Approval and Statutory Cost Assumptions: Building an Auditable Feasibility Allowance

Direct answer: There is no national schedule of approval costs in India, and no defensible single percentage of project cost that covers them. Build the allowance as an itemised list of charges with a named issuing authority, a computation basis, a source document and a date for each. Where an item cannot be sourced, carry it as a labelled assumption with a range and flag it — do not blend it away.

Why a blended percentage fails

Statutory costs are levied by different bodies on different bases: some per sq m of built area, some on land value, some on unit count, some as a percentage of estimated cost, some as refundable deposits. They change with notifications, and several are discretionary in timing rather than amount. A single "3% of project cost" allowance therefore:

• hides which authority is being paid, so it cannot be diligenced;
• moves with the wrong driver when the scheme changes;
• silently omits refundable deposits, which are a finance cost, not a sunk cost;
• gives a lender or investor nothing to verify.

The itemisation structure

Build a table with these columns for every line: charge name · issuing authority · computation basis · rate · source document and date · payable at which stage · refundable? · assumption confidence.

Categories to work through (names differ by state; treat this as a prompt list, not a schedule):

1. Land and title — land-use conversion or NA permission where applicable, layout/sub-division approval, revenue record updates.
2. Planning approvals — building plan scrutiny and sanction fees, development charges, betterment or infrastructure charges, open-space or amenity contributions, labour cess where applicable.
3. Additional buildable area — premium FSI payments, TDR purchase (https://devpartner.in/insights/premium-fsi-economics).
4. Utilities and infrastructure — water and sewerage connection and infrastructure charges, electricity infrastructure and deposit, road cutting and restoration.
5. Clearances — fire, environment where thresholds are triggered, airport height where applicable, coastal or heritage where applicable, height clearance, tree authority.
6. Registration and regulatory — RERA project registration and periodic compliance, society/association formation, completion and occupancy certificate fees.
7. Acquisition duties — stamp duty and registration on land or development rights (usually modelled below the land residual, not inside project cost).
8. Professional and compliance — liaison, legal, structural proof-checking, third-party certifications, quality/testing.

Every rate in the categories above must be taken from the notified schedule of the specific authority — state development control regulations and fee notifications, municipal or development-authority schedules, state RERA fee rules, utility tariff schedules and the state stamp duty schedule — each cited with its date. Do not reuse rates across cities or across years. This article deliberately publishes the structure and not the numbers, because the numbers are local and dated.

Worked structure — how it should look (values are placeholders)

| Charge | Authority | Basis | Rate (assumed) | Amount | Source | Refundable | |---|---|---|---|---|---|---| | Plan scrutiny & sanction | Planning authority | per sq m of built-up | [assumption] | [₹] | [cite notified schedule + date] | No | | Development charge | Planning authority | land value / built area | [assumption] | [₹] | [cite notified schedule + date] | No | | Labour cess | State labour welfare board | % of construction cost | [assumption] | [₹] | [cite notified schedule + date] | No | | Water/sewerage infra | Water utility | per unit / per sq m | [assumption] | [₹] | [cite notified schedule + date] | Partly | | Electricity deposit | Distribution licensee | per kVA sanctioned load | [assumption] | [₹] | [cite notified schedule + date] | Yes | | RERA registration | State RERA | per sq m / slab | [assumption] | [₹] | [cite notified schedule + date] | No | | Fire clearance | State fire services | per building / height slab | [assumption] | [₹] | [cite notified schedule + date] | No |

The point of publishing the structure with markers rather than invented numbers is that the structure is transferable and the numbers are not.

Timing and finance

Approval costs are not a single outflow. Split the allowance across:

• Pre-sanction — scrutiny, clearances, liaison. Funded by equity; carried longest.
• At sanction — development and infrastructure charges, premium payments. Often the largest single tranche.
• During construction — labour cess, utility connections, periodic compliance.
• At completion — occupancy/completion, society formation, deposits released.

Refundable deposits belong in the cash-flow model as working capital with a recovery date, not in cost. Getting this wrong overstates cost and understates finance need.

Mistakes and risks

• Copying an allowance from a previous project in another city.
• Ignoring revisions. Fee notifications are periodically amended; a two-year-old rate is an unsourced rate.
• Omitting discretionary and time-linked costs. Delay itself is a cost (https://devpartner.in/insights/sensitivity-analysis-feasibility).
• Treating refundable deposits as sunk.
• Netting premium FSI into "approvals". It is a buildable-area purchase and must be visible for the marginal test.
• No contingency on unsourced items. Where an item is an assumption, carry a range and show it.

Checklist

• [ ] Every charge has authority, basis, rate, source and date
• [ ] Unsourced items are labelled and ranged, not blended
• [ ] Refundable items separated from sunk costs
• [ ] Payment stages mapped to the cash-flow model
• [ ] Premium FSI / TDR shown separately from statutory fees
• [ ] Stamp duty and registration handled below the land residual
• [ ] Allowance re-run whenever the scheme envelope changes
• [ ] Assumption register versioned with the appraisal

FAQs

What percentage of project cost do approvals usually take? No responsible figure can be quoted nationally. The proportion varies with jurisdiction, buildable area purchased and utility loads. Itemise instead.

Are approval costs recoverable from buyers? Commercially they sit within pricing, but specific charges and taxes have specific statutory treatment and disclosure requirements. Take legal and tax advice.

How do I handle costs I genuinely cannot source yet? Carry a labelled range, flag the item for diligence, and reflect the uncertainty in the sensitivity grid.

Does RERA registration cost matter at feasibility stage? It is small relative to other lines but its compliance obligations affect programme and cash flow, which do matter.

Next step

Attach the itemised allowance to the cost build in /construction-cost-calculator and let it flow into /residual-land-value-calculator. Keep the assumption register with the opportunity at /opportunities/new.

Sources

• Real Estate (Regulation and Development) Act, 2016 — full text, India Code, Ministry of Law and Justice (accessed 6 August 2026): https://www.indiacode.nic.in/handle/123456789/2158
• Model Building Bye-Laws, 2016 — Ministry of Housing and Urban Affairs, Government of India (accessed 6 August 2026): https://mohua.gov.in/cms/model-building-byelaws.php

This article states no jurisdiction-specific rate, fee or market figure as fact. Every number in it is either arithmetic on stated assumptions or an explicitly labelled assumption.

Disclaimer. Decision support only, not legal, tax or planning advice. This article deliberately contains no rate figures, because statutory charges vary by authority and are revised over time. Verify every charge against the current notified schedule of the competent authority and with qualified liaison consultants, legal counsel, chartered accountants and architects before relying on any allowance.

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