Rollback of building permit fee hike: Over 4 lakh applicants in Kerala heave a sigh of relief

Thiruvananthapuram: The Kerala government's decision to roll back the hike in fees for building construction permits, applications, and layout inspections with retrospective effect will bring relief to over four lakh applicants.

According to official estimates, 40,401 building permit applications were received across 87 municipalities and six corporations between April 1, 2023, and March 31, 2024. Meanwhile, the 941 panchayats received 3,59,331 applications during this period. These numbers will go up further when considering the applicants between April 1 and July 31 this year. As per the state government’s decision, the local self-government bodies are now required to repay the hiked fees charged during this period.

Though the state government decided to hike the fee, the implementation and benefits were handled by the local bodies. The additional revenue collected through the fee hike during the previous financial year amounted to Rs 177.79 crore. Following the latest decision to slash the fee, about half of this amount will now have to be repaid.

The substantial hike in fee, which came into effect on April 10, 2023, had faced sharp criticism from various quarters. Despite the backlash, the government remained firm in its decision and continued to justify it. Last week, however, it announced its decision to reduce building permit fees by up to 60 per cent. The new rate would lower the permit fee by at least 50 per cent for houses ranging from 81 to 300 square meters in area.

Given the need for time to process these repayments, it has been decided to handle applications online and facilitate repayments via the online banking system. However, it remains to be seen how repayments will be managed in cases where a person obtained a permit and then transferred the building's ownership to someone else.

While the public often owes payments to local self-government bodies, this situation marks a rare instance where the local bodies are liable to make payments to the public. Given the high permit fees, it will be challenging for the authorities to offset these repayments by adjusting property taxes for buildings.

Starting April 1, 2023, the state government decided to classify the buildings in the state into three area-based slabs. They were also categorized into ‘residential,’ ‘industrial,’ ‘commercial,’ and ‘others,’ with different rates in panchayat, municipality, and corporation limits. This classification system will continue despite the fee reductions.