BENGALURU: The Bangalore Development Authority (BDA) has updated the penalty for owners who do not construct houses within the specified five-year period under lease-cum-sale agreements. Instead of the previous flat rate of 10%, introduced in September 2024, a new tiered penalty system ranging from 2.5% to 10% will be applied based on the size of the site.
This change comes in response to feedback from site allottees, who argued that the uniform 10% penalty of the current guidance value for vacant sites was excessive and did not consider the diverse dimensions of sites or individual financial situations. Following these concerns, the issue was brought before the authority’s board, which approved the revised structure.
A senior official from the BDA stated, “Many sites in the city have no construction at all, and previously, penalties ranged from Rs 1 lakh to Rs 5 lakh. The uniform increase to 10% faced strong opposition, prompting us to rationalize the structure. The new tiered system should benefit both the public and the authority, with all collected penalties directed towards the development of Bengaluru.”
The official further noted, “This new system aims for fairer penalties, particularly helping smaller site owners with lower rates.”
However, the revised penalties will not apply to allotments in Nadaprabhu Kempegowda Layout and Arkavathy Layout.
A notification from the BDA on February 11 stated, “If construction is completed after the five-year deadline, penalties will be assessed based on the guidance value at the time of construction. If that value is unavailable, the rate in the lease-cum-sale agreement will be used. The marginal cost of funds-based lending rate (MCLR) plus an additional 2% interest will apply from the agreement date. Alternatively, penalties can be calculated using the current guidance value and site area, with the lower amount being collected.”
Allottees who do not wish to pay the penalty may surrender their sites to the BDA, with 12.5% of the payment deducted before a refund of the remaining balance. Those opting to pay must clear their dues within 90 days; otherwise, interest at SBI’s MCLR plus 2% will apply. The authority clarified that the new rates will not apply to individuals who have already paid the previous 10% penalty, and no refunds will be given.
BDA Commissioner P. Manivannan emphasized that this initiative was a collaborative decision, saying, “This is a board decision, led by Chairperson N.A. Haris.”
