An Explainer: Betterment Fees

Betterment fees is a charge collected by civic authorities in case a property has seen price appreciation, driven by infrastructural development, including Metro, retail or commercial set-up (a special economic zone, a mall or an IT park), an industrial corridor or better connectivity.
 
In a recent development, the Ministry of Urban Development had given its approval to "betterment fees" that will be levied in addition to other charges, including stamp duty, in case, the property is expected to witness price appreciation in future owing to infrastructural development. Known as Value Capture Finance, the scheme would be rolled out in 2017-18 fiscal. So, come April 1, 2017, anyone who purchases or sells such a property will have to pay this fee.

Also Read: Here is all you need to know about Betterment Charges
 
Apart from betterment fees, Value Capture Finance would also include land value tax, fees for changing land use, development charges, transfer of development rights, the premium on the relaxation of floor space index and floor area ratio, vacant land tax, tax increment financing, zoning relaxation for land acquisition and land pooling system.
 
It was in 2013, that betterment fees was levied by Bruhat Bangalore Mahanagara Palike for the properties on those lands that were brought under the city jurisdiction and had to be converted from agricultural to residential. This move benefitted nearly three lakh property owners in the BBMP limits, who were earlier issued a 'B' Khatha, which means that they were merely the holders of the property in BBMP records and not the owners. Such properties were converted in to 'A' Khatha category once the fee was paid, declaring them as property owners.