External, infrastructure development charges
Apart from the basic per sq. ft price of an apartment, there are various other costs associated with buying an apartment. You can opt out of paying some of the charges—for example, by not choosing a park-facing house or by opting out of club membership.
There are some charges that have to be compulsorily paid by all the homebuyers. These include external development charges (EDC) and infrastructure development charges (IDC). All those buying houses in any housing project have to bear these charges, usually based on the size of their apartment. These additional charges can increase the price of an apartment by 15-20%. Here is more about EDC and IDC and why they are charged to homebuyers.
As the name suggests, these charges are for the development work in and around the project in which you are buying a house. According to the Real Estate (regulation and development) Act, 2016, (RERA) external development works includes: roads and road systems, landscaping, water supply, sewage and drainage systems, electricity supply, transformer, sub-station, solid waste management and disposal or any other work that may have to be done within the periphery of, or outside a project for its benefit, as may be provided under the local laws.
Similarly, infrastructure development charges include the cost of developing major infrastructure projects such as highways, bridges, and transport systems in the city in which project is located.
Usually, these charges range between Rs50 and Rs300 per sq. ft of an apartment. Both these charges are statutory charges that are levied by the respective state governments; and they can differ from state to state. These charges also vary depending on the location (zone) and type of the project within the city. For instance: in Gurugram, Haryana, under residential category, the IDCs are different for hyper-potential zones (Rs500 per sq. m), high-potential zones (Rs350 per sq. m), medium-potential zones (Rs250 per sq. m) and low-potential zones (Rs70 per sq. m).
Under the commercial category, IDC rates range from Rs1,000 per sq. m for hyper-potential zones and Rs190 per sq. m for low-potential zones.
Similarly, there are different rates for institutions, industries and group housing segments in the different zones. These charges are proportionately collected by the developer (and paid to the authorities) from the homebuyers, according to the size of the apartments that they buy.
Many people believe that IDC stands for internal development charge. However, according to the Act, “internal development work” refers to the following works carried out as per the projects’s sanctioned plans: construction of roads, footpaths, water supply, sewers, drains, parks, tree planting, street lighting, community buildings, solid waste management and disposal, water conservation, energy management, fire protection and fire safety requirements, social infrastructure such as educational, health and other public amenities or any other work in a project for its benefit.
Such works have to be done within the project and the developer should not charge extra for these. Their cost is typically built into the price of the apartment.