The enactment of the Maharashtra Land Revenue Code (Second Amendment) Act, 2025, constitutes a fundamental restructuring of land revenue administration and property development regulations in the state of Maharashtra. Published officially on December 31, 2025, this legislative intervention represents a departure from the historical revenue-control model that has governed agricultural land conversion since the inception of the Maharashtra Land Revenue Code, 1966.
By substituting the core mechanisms of Section 42 and Section 47, the state legislature has effectively synchronized land use conversion with urban planning permissions, thereby eliminating the long-standing requirement for separate permissions from the District Collector and the issuance of a non-agricultural Sanad. This reform is designed to enhance the ease of doing business, reduce administrative delays, and remove the fiscal burden of dual taxation that previously hampered the real estate, industrial, and infrastructure sectors.
Legislative Context and the Substitution of Section 42
The Maharashtra Land Revenue Code, 1966, was originally designed to manage land primarily as a source of state revenue through agricultural assessments. The most significant legal change introduced by the 2025 Act is the complete substitution of Section 42 of the Code, which stipulates that no permission from the Collector is required for the change in use of land from agricultural to non-agricultural if such use is permissible under the draft or final Development Plan or Regional Plan published as per the provisions of the Maharashtra Regional and Town Planning Act, 1966 (MRTP Act).
Consequently, the grant of development permission or the approval of a building plan by the concerned Planning Authority now serves as the primary and sufficient legal authority for the conversion of land use. However, Section 42(2) explicitly clarifies that the occupancy status of land, other than Class-I occupancy land, shall not be altered merely because development permission is given or a building plan is approved.
Landholders of Class-II lands must still comply with existing legal requirements regarding tenure conversion or the payment of nazarana if they intend to transfer the land, ensuring that the streamlined conversion process does not bypass tenure-based revenue protections.
Fiscal Overhaul and the Abolition of the Sanad Framework
The fiscal structure of land conversion has been transformed by the substitution of Section 47, which replaces the fragmented system of annual non-agricultural assessment with a “One-Time conversion premium”. This premium is a capitalized charge recovered upfront by the Planning Authority before the grant of development permission or building plan approval, calculated as a percentage of the current market value determined by the Annual Statement of Rates (ASR).
For land parcels up to 1,000 square metres, the premium rate is 0.1 per cent; for parcels between 1,001 and 4,000 square metres, the rate is 0.25 per cent; and for areas exceeding 4,000 square metres, the premium is set at 0.5 per cent. Simultaneously, the 2025 Act deletes Sections 44 and 44A, which were the statutory pillars of the Sanad framework.
Pursuant to the Government Resolution (GR) dated February 10, 2026, the requirement for a separate Sanad for availing bank loans has been officially dispensed with, as financial institutions are now directed to rely on the development permission or building plan approval issued by the Planning Authority.
Transitional Provisions and Institutional Realignment
The 2025 Amendment Act includes specific legal provisions to bring properties converted to non-agricultural use before the commencement of the new Act into the one-time premium regime. Under Section 47(2), for land converted on or before December 31, 2001, the one-time premium is recovered at tiered rates based on the ASR of the year 2001.
For lands converted between January 1, 2002, and the date the 2025 Act came into force, the premium is calculated based on the market value as per the ASR of the year in which the land was originally converted. This realignment is supported by a financial sharing formula specified in the GR dated February 10, 2026; in “A” class Municipal Corporation areas, the state retains 70 per cent of the premium while the corporation receives 30 per cent, whereas in other local bodies, the premium is generally shared equally on a 50:50 basis.
Furthermore, the Revenue Department has integrated these processes with digital platforms like the Building Permission Management System (BPMS) or AutoDCR, ensuring that mutation entries in the 7/12 land records are updated automatically once approvals are granted and premiums are paid.
Sectoral Impact and Legal Nuances of Class-II Occupancy
This reform is expected to have far-reaching positive impacts on the real estate, industrial, and tourism sectors by lowering project costs and reducing the carrying cost of land during the approval phase. For industrial projects such as solar power plants and warehouses, the transition to a modest one-time premium and the abolition of annual non-agricultural (NA) tax makes large-scale infrastructure more economically viable.
Despite these efficiencies, legal practitioners must remain vigilant regarding Class-II occupancy and restricted tenure. Because Section 42(2) preserves underlying tenure-based restrictions, a developer utilizing Class-II land must still navigate a dual legal process: first, obtaining the Collector’s permission for the transfer of the land and paying the required nazarana for tenure conversion, and second, obtaining development permission from the Planning Authority and paying the one-time conversion premium.
This distinction is vital for maintaining title clarity, as the “single-window” for land use conversion does not eliminate the necessity for comprehensive due diligence regarding the underlying tenure of the land.
Conclusion
The Maharashtra Land Revenue Code (Second Amendment) Act, 2025, represents a definitive pivot toward a modernized, planning-centric model of land governance. By dismantling the obsolete machinery of Collector-driven permissions and recurring non-agricultural assessments, the state has provided a robust legal foundation for accelerated urban and industrial growth.
The replacement of the annual non-agricultural (NA) tax with a standardized one-time conversion premium, coupled with the abolition of the Sanad requirement, significantly reduces administrative friction and enhances fiscal transparency for developers and landholders alike.
While the success of this reform depends on the seamless digital integration between Planning Authorities and the Revenue Department, the 2025 Act successfully aligns Maharashtra’s land laws with the requirements of contemporary economic development. Practitioners and stakeholders must now focus on the one-year window provided for the regularization of historical conversions to ensure their properties are fully integrated into this new, streamlined regulatory framework.
The evolving framework under Maharashtra’s land governance reforms complements issues like Possession Without OC: Builder Still Liable for Delay, highlighting how regulatory compliance remains central to determining developer liability.
