of the current market value of the land determined as per current Annual Statement of Rates.
• For area above 1,000 square meters but up to 4,000 square meters: 0.25 per cent of the current market value determined as per current Annual Statement of Rates.
• For area above 4,000 square meters: 0.5 per cent of the current market value determined as per current Annual Statement of Rates.

The “Annual Statement of Rates” is defined as the Annual Statement of Rates published under the provisions of the Maharashtra Stamp (Determination of True Market Value of Property) Rules, 1995 or any other Rules for the time being in force in this regard. This provides an objective and transparent basis for valuation.

Transitional Provisions For Previously Converted Lands

The Amendment incorporates critical transitional provisions to address lands converted prior to the commencement of the 2025 Act:

First Proviso: For land converted to non-agricultural use on or before 31st December 2001, instead of the annual non-agricultural assessment, a one-time premium shall be levied and recovered at the rates specified in sub-section (2), calculated on the current market value of the land determined as per the Annual Statement of Rates of the year 2001.

Second Proviso: For land converted to non-agricultural use on or after 1st January 2002 and before the date of commencement of the Maharashtra Land Revenue Code (Second Amendment) Act, 2025, instead of the annual non-agricultural assessment, a one-time premium shall be levied and recovered at the rates specified in sub-section (2), calculated on the market value of such land determined as per the Annual Statement of Rates of the year in which land was converted to non-agricultural use.

These transitional provisions ensure equitable treatment of existing landholders whilst eliminating the burden of recurring annual assessments.

Exemption Powers For Public Purpose Projects

The State Government is empowered, by notification published in the Official Gazette, to grant exemption from payment of the premium levied under Section 47, if the State Government is of the opinion that it is necessary for projects of public purpose or in the public interest. This provision confers flexibility to promote projects serving public welfare objectives without imposing fiscal burdens.

Integration With Planning Authority Functions

Significantly, the Planning Authority is mandated to recover the one-time premium at the rates mentioned in Section 47 before granting development permission or approving building plans for non-agricultural use of land. Where the Planning Authority grants development permission or approves building plans, necessary changes shall be effected in the revenue records pursuant to such permission or approval. This integrates fiscal recovery with the development permission process, creating a unified administrative mechanism.

Consequential Amendments

The Amendment effects consequential modifications, including deletion of clauses (7-A) and (21) of Section 2, relating to definitions that are rendered obsolete by the substantive amendments. Sub-sections (2) to (6) of Section 41 are deleted, streamlining provisions relating to classification of lands. Chapter VII and Sections 108 to 120 are deleted, along with various other provisions and rule-making powers that are no longer applicable under the new regime.

Practical Implications And Benefits

Elimination Of Dual Administrative Processes

Previously, landholders were required to liaise with two separate authorities: the Collector under the Maharashtra Land Revenue Code for non-agricultural conversion permission, and the Planning Authority under the Maharashtra Regional and Town Planning Act for development permission. The Amendment eliminates this duplication, creating a single-window mechanism administered by the Planning Authority for development permissions accompanied by fiscal recovery.

Fiscal Certainty And Elimination Of Recurring Liability

The substitution of annual non-agricultural assessment with a one-time premium provides landholders with fiscal certainty and eliminates recurring annual liability. This is particularly beneficial for industrial and commercial enterprises, which can now accurately forecast landrelated fiscal obligations without exposure to periodic assessment increases.

Mitigation Of Dual Taxation Concerns

The abolition of annual non-agricultural assessment addresses long-standing grievances regarding dual taxation, as landholders are already subject to municipal taxes and development charges under Municipal laws. The one-time premium represents a rationalisation of fiscal impositions related to land use conversion.

Ease Of Doing Business And Development Facilitation

By eliminating procedural requirements for applications, examinations, calculations and issuance of sanads by the Collector, the Amendment significantly reduces transaction costs and time delays in land development. This reform aligns with the Government's ease of doing business objectives and is expected to accelerate infrastructure, industrial and commercial development in Maharashtra.

Practical Considerations For Stakeholders

For Landholders With Previously Converted Land

Landholders whose lands were converted to non-agricultural use prior to commencement of the Amendment must pay the one-time premium in lieu of annual non-agricultural assessment. The valuation basis differs according to the date of conversion:

Conversions on or before 31st December 2001: Premium calculated on Annual Statement of Rates for 2001.

Conversions between 1st January 2002 and commencement of the A mendment: Premium calculated on Annual Statement of Rates for the year of conversion. This approach provides substantial relief to holders of long-converted lands, as the premium is calculated on historical values rather than current market values.

For Future Land Conversions

For lands to be converted post-commencement of the Amendment, the one-time premium shall be calculated on current market value as per current Annual Statement of Rates at the time the Planning Authority grants development permission. Applicants must ensure payment of the premium before obtaining development permission or building plan approval.

Wider Stakeholder Perspective

Stakeholders, including landholders, developers, industrial enterprises and public authorities, should familiarise themselves with the new provisions, particularly the progressive rate structure based on land area, the transitional provisions for previously converted lands, and the integration of premium recovery with Planning Authority functions. The Amendment is expected to significantly accelerate land development and contribute to Maharashtra's economic growth whilst providing landholders with a more transparent, predictable and equitable fiscal regime.

Conclusion

The Maharashtra Land Revenue Code (Second Amendment) Act, 2025 represents a comprehensive overhaul of the legal and fiscal framework governing conversion of agricultural land to non-agricultural use in Maharashtra. By abolishing the annual non-agricultural assessment and introducing a one-time premium mechanism, integrating fiscal recovery with the development permission process, and eliminating procedural requirements for Collector's permission and sanad issuance, the Amendment achieves multiple policy objectives: simplification of administrative procedures, elimination of dual taxation concerns, provision of fiscal certainty to landholders, and facilitation of ease of doing business in the State.

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