Bangalore Premium FAR Policy (2026): Complete Guide to Rules, Charges, Eligibility, Calculation & TDR
- Arkarth Community
- 5 days ago
- 8 min read
Updated: 2 days ago
Bangalore Premium FAR Policy: Everything Developers Need to Know
Bengaluru's real estate market has entered a new phase of vertical development with the introduction of the Premium Floor Area Ratio (Premium FAR) Policy. The policy allows eligible landowners and developers to purchase additional development rights beyond the base permissible Floor Area Ratio (FAR) by paying a premium charge to the planning authority.
The Government of Karnataka officially introduced these provisions through Gazette Notification No. UDD 78 MNJ 2024 (E) dated 21 February 2025, by inserting a new chapter titled "Premium F.A.R Granted by Levy of Premium Charges" into the Zonal Regulations of the Revised Master Plan 2015. The regulations are issued under Section 15 of the Karnataka Town and Country Planning Act, 1961.
For developers, investors, architects, valuation professionals, financial analysts, and urban planners, understanding Bangalore Premium FAR Policy Rules is now critical when evaluating land acquisitions, project feasibility, and investment returns.
What is Floor Area Ratio (FAR)?
Floor Area Ratio (FAR), also known as Floor Space Index (FSI), represents the maximum built-up area that can be constructed on a plot of land.
The formula is:
FAR = Total Built-up Area ÷ Plot Area
For example, if a site measures 10,000 sq.ft. and the permissible FAR is 2.5, the maximum buildable area is:
10,000 × 2.5 = 25,000 sq.ft.
FAR is one of the most important planning controls because it determines the development potential of a property.
What is Premium FAR?
Premium FAR refers to additional Floor Area Ratio that can be obtained by paying a premium charge to the planning authority, allowing development beyond the standard permissible FAR.
Rather than acquiring additional land, developers can legally increase the built-up area on an eligible site, subject to the applicable regulations and approvals.
The Premium FAR provisions apply across several planning jurisdictions, including BDA, BMRDA, BMICPA, Anekal, Kanakapura, Ramanagara, Channapatna, Magadi, Nelamangala, Bengaluru International Airport Area, and Hoskote, with approvals granted by the relevant Local Planning Authority.
Why Was the Premium FAR Policy Introduced?
The policy aims to support Bengaluru's long-term urban development by:
Promoting efficient land utilisation
Encouraging vertical growth
Increasing housing and commercial supply
Supporting redevelopment projects
Reducing urban sprawl
Generating revenue for public infrastructure through Premium FAR charges
Instead of expanding horizontally into peripheral areas, the policy encourages better utilisation of existing urban land where infrastructure can support additional development.
Premium FAR vs FAR vs TDR
Feature | FAR | Premium FAR | TDR |
Nature | Base development right | Purchased additional FAR | Transfer of development rights |
Cost | Included with land | Premium payable to authority | Purchased from TDR holder |
Transferable | No | No | Yes |
Purpose | Standard development | Additional construction | Additional construction |
Although Premium FAR and Transferable Development Rights (TDR) both increase development potential, they operate differently. Premium FAR is purchased from the planning authority, whereas TDR is obtained through development rights created under the Karnataka Town and Country Planning framework.
Eligibility for Premium FAR
Premium FAR is not available for every property. Eligibility depends on factors such as:
Road width adjoining the property
Applicable land use zoning
Compliance with planning regulations
Approval from the relevant planning authority
Satisfaction of development control norms
Developers should verify eligibility before assuming additional FAR is available.
Road Width Criteria for Premium FAR
The amount of additional FAR depends on the width of the abutting road. Below table provides the maximum permissible additional FAR in Premium FAR Policy:
Road Width (where Premium FAR may be Issued) (in m) | Maximum Additional FAR | Maximum Additional Premium FAR which may be granted by levy of Charges | Additional FAR which may be availed using Development Rights Certificate (DRC) / Transfer of Development Rights (TDR) along with the Premium FAR |
More than 9 m up to 12 m | 20% | 20% | Nil |
More than 12 m up to 18 m | 40% | 30% | 10% |
More than 18 m | 60% | 40% | 20% |
Where Premium FAR is utilised, the total additional FAR cannot exceed the prescribed limits, and any additional entitlement beyond the Premium FAR limit must generally be obtained through TDR, subject to applicable regulations.
How Are Premium FAR Charges Calculated?
Premium FAR charges are linked to the guidance value of the developed site and the additional notional site arearequired for the extra built-up area.
The official methodology can be summarised as follows:
Determine the plot area.
Identify the latest developed-site guidance value.
Calculate the permissible FAR.
Determine the additional built-up area required.
Calculate the corresponding notional site area.
Compute 50% of the guidance value of the notional land.
Compare the resulting rate with the prescribed minimum, which requires the Premium FAR charge per square metre of additional built-up area to be not less than 28% of the developed-site guidance value per square metre. The higher applicable amount determines the final Premium FAR charge.
Example of Premium FAR Calculation
Consider the following example:
Plot Area: 10,000 sq.m.
Permissible FAR: 2.5
Guidance Value: ₹5,000 per sq.m.
Additional Built-up Area Required: 10,000 sq.m.
Under the Gazette illustration:
The notional site area required for the additional built-up area is 4,000 sq.m.
Fifty percent of the guidance value of this notional land is first calculated.
A minimum floor-rate test (28% of the guidance value per sq.m.) is then applied.
The higher of these values determines the Premium FAR charges payable.
This approach ensures that Premium FAR charges remain aligned with prevailing land values while maintaining a minimum pricing threshold.
Parameter | Formula | Value | Units |
A. Area of the site / Plot where Premium FAR is sought | 10,000 | SqM | |
B. Latest Guidance Value of the Developed site at Plot as per Notification u/s 45B of Karnataka Stamp Act 1957 | ₹ 5,000 | Per SqM | |
C. Coverage Allowed on each Floor (say) | 50% | % | |
D. Area of Each Floor | = A x C | 5,000 | SqM |
E. Allowable FAR | 2.5 | ||
F. Allowable total FAR area (Permissible FAR) | = A x E | 25,000 | SqM |
G. Permissible number of Floors | = F / D | 5 | Nos |
H. No. of Extra Floors desired by the developer (for illustration purpose) | 2 | Nos | |
I. Additional FAR Area to be constructed through Premium FAR | = H x D | 10,000 | SqM |
J. Additional FAR Area required as Premium FAR (Notional Area) | = I / E | 4,000 | SqM |
K. Premium FAR as ratio of the otherwise allowed FAR | = I / F | 0.4 | |
L. Premium FAR as % age of Permissible FAR (this is within allowed limits of Premium FAR as per table provided above) | 40% | % | |
M. Value of the Notional Land for additional 10,000 SqM to be constructed using Premium FAR | = J x B | ₹ 2,00,00,000 | INR |
N. Premium FAR charges 50% of GV of the Notional Land (4,000 SqM) | = M x 50% | ₹ 1,00,00,000 | INR |
O. Per square meter rate of the additional 10,000 SqM built up area | = N / I | ₹ 1,000 | INR Per SqM |
P. Lower Floor Cap for per sq meter cost of additional 10,000 SqM @ 28% of the GV Rate of the Notional Land | = 28% x B | ₹ 1,400 | INR Per SqM |
Q. Final Price for additional built-up area of 10,000 SqM @ Rs.1,400 per SqM | = P x I | ₹ 1,40,00,000 | INR |
Key Regulatory Conditions
The Premium FAR policy includes several important conditions that developers should consider:
Maximum Premium FAR
Premium FAR itself is capped according to the prescribed limits. Where additional development rights beyond the Premium FAR limit are required, TDR may be necessary within the overall permissible ceiling.
Guidance Value
Premium FAR calculations must use the latest developed-site guidance value published under the Karnataka Stamp Act. Agricultural or undeveloped land guidance values cannot be used.
Multiple Road Frontages
If a property abuts two or more roads, the highest applicable guidance value for the abutting roads is considered for calculating Premium FAR charges.
Setback Relaxation
The policy provides setback relaxation similar to the existing TDR framework. Where both Premium FAR and TDR are fully utilised, an overall setback relaxation of up to 25% may be available, with proportionate relaxation where only part of the entitlement is used.
Non-Transferability
Unlike TDR, Premium FAR is linked to the specific property for which it is granted and cannot be transferred to another site.
Existing Buildings
Premium FAR cannot be applied retrospectively to buildings that have already received occupancy certificates or to completed developments without the required approvals.
Understanding Transferable Development Rights (TDR)
Development rights issued in the form of notional land to landowners whose property is acquired or surrendered for public purposes.
These rights may be utilised or transferred to another eligible receiving plot in accordance with the Karnataka Town and Country Planning (Benefit of Development Rights) Rules, 2016. The value of the rights is linked to both the originating and receiving properties.
Financial Impact of Premium FAR
Purchasing Premium FAR can significantly influence project economics. While it increases saleable area and revenue potential, it also affects:
Land acquisition strategy
Project cost
Construction financing
Cash flow
Internal Rate of Return (IRR)
Residual land value
Overall project feasibility
Developers should therefore evaluate Premium FAR within a detailed financial model rather than considering it as a standalone regulatory benefit.
Buildability Considerations
Before opting for Premium FAR, developers should conduct a comprehensive buildability assessment. Factors such as setbacks, parking requirements, fire safety norms, access, and infrastructure constraints may limit the practical utilisation of additional FAR.
The source document also notes that there is a need for greater clarity regarding the interaction of Premium FAR with certain benefits available along existing metro corridors, reinforcing the importance of project-specific due diligence.
Frequently Asked Questions
Is Premium FAR mandatory?
No. It is an optional mechanism that allows eligible developers to obtain additional development rights by paying the prescribed premium charges.
Can Premium FAR and TDR be used together?
Yes, subject to the limits and conditions specified in the applicable regulations.
Can Premium FAR be transferred?
No. Premium FAR is specific to the property for which it is granted and cannot be transferred.
Does Premium FAR increase land value?
Properties capable of utilising additional development rights may command higher values, although the actual impact depends on market conditions, construction costs, and project feasibility.
Who should use Premium FAR?
Developers, investors, architects, planners, valuation professionals, consultants, and financial analysts involved in Bengaluru real estate projects.
Simplify Premium FAR Calculations with Arkarth
Calculating Premium FAR charges manually can be time-consuming and prone to errors, particularly when evaluating multiple land parcels or comparing development scenarios.
To streamline this process, Arkarth has developed the Bangalore Premium FAR & TDR Cost Calculator, a professional Microsoft Excel model designed for real estate developers, consultants, architects, valuation professionals, investors, and financial analysts.
The model helps you:
Calculate Premium FAR charges using editable assumptions
Estimate TDR costs
Compare development scenarios
Support land acquisition and feasibility studies
Integrate seamlessly into broader real estate financial models
Save time through automated calculations
Whether you are assessing a residential, commercial, or mixed-use project, the calculator provides a structured framework to support informed investment decisions.
Conclusion
The Premium FAR Policy represents a significant evolution in Bengaluru's urban planning framework, enabling higher-density development while generating resources for infrastructure. However, obtaining additional development rights should not be viewed solely as a regulatory opportunity—it must also make financial sense.
Successful use of Premium FAR requires a clear understanding of the applicable regulations, road-width criteria, guidance values, TDR provisions, and buildability constraints. By combining regulatory compliance with rigorous financial modelling, developers can make more informed decisions and maximise the long-term value of their projects.
Download the Bangalore Premium FAR Calculator
Arkarth's Bangalore Premium FAR & TDR Cost Calculator automates Premium FAR charge calculations, TDR estimation, guidance value analysis, and project feasibility. Designed for developers, consultants, architects, valuation professionals, and investors, it reduces manual effort and integrates seamlessly into broader real estate financial models.
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