In a strategic move to unlock greater potential in his ongoing real estate project, the builder has turned to us with a critical question can the value of the project be increased by integrating Transferable Development Rights (TDR)? With rising competition, non-budgeted expenses, delay in obtaining approvals, clearances, delay in completion of the development works and growing expectations from stakeholders, he seeks not just to complete the project, but to maximize its worth and optimize every square foot of development. The challenge lies not just in adding TDR, but in doing so within the strict framework of building bye-laws, obtaining the various clearances and legal compliances. It’s a high-stakes decision, and the builder is looking for clear guidance to ensure that every move enhances the project’s marketability, profitability, statutory approvals and regulatory compliances.
I am writing this article to share some thoughts based on my limited experience and understanding of the subject.
a) The extracts of the Niti Ayog Report published in the year 2020 – By 2030, the economic growth in India shall be accompanied by a shift in the underlying demographics. There will be an increasing trend of urbanization, a peaking of the population in the working age group, and a larger share of this population will be employed in the services sector. To support this demographic shift and meet the infrastructural needs of present and foreseen urbanization huge investments are required. The Urban Local Bodies (ULBs) often find it difficult to meet such investments given their limited revenue base.
b) TDR was conceptualized as a tool for land acquisition with a special focus to road widening and new road formation and other public infrastructure projects. The concept of TDR, in principle, is fair as it gives the owner rights of development in return of the acquired land.
c)Example – The BDA acquired land for road widening in Bengaluru. Instead of providing financial compensation, it issues a Development Rights Certificate (DRC), commonly known as TDR
d) TDR means an award specifying the Built-Up Area (BUA) an owner of a site or plot can either sell or utilize elsewhere, in lieu of the land foregone on account of surrendering / gifting land free of cost to the ULB’s (Municipal Body, Urban Development Authority), required to be set apart for public purpose as per the Master Plan or for road widening, recreational use zone, etc.
e) The award is in the form of a TDR Certificate issued by the Competent Authority. The TDR Certificate inter-alia should mention the area surrendered and the cost of that area as per the guidance value. These certificates are regulated under the building Bye-Laws or in conjunction with TDR guidelines framed by State Governments from time-to-time.
f) TDR is a technique of land development, which separates the development potential of a particular parcel of land from it and allows its use elsewhere within the defined zones of the city. It allows the owner to sell the development rights of a particular parcel of land to another. This entitlement is over and above the usual FSI available for receiving plot in accordance with the prevailing laws and regulations, which entitles a landowner to construct additional built‐up area on his existing building or vacant land.
Transaction flow of TDR –
| Step | Transaction / Event |
| 1 | Government marks the area for Road widening, Park or for any public development purposes – by way of Comprehensive Development Plan (CDP) |
| 2 | Those earmarked/reserved areas cannot be developed by the owners of the land. Invariably these lands will be acquired by the government/ Surrender of Land by the Owner. |
| 3 |
Example – a) Landowner ‘A’ surrenders his land to the (Urban local bodies – ULB) government in a scheme of Road widening by way of gift. b) ULB / Government issues a Development Right Certificate (“DRC” or the “TDR Certificate”). c) This is a right which is valued in terms of money, is transferable and which can be bought by a third-party owning land in a receiving area, who without that right cannot realize the land value to the extent possible. d) Thus, the landowner ‘A’ in a sending area sells his right to Landowner ‘B’ (in a so-called Receiving area), who can then use it to develop his land more intensively than before. |
| 4 | The Development Rights (measured in Floor Area Ratio/FAR) are calculated based on the area of land surrendered, the applicable zoning regulations, and CDP (Comprehensive Development Plan) guidelines |
| 5 | DRC entitles the receiver to an extra-built-up area which extends more than authorized/ permitted FSI/ Floor for the receiving area. These certificates obtained in-lieu of the TDR can either be traded in a different location for extra built-up area or be used in-situ for incremental construction. |
| 6 | The buyer of these DRC can utilise in their building (generally in real estate projects) |
TDR is implemented by the BBMP (Bruhat Bangalore Mahanagara Palike) in Bangalore as per the provisions specified by the section (14) of KTCP Act, 1961 and the guidelines given by the Revised Master Plan 2015. The majority of DRCs have been purchased and utilized by the real estate developers.
TDR is considered successful in Mumbai amongst all Indian cities. In Mumbai, 70% of TDR generation is accounted for by those used in Slum redevelopment. Slum TDR being highly popular for real estate reasons is generated in huge numbers. Hence TDR generated is more.
In the user survey carried out under this study, it was revealed that the majority of the TDR transaction happens through liasoners or middle men. There is no direct transaction between the TDR owner and the utilising entity. This can be reasoned with the lack of information availability in the market about potential TDR sellers and potential TDR buyers. Hence it forms a virtual market where the price of TDR can be highly manipulated and skewed for the benefit of the middle men.
Recommendation to the government to achieve the transparency in dealing with TDR’s – to ensure that the Transferable Development Rights (TDR) system functions effectively, fairly, and transparently, the following recommendations may be considered:
1. Creation of a Centralized Digital TDR Portal
a. Develop an integrated online platform where all DRCs (Development Rights Certificates) are issued, tracked, and verified
b. The portal should display real-time data on issued DRCs, transferable limits, usage status, and geographical applicability (sending and receiving zones).
c. This should be integrated with the GIS-based land records and building approval systems.
2. Unique Identification and QR Coding of DRCs:
a. Every DRC should be assigned a unique identification number and QR code to prevent duplication or forgery.
b. Scanning the code should allow stakeholders to verify the origin, holder, and unused portion of the DRC.
3. Mandatory Registration of TDR Transfers: Presently Following
a. All transfers or transactions involving TDR must be registered with the Sub-Registrar and updated in the central TDR portal.
b. This helps in tracking the chain of ownership and avoids unregulated trading.
4. Public Disclosure of TDR Usage:
a. Authorities should publish details of TDR utilization in approved building plans, including project-wise TDR applied and sanctioned.
b. This will prevent misuse or overutilization and instill public confidence.
5. Integration with Building Approval Systems:
a. The TDR portal must be integrated with local planning authority’s building approval software to auto-verify the availability and eligibility of TDR usage before granting construction permits.
6. Cap on Market Trading Margin (Optional):
a. To avoid speculative trading, the government may consider regulating or disclosing pricing patterns, or placing a cap on the maximum allowable transfer margin under public domain pricing norms.
Following important laws or statues to be considered while transacting with the DRC / TDR as it involves financial transactions –
1. The Registration Act and The Indian Stamp Act
2. Income Tax Act – as capital gains
3. GST – forward or reverse charge applicability
4. Urban Planning and Building Bye-laws
5. Other property related laws
The survey indicates that 99% of TDR/DRCs are ultimately transferred to third parties, who then utilize them in the development of real estate projects. With the implementation of the Real Estate (Regulation and Development) Act, 2016, it has become increasingly important to examine how TDR/DRCs are treated, reported, and communicated to stakeholders, including buyers, authorities, and financial institutions.
In the pre-RERA regime, it was common practice in the industry, promoters included clauses in the agreement for sale stating their intention to load DRC/TDR in the future. Customers were often deemed to have consented to this by signing the agreement, regardless of whether the promoter actually utilized DRC/TDR later or not. These clauses were generally standard and included in all agreements, without specifically reflecting the factual position of the project
However, with the introduction of RERA (Real Estate (Regulation and Development) Act, 2016), it has become necessary for the promoter to have clear intent and transparency regarding the use of Transferable Development Rights (TDR) or Development Rights Certificates (DRC) in the project. Under RERA, the promoter is required to disclose the full details of the project at the time of registration, including the Total Land Area, total development potential, FAR, FSI, and whether additional FSI through TDR/DRC will be utilized. This information must also be reflected in the sanctioned plan and agreement for sale, ensuring that homebuyers are fully informed of the development scope from the outset. Unlike the pre-RERA era where future loading of TDR was often kept open-ended and vaguely mentioned in agreements, the RERA demands certainty, compliance, and accountability. Therefore, any intention to infuse TDR or DRC during the course of development must be clearly planned, documented, and registered with the regulatory authority to maintain transparency and protect the interests of allottees.
There can be two scenarios –
1. First, the promoter procures TDR/DRC in advance, utilizes it, and then obtains the Development Plan and Building Sanction Plan accordingly. Apply for RERA registration and obtain it.
2. Second, the promoter obtains the Development Plan and Building Sanction Plan with the intention of loading TDR/DRC during the course of development or at a later stage of the project
In the first scenario, the application for RERA registration must include copies of the TDR/DRC, supporting legal documents, and the corresponding building sanction plan. All legal draft documents such as the draft Agreement for Sale and the draft Sale Deed should clearly mention and detail the TDR/DRC as part of the legal title flow and recitals. Further, the land physically available is proportionately distributed based on the built-up or carpet area of each apartment. Consequently, the land entitlement or share for each unit is reduced when TDR/DRC is utilized in the real estate project
In the second scenario, the promoter plans to procure and utilize the TDR/DRC during the course of project development (i.e., an ongoing project). If so, the following points must be considered while seeking approval from RERA:
1. Promoter to obtain the TDR-DRC (prior to consent of allottees or post consent of the allottees)
2. Obtain the 2/3rdconsent from the allottees in the project – Section 14(2)(ii) of the RERA Act 2016 by providing the factual information. Such consent shall be informed consent. i.e., all details regarding the proposed sanction plans shall be provided. Eg., number of additional floors, number of additional units, what is the modification in the project proposed, extended date of delivery if any etc
3. Obtain necessary approvals from statutory agencies to apply for revised/modified plan eg., water, electricity, Fire, Airport Authority, Environmental, Pollution control board etc
4. Once two-thirds consent is obtained from the allottees, the promoter must apply for the modified sanction plan (including the development plan and building construction plans) from the planning authority
5. On receipt of a modified development plan and building construction plan, the promoter shall submit the application with RERA Authority to comply with Section 14 of the RERA Act. Such application shall be submitted online (on the website of the RERA Authority) – https://rera.karnataka.gov.in/applyForModificationPage
6. Click https://rera.karnataka.gov.in/resources/staticpage/modification_usermanual.pdffor the user manual of Karnataka RERA for modification of plan
7. The following details shall undergo change in project on the web portal of the RERA Authority –
a. Total Land Area / additional TDR
b. Revised or modified building plan details with FAR etc
c. Additional or revised number of floors, amenities
d. Additional or revised carpet area statement
e. Revised end date for completion with revised schedule of works if any
f. Additional or revised estimated cost of construction of the project.
g. Modified legal draft documents i.e., revised agreement of sale, Allotment letter etc.,
h. Modified or amended amenities, facilities, specifications etc.
8. The promoter must furnish the current status of development works and pending activities, supported by professional certificates from the engineer, architect, and a practicing Chartered Accountant. These certificates should detail the total development work completed and pending, the sold and unsold inventory, the amount received and receivable, as well as the amount incurred and the estimated balance to be incurred.
9. Upon receipt of the application, the officers will scrutinize the request for modification of the plan (including the infusion of TDR/DRC), verify the accuracy and sufficiency of the submitted documents, and forward it for approval by the Authority.
10. The Authority will call for a personal hearing with the promoter or their authorized representative. Upon being satisfied with the information, supporting documents, and explanations provided, the Authority may approve the application for modification, including the incorporation of TDR/DRC details.
11. On approval of the application, the same is reflected in the website of the authority under a separate page in the registration module – modification of plan.
To conclude – All information submitted in connection with a modification of the sanctioned plan particularly when it involves the infusion of TDR/DRC—is made publicly available through the RERA portal and is accessible to all stakeholders, including homebuyers, financial institutions, and regulatory authorities. Any errors, omissions, or misrepresentations could lead to regulatory consequences, loss of credibility, and even potential litigation.
Promoters, on their part, bear the primary responsibility of ensuring that the information furnished is complete, accurate, and consistent with the actual status of the project. They must disclose all relevant details such as the scope of TDR utilization, changes in project layout, financial implications, and any impact on existing allottees. This transparency is not only a legal obligation under RERA but also a foundational requirement to build trust with buyers, protect the interests of all parties involved, and ensure smooth execution and delivery of the project.
The author CA.Vinay Thyagaraj is partner at M/s.Venu & Vinay, Chartered Accountants, he can be reached at vinay@vnv.ca for any clarifications
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