Through this platform, we intend to educate readers on issue that concern them when they take the decision of purchasing a home. In this issue, we will discuss External and Internal Development Charges (EDC and IDC) - a charge levied by the State Government for the development of the area.
When you buy a property, you may encounter several charges (over the basic price) that you must consider in your Budget.
EDC and IDC are among them. These charges have confused buyers, making them discontented. Prima facie, it must be understood that these are levied by the State Governments. Certain other charges like stamp duty, electricity etc are also levied by the Government. However, some additional charges are levied by the builders for providing meaningful services to their owners.
What are EDC and IDC? These are the charges levied by authorities like HUDA, PUDA etc on commercial, institutional, residential owners and also plot owners for the development of the area. These vary from state to state, city to city and master plan to master plan.
External Development Charge is levied for external development works, like roads and road systems, landscaping, water supply, sewerage and drainage systems, electricity supply transformer, sub-station or any other work which may have to be executed in the periphery of, or outside, a colony for its benefit. While Internal Development charge is levied for internal development works like footpaths, sewers, drains, tree planting, street lighting, provision for community buildings and for treatment and disposal of sewage and sullage water or any other work in a colony necessary for its proper development.
Government can enhance EDC/IDC, according to its discretion. Such hike may bewilder and confuse buyers, as these can / may be retrospectively levied by the state authorities on developers, who in turn pass this on to flat owners.
In fact, most builders have a clause in their sale agreement that whenever the Government levy increases (retrospectively or prospectively)-taxes, fee, charges; the same shall be recovered from the buyers.
It must be understood that payment of EDC/IDC is an essential clause to get completion certificate for a project from the appropriate government authority. In absence of payment of such charges, completion certificate may be delayed.
Builders on their part charge for facilities like fire fighting, power backup, air-conditioning, and preferential location and so on. However, it is a must for the builder to deposit to the Government any tax collected from buyers.
This concludes the most important point of buying a home, i.e. your Budget may exceed the base price you thought was the final price while deciding on buying a property. All additions are on account of services you get from Government or your builder.
