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Issue of EDC- External Development Charges - levied by the developers

Issue of EDC- External Development Charges - levied by the developers, naya haryana, नया हरियाणा

30th July 2014

Naya Haryana

Section 3 of the Haryana Development and Regulation of Urban Areas Act, 1975 provides for the recovery of proportionate development charges, known as External Development Charges (EDC), if the External Development Works (as defined in clause (g) of Section 2 of the Haryana Development and Regulation of Urban Areas Act, 1975) are to be carried out by the Government or any local authority.

While the Act also provides for determination at the level of the Director, the proportion and the time within which such EDC payment is to be made, in the absence of any dedicated engineering body to carry out the EDWs, such works are to be carried out by the Haryana Urban Development Authority.

Contrary to expectations, External Development Charges (EDCs) have rather assumed a controversial shape, often resulting in litigations by the residents and the developers as well. Time and again several aggrieved builders as well as residents have moved courts challenging the legality of EDCs. Only recently, the Haryana government too, conceded before the Punjab and Haryana High Court that more than Rs. 6,000 crore collected on account of EDC in the last 12 years were still unspent, while Rs. 568 crore were utilised as  departmental charges  and Rs. 315 crore on Metro service (as per a High Court directive money spent on Metro service cannot be included in EDC expenditure).

Obviously the state government is found misappropriating the EDC fund.

Moreover, even as the EDCs are levied by the Government from the builders, it has become a practice for the latter to fleece the customers in the name of EDCs as the builders now even over charge the customers for the same at the time of the booking itself. While it is often noticed that because of the connivance, the Builders do not make timely payment of EDC to the authorities, that allows the builders easy back-door liquidity at the cost of development.

There is little surprise therefore that the customers feel cheated when they do not get the facilities that they had paid for.

In view of the controversies that EDCs have generated, Captain Abhimanyu calls for a better explanation of the EDCs by HUDA. His vision is to ensure better urban planning by taking care of all the concerned parties   the consumers, developers and the government. He calls for a better regulation of the provisions for Naya Haryana.

According to Captain Abhimanyu's vision:

The Authority at the time of issuance of License should declare on its website along with other details, the total EDC payable on a particular license as well as the cost per flat that needs to be paid by the home buyer, so that the builders don't over charge their customers.


There has to be proper monitoring to check this unholy nexus between the builders and the regulators, and laws should be made stringent, in favour of the residents. According to his vision, the genuine developers who were losing money as their project completion and occupation were delayed just because of the failure of the government to match the pace of their projects with external development (which had to be done by the government), should be brought under a safety net.

EDC should either be abolished and external development be entrusted to developer, so as to enable these developments keep pace with the project or, external development should be made time-bound and completed before the completion of project by the developers.

The EDC rates should also be streamlined for better transparency in the taxing system in view of the repeated changes in the process for determination of the rates of EDCs from time to time.

A priority list of development plans should be introduced along with the time schedule by the authorities, so as to determine the EDC rates.


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