Punjab Doubles Development Charges: A Major Shift in Real Estate Economics
The Punjab government has made a big move to capture more real estate activity by raising External Development Charges (EDC) by 50% to 100% across major urban hubs starting April 1, 2025. This change affects builders in high-growth regions like Mohali, Jalandhar, and Ludhiana, especially for luxury and commercial developments. The policy aims to align infrastructure contributions with development demands.
Region-Specific Hikes: Where Costs Are Rising Sharpest
| Area | Project Type | Old EDC/Acre | New EDC/Acre | Increase |
|---|---|---|---|---|
| Mohali | Residential Colony | ₹67 lakh | ₹1.28 crore | ~91% |
| Mohali | Group Housing Projects | ₹1.66 crore | ₹3.65 crore | ~120% |
| Mohali | Commercial Developments | ₹2.50 crore | ₹4.60 crore | ~84% |
| Ludhiana/Jalandhar | All Types | Variable | +52–65% | ~60% avg |
| Sunam/Bathinda | All Types | Variable | +50–65% | ~57% avg |
Key Takeaways: Mohali sees the steepest hike due to its role as Punjab’s real estate growth engine. Commercial and group housing developments face the highest percentage increases.
Why This Matters: Policy Context and Stakeholder Implications
- Revenue Boost: The EDC revision addresses state budget gaps and funds infrastructure expansion in urbanizing areas like Zirakpur and Kharar.
- Cascade Effects: Premium properties' prices are increasing due to their amenities and features.
- Future Escalations: From April 2026, automatic 10% annual compounded increases will apply to EDC, CLU (Change of Land Use) charges, and license fees.
Companion Policies: CLU and Land Pooling Reforms
The Cabinet has also:
Expanded Land Pooling: Introduced voluntary pooling in 27 cities, replacing the older schemes centered around Mohali. This allows group housing projects on pooled land.
CLU Charge Revisions: Categorizes CLU fees based on land use intensity and project scale.
Payment Incentives: Offers 15% plot cost discounts for lump-sum payments, aimed at accelerating revenue collection.
Developer Response and Market Outlook
Builders are adjusting budgets, especially in Mohali where EDCs now account for ~18–24% of project costs (versus 10–12% before the revision). Industry analysts predict:
- Short-Term Price Increases: Immediate construction delays as firms reassess project viability
- Mid-Term Efficiency Gains: Push toward modular, pre-fabricated construction to offset costs
- Long-Term Policy Watch: Monitoring of 10% annual EDC hikes post-2026 for compounding effects