While hammering out more than 32 decisions in what was probably the last cabinet meeting ahead of the state assembly elections, the Mahayuti government announced the abolition of the non-agricultural (NA) tax for citizens. While the announcement comes as a major relief, it throws up a few questions.

A non-agricultural tax is levied on land parcels under residential, commercial, and industrial use. It applies to lands other than gaothans, on extended urban settlements. According to experts, the NA tax generates an annual revenue between Rs 12,000 crore and Rs 15,000 crore for the state government.

Residential users contribute to almost half this amount, according to officials familiar with the workings of the revBonanza for developers from Mumbai, Thane, Navi Mumbai, and the metropolitan region enue department, which collect it.

While the cabinet decision clearly says the burden on residential users is being removed, it does not offer a similar commitment to commercial and industrial users, which means these users must wait awhile, The decision pertains to thousands of land parcels under residential use but the press release issued by the state government on Friday, barely offered details.

Attempts to ascertain details proved futile as those involved in the process were busy in meetings. In effect, the state government has said that all the land parcels on which the residential structures stand have been removed from the ambit of the NA tax.

But there is a rider. say sources from Mantralaya. According to these sources, the state had, in 2001, staved the recovery of NA tax with separate orders from time to time, and the last such stay order was issued in March 2021.

Now, the recovery of pending tax will be made on the basis of the valuation of the land existing in 2001 only and not against the existing rates when the recovery was stayed by the government from time to time. Clearly, it is a bonanza for developers from big cities like Mumbai, Thane, Navi Mumbai, and from the metropolitan region—Pune, Nashik, Nagpur, Chhatrapati Sambhajinagar, and so on, an official told this newspaper.

The issue does not end here. The conversion tax (of land parcel from the agricultural use to the non-agricultural use) will now be just one percent of the valuation existing in 2001. This decision is set to offer a huge benefit to the builders who have developed their townships and complexes in the last over two decades, claimed an official. ‘While the government has offered such benefits to land parcels under residential use, it has words of assurance for commercial and industrial users.