ASSESSMENT AND SETTLEMENT OF LAND

REVENUE OF NON-AGRICULTURAL LAND

Synopsis

I. Introduction 6. Determination of Full Market Value

II. What is Settlement 7. Fixation of Standard Rate of NA

Assessment [S. 113]
III. Classification of Non-Agricultural Land
8. Rate of NA Assessment in Urban
IV. Assessment by whom to be fixed [S. 68]
Areas [S. 114]
V. Procedure for Determination of Land
9. Date of Commencement of NA
Revenue of Non-Agricultural Land
Assessment [S. 115]
1. Determination based on use of land
10. Lands exempt from payment of NA
[S. 109]
assessment [S. 117]
2. Determination of NA assessment in
11. Revocation of exemptions [S. 118]
non-urban areas [S. 110]
12. NA Assessment of Lands Wholly
3. Rates of NA Assessment in non-urban
Exempt from Payment of Land
areas
Revenue [S. 119]
4. Determination of NA assessment in
13. NA Assessment fixed before the
urban areas [S. 111]
enactment of the MLRC [S. 120]
5. NA assessment in urban area not to
VI. Conclusion
exceed 3% of full market value [S.
112]

Introduction
The system of land revenue that is prevalent in the state of Maharashtra is the rayatvari one, and it is
based upon a complete measurement, classification and assessment of the land. Under the rayatvari
system, land revenue is paid by the holder directly to the Government and not to an intermediary as is the
case under the talukdari, zamindari, and other similar systems. It was in fact in the Poona district that the
first system of measurement, classification and assessment, or what is termed survey and settlement
operations in the district were completed by 1853.
Chapter VI (Ss. 90 to 107) and Chapter VII (Ss. 108 to 120) provide for the procedure for assessment and
settlement of land revenue in relation to agricultural and non-agricultural lands respectively.

What is Settlement
A settlement is a process of determining the amount of land revenue due from the land. Section 90(e)
defines settlement as the result of the operations conducted in a zone to determine the land revenue
assessment therein. This settlement involves three processes

Classification of soils and the collection of data for the determination of demand;
The determination of the demand;
The introduction of the settlement.

Classification of Non-Agricultural Land

For the purposes of determination of settlement, the classification of land is primarily based on the
market value of the lands. Firstly the State is divided into urban and non-urban areas.

According to S. 2(42), urban area means an area included within the limits of any municipal corporation
or municipal council, constituted under the relevant law for the time being in force. An area which is not
urban area is therefore a non-urban area.

Non-urban area is divided into Class-I and Class-II based on the market value. Similarly, urban area is
divided into blocks.

Assessment by whom to be fixed [S. 68]

S. 68(1) provides that the assessment of the amount to be paid as land revenue shall, subject to rules made
in this behalf, be fixed by the Collector. Such land revenue shall be assessed for such period as he may be
authorised by the State Government to prescribe. But such period shall not exceed ninety-nine years. The
amounts due according to such assessment shall be levied on all such lands assessed by the Collector.

Procedure for Determination of Land Revenue of Non-Agricultural Land

Determination based on use of land [S. 109]
The non-agricultural assessment of lands shall be determined with reference to the use of the land for
non-agricultural purposes and having regard to urban and non-urban areas in which the lands are situated.

Determination of NA assessment in non-urban areas [S. 110]

S. 110 provides that the Collector shall divide the non-urban areas into two classes, namely Class-I and
Class-II. This division shall be on the basis of the market value of the land. While determining the classes,
the Collector shall also take into account
 i. the situation of the lands
ii. the non-agricultural propose for which they are used, and
iii. the advantages and disadvantages attaching thereto

The Collector shall then proceed to determine the NA assessment for each Class of land.

Rates of NA Assessment in non-urban areas

The Collector shall assess lands falling in Class I according to the non-agricultural purpose for which they
are used at a rate not exceeding ten paise per square metre per year, and those falling in Class II at a rate
not exceeding five paise per square metre per year, regard being had to the market value of lands used
for the non-agricultural purpose. However the assessment so fixed should not be less than the agricultural
assessment which may be leviable on such land.

Determination of NA assessment in urban areas [S. 111]

While land in non-urban areas is divided into Class-I and Class-II, land in urban areas is divided into
blocks. This division is also on the basis of the market value of the land, and shall also take into account
the situation of the lands, the non-agricultural propose for which they are used, and the advantages and
disadvantages attaching thereto

NA assessment in urban area not to exceed 3% of full market value [S. 112]
The non-agricultural assessment on lands in each block in an urban area shall not exceed 3% of the full
market value thereof, when used as a building site.

Determination of Full Market Value

Full market value is defined in S. 108 as an amount equal to the market value of that land plus the amount
representing the capitalised assessment for the time being in force.

FMV = MV + Capitalised Assessment

According to Rule 15 of the Maharashtra Land Revenue (Conversion of use of land and Non-Agricultural
Assessment) Rules, 1969, the full market value of non-agricultural lands in an urban area in a block shall
be estimated on the basis of sales, leases and awards under the Land Acquisition Act, which have taken
place or declared, as the case may be, in that block during the period of five years immediately preceding
the year in which the standard rate of non-agricultural assessment of lands in that block is to be fixed in
accordance with the principles laid down therein.

If the plot is unassessed then the full market value is equal to the sale price of the plot. If the plot is
previously assessed, then the FMV is equal to the sale price + sixteen times the previous assessment of
land revenue the plot.
Fixation of Standard Rate of NA Assessment [S. 113]
S. 113 of the MLRC requires fixation of standard rate of the non-agricultural assessment per square
metre of land in each block in an urban area. This standard rate of assessment is then used to
determine the actual rates of assessment of lands used for non-agricultural purposes.

According to Rule 16, for the purpose of determining the standard rate of non-agricultural assessment per
square metre of land in each block, the Collector shall first determine the full market value of land per
square metre in each block.

. . =

The standard rate of NA assessment per sq. mtr. of land shall be equal to 3% of the full market value
per sq. mtr. of in each block.

The standard rate of non-agricultural assessment shall remain in force for a period of guaranteed period of
five years and shall be liable to revision at intervals of ten years.

Rate of NA Assessment in Urban Areas [S. 114]

Section 114 prescribes the following rates of assessment in respect of lands in urban areas

Purpose of Use of Land Rate of NA Assessment

Land used for purposes of residential Standard rate of NA assessment

building

Land used for the purpose of industry 1.5 times standard rate of NA assessment

Land used for purposes of commerce Thrice the standard rate of NA assessment (in areas within
the limits of all the other municipal corporations, excluding
the area of the Mumbai City District in the Mumbai
Municipal Corporation area)

Twice the standard rate of NA assessment (in the remaining

urban areas of the State)

Land used for any other non-agricultural Rate not less than the standard rate of non-agricultural
purpose assessment, and not exceeding 1.5 times that standard rate
Date of Commencement of NA Assessment [S. 115]
The non-agricultural assessment shall be levied with effect from the date on which any land is actually
used for a non-agricultural purpose, except as otherwise directed by the State Government in the case of
co-operative societies and housing boards established under any law for the time being in force in this
State.

Lands exempt from payment of NA assessment [S. 117]

Lands used for the following purposes shall be exempt from the payment of the non-agricultural
assessment, namely

1. lands used by an agriculturist for an occupation subsidiary or ancillary to agriculture, such as

the erection of sheds for hand-looms, poultry farming, or gardening or such other occupations as
the State Government may specify in rules made in that behalf;
2. lands used for purposes connected with the disposal of the dead
3. lands solely occupied and used for public worship and which were exempt from payment of land
revenue by custom, grant or otherwise before the commencement of this Code
4. lands used for an educational or a charitable purpose the benefit of which is open to all citizens
without distinction of religion, race, caste, place of birth or any of them
5. lands used for hospitals, hostels, playgrounds, parks and garden, officer premises of local
authorities and gymnasiums or for roads, paths and lanes set apart in layouts, for the benefit
of all citizens without distinction of religion, race, sex, place of birth or any of them, and yield no
profit to private individuals or to any person.
6. lands used for any other public purpose which the State Government may by rules made under
this Code declare to be exempt
7. agricultural lands in non-urban area used for personal bona fide residential purpose
8. such agricultural lands (outside a gaothan, if any) in a non-urban area, converted to non-
agricultural use for purposes of residential building as the State Government may, by notification
in the Official Gazette, specify.

Revocation of exemptions [S. 118]

It shall be lawful for the State Government to direct that any land which is exempt under the provisions of
section 117 from payment of non-agricultural assessment shall cease to be so exempt if the land is used
for any purpose other than that for which the exemption is provided.
NA Assessment of Lands Wholly Exempt from Payment of Land Revenue [S. 119]
Nothing in this Chapter shall be deemed to prevent the Collector from determining and registering the
proper full non-agricultural assessment on lands wholly exempt from payment of such assessment.

NA Assessment fixed before the enactment of the MLRC [S. 120]

Section 120 provides that non-agricultural assessment fixed on lands and in force in any part of the State
immediately before the commencement of this Code shall be deemed to have been fixed under the
provisions of this Chapter and shall be deemed to continue to remain in force during the whole of the
period for which the assessment was fixed, until such assessment is revised under the provisions of this
Chapter.

It must be noted that while assessment of agricultural land, adequate opportunity is given for public
participation. But there is no provision for public participation in case of assessment of non-agricultural
land. This is because NA assessment is carried out by the Collector as part of legislative function and not
as a quasi judicial function. In the case of

State of Maharashtra

v.

Nirlon Synthetic Fibres & Chemicals Ltd.

The Court held that for assessment of non-agricultural land, notice is not a pre-condition. It is a function
carried out by the Collector as a part of legislative exercise. Therefore the principles of natural justice do
not come into play. Notice before constituting blocks u/s 111 is not necessary.

Conclusion
As laid down under Section 64 of the Code, all land, whether applied to agricultural or other purposes,
and wherever situate, is liable to the payment of land revenue to the State Government as provided by or
under this Code. The land revenue so payable on a piece of non-agricultural land is assessed and
determined by the Collector in accordance with Chapter VII of the MLRC, by dividing the area into
blocks and fixing standard rates of assessment.