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I. Introduction

Real estate is a sector which touches almost everyone’s life.  One often comes across concepts such as land reservation, nature of land, etc., while dealing with the real estate sector. Further, while dealing with taxation issues connected with real estate, such as s.80-IB(10), knowledge of these terms is of immense value. The types of uses for which land in Mumbai can be used are explained in the Development Control Regulations for Greater Bombay, 1991 (“the DC Regulations”). The Regulations have been framed under the Maharashtra Regional and Town Planning Act, 1966 (“ the MRTP Act”). As the name suggests, these Regulations are applicable only for the City and suburbs of Mumbai. The MRTP Act provides for the town planning and the development of land for public purposes within the State of Maharashtra. This Article gives a bird’s eye-view of the land usage provided under the DC Regulations. 


II. Division into Zones

2.1 As per the town planning scheme for Mumbai, the entire city has been divided into various zones and sub-zones. Accordingly, land has been designated or reserved for certain development purposes. This is to ensure an equitable distribution of the available land for different purposes. Some of the important land uses specified in the DC Regulations are as under:

(a) Residential (R)

(i)  Residential (R-1)    

(ii) Residential with Shopping Line (R-2)

(b) Commercial (C)

(i)  Local Commercial (C-1)

(ii) District Commercial (C-2)

(iii) Shopping Centre (SC)

(c) Industrial (I)

(i)  Service Industries (I-1)

(ii) General Industries (I-2)

(iii) Special Industries (I-3)

(iv) Industrial Estate (IE)

(d) Public / Semi-Public

(i)  School – Primary / Secondary

(ii) College

(iii) Recreation Ground (RG)

(iv) Playground (PG)

(v) Garden (G)

(vi)Park (P)   


The Municipal Corporation, which administers the DC Regulations, decides the purpose for which certain land is to be used depending upon various factors, such as, the need for green spaces in every locality, provision of public amenities like theatres, schools, etc. in residential areas, open spaces in industrial zones, etc. 

2.2 Although, the names of the zones specify the type of usage permitted in that zone, certain ancillary uses are also permitted in these zones, subject to the fulfillment of certain conditions. Some of the important ancillary uses permitted are as follows:

(a) Pure Residential Zone (R-1) : An area up to 50% of the floor space of the principal zone may also be used for clinics of doctors / dentists, nursing homes, students’ hostels, bus shelters, crematoriums, police stations, etc.  Further, convenience shopping is allowed at the rate of one shop per 15 tenements on the ground floor. Such shopping line will not be permitted in more than two adjoining plots in any locality and shall not cover more than 5% of the plot area. “Convenience shopping” is defined to mean shops, each with a carpet area not exceeding 20 sq. m. except where otherwise indicated and comprising those dealing with day to day requirements, as distinguished from wholesale trade or shopping.  It  includes, foodgrain or ration shops, each with carpet area not exceeding 50 sq. m., dry cleaners, tailors, groceries, beauty parlours,  bakeries, restaurants and eating houses each with a carpet area not exceeding 50 sq.m, shoes and sports shops each with a carpet area not exceeding 75 sq.m.

(b) Residential Zone with Shopping Line (R-2) : In addition to the uses permitted under R-1 zone, certain additional uses are allowed, such as, retail stores, professional offices not exceeding 100 sq.m. in area,  restaurants and eating houses each with a carpet area not exceeding 200 sq.m. on the ground floor, establishments of a larger size than those permitted in a R-1 zone, etc. The shopping line must confirm to certain additional restrictions, e.g., the area of any shop cannot exceed 100 sq.m., they must only be on the ground floor, etc. Most of these shopping lines have been the bone of contention in cases u/s. 80-IB(10) of the Income-tax Act. Developers in Mumbai have constructed shopping lines in accordance with the permissible limits under the DC Regulations.    


2.3 Recreation/Amenity Open Spaces - In residential and commercial layouts  certain open spaces must be earmarked for recreational areas. In any layout or sub-division of vacant land in a residential and commercial zone, open spaces shall be provided as under :

(i)    Area from 1001 sq. m. to 2500 sq.m.  ..   ..   15%.

(ii)   Areas from 2501 sq. m. to 10,000 sq.m.  ....   20% (ii)   Areas above 10,000 sq. m. ..    ..  ..   25%


These open spaces shall be exclusive of areas of accesses/internal roads/designations or reservations development plan roads and areas for road-widening and shall as far as possible be provided in one place.  Where however, the area of the layout or sub-division is more than 5000 sq.m., open spaces may be provided in more than one place, but at least one of such places shall be not less than 100 sq. m. in size.  Such recreational spaces will not be necessary in the case of land used for educational institutions with attached independent playgrounds. The minimum area of such recreational space shall not be less than 125 sq. m.

2.4The maximum permissible Floor Space Index or FSI earmarked for some of the areas in Mumbai are as under :


Area and type of Occupancy

FSI permissible


Residential Zone & Commercial Zone



Island City of Mumbai (i.e., from South Mumbai to Mahim)  




Ranges from 0.5 to 1.00


Service Industrial Zone



Educational Buildings, Medical Institutions and Institutional Buildings



Island City of Mumbai (i.e., from South Mumbai to Mahim)  






Under the DC Regulations, the plot size for the FSI computation is done as under :


Plot size

Area for FSI computation


Residential and Commercial Zones


Up to 1,000 sq.m.

Total Area


1,001 – 2,500 sq.m.

Total Area subject to maximum of 2,125 sq. m.


2,501 sq.m. and above

Total Area (-) 15% of the area for recreational / amenity open space


Industrial Plots


Up to 1,000 sq.m.

Total Area subject to maximum of 900 sq. m


Above 1,000 sq. m 

Total Area (-) 10% of the area for recreational / amenity open space


2.5Many times a land falls within the zones demarcated or areas reserved for public purpose / additional amenities in the development plan prepared under the MRTP Act.  These are known as reservations under the DC Regulations. In such a case the Town Planning Authorities require the plot of land for carrying out their developmental activities, such as reservation for garden area, road widening, construction of schools, parks, playgrounds, etc. Thus, there are conflicting objectives of the BMC / Town Planning authorities on one hand who want to use the land for reservation purpose and the Owner of the land on the other hand who wants to use the land to construct residential / commercial, other projects. These divergent objectives are balanced by Transferrable Development Rights or TDRs.

Thus, where an owner whose land is reserved for any town planning purpose under the MRTP Act has surrendered his land free of cost to the BMC in the manner specified under the DC Regulations, then he is eligible for FSI in the form of Development Rights. The FSI by way of Development Rights would be of the like manner and to the same extent had the land not been  reserved. Alternatively, the Owner may be granted TDR after he has completed the development of the reservation and surrendered the same to the BMC. The Development Rights are granted in the form of a Development Rights Certificate which the owner may either use himself or he can transfer it to any other person.  If the owner instead of merely surrendering his land to the BMC, also develops or constructs the amenity on the surrendered plot at his own cost and then hands over the developed/constructed amenity to the BMC, free of cost, then he is eligible for additional Development Rights. These additional Development Rights would be  equal to the FSI equal to the area of the constructed by him. 


V. How a CA can help?

Although an Auditor is not supposed to enquire about the compliance of DC Regulations, etc., it would be of great utility to him if he has a basic understanding of the provisions of the law in this respect. The Auditor may be able to use this knowledge in judging whether the going concern of an entity which is engaged in real estate construction has been affected because of severe violations of these Regulations. Further, while providing tax advise to clients on matter such as the provisions of s.80-IB(10), knowledge of these provisions would be of great assistance.

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