The Maharashtra government has changed how the additional 12 percent payment to landowners is calculated during a land acquisition. Payments to landowners will now be based on the market value of the land, without adding the government-prescribed factor of two that would eventually increase the compensation value.

The Revenue Department, through a Government Resolution on September 10, replaced its October 28, 2016 instructions.

According to the official, MSRDC had sought the change as it is undertaking large-scale land acquisition for projects including the Virar-Alibaug corridor and the proposed Shaktipeeth Expressway.

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The official said MSRDC wanted the calculation to be clarified and streamlined to expedite the acquisition process and avoid further complications and litigation over the additional payment.

The official said the government’s position was that the 12 per cent payment under the 2013 law was meant to be calculated on the market value determined under Section 26(1), and that the practice of first applying the factor under Section 26(2) and then calculating the 12 per cent was not in accordance with the law. The official also said the Attorney General’s opinion had been considered in arriving at the position.

The official said the new circular was intended to bring uniformity in the manner in which the 12 per cent component is calculated.

What changes now?

For example, if the basic market value of a farmer’s land is Rs 1 crore and a factor of two applies, the earlier Maharashtra method would have meant calculating the 12 per cent additional payment on Rs 2 crore. Under the new circular, the 12 per cent will now be calculated on Rs 1 crore.

The difference is significant.

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In the earlier method, the additional payment in the above example would have been Rs 24 lakh a year. But, under the new one, it has come down to only Rs 12 lakh.

The 2013 land acquisition law provides for a 12 per cent annual payment, in addition to the market value, from when the relevant acquisition notice is published until the possession of the land, whichever is earlier.

Section 26 provides for determining the market value and, in applicable cases, applying a multiplier to it.

The Maharashtra circular states that the 12 per cent amount under Section 30(3) will henceforth be calculated only on the market value determined under Section 26(1), specifically removing the earlier practice of taking the Section 26(2) factor into account while calculating the 12 per cent additional payment.