The state government of Punjab has decided to increase the charges for changes in land use (CLU), licence fees, and external development charges (EDC).
Reports say that this development is likely to adversely impact the small realty players. Some expected consequences of this decision are decline in the sales of building materials by 20 to 25 per cent and fall in VAT revenue and stamp duty collection.
The Punjab government sent the notice on August 17, according to which the state has been divided into four zones: the hyper potential area under the Greater Mohali Area Development Authority (GMADA); the high potential area, which includes Amritsar, Jalandhar and Ludhiana; the medium potential area, which is 5 km on both sides of the National Highway 1; and the low potential area.
The change in the land-use policy and the new charges is expected to increase the cost of the land for the builders and developers. The government has also not issued licence to builders since a few months, according to reports.
Sources said that 95 per cent of the 150 to 175 builders are small players and the new rates will force them to re-think their projects.
Colonisers like the Indian Colonizer Private Ltd may have to put their projects on hold. Property prices are expected to increase by an average of Rs 2,500 per square yard to Rs 6,000 per square yard.