Andhra Pradesh Cuts Vacant Land Tax by 50% to Boost Real Estate Growth

The Andhra Pradesh Assembly has approved a significant amendment to municipal laws, allowing a 50 percent reduction in vacant land tax during the construction phase of projects. The relief will be available until the issuance of the occupancy certificate, offering timely financial support to developers navigating project execution challenges.

The move is widely seen as a pro development reform aimed at reviving the real estate sector and restoring investor confidence. Industry stakeholders had long expressed concerns that full vacant land tax during construction increased project costs and slowed execution timelines. By reducing the burden during the critical construction stage, the government aims to improve liquidity for builders and accelerate project completion.

Officials indicated that the decision is part of a broader effort to strengthen ease of doing business and stimulate economic activity. The real estate sector plays a pivotal role in employment generation, allied industries, and urban infrastructure expansion. Any policy support that enhances cash flow at the project level can have a multiplier effect across construction, cement, steel, and services sectors.

The amendment also signals a shift toward growth oriented governance, particularly after a period when policy uncertainties had affected investor sentiment. By introducing tax rationalisation measures, the state intends to create a more predictable and supportive regulatory environment.

Developers believe the reform will encourage new project launches, especially in residential and mixed use segments. Lower holding costs during construction can translate into improved pricing stability and better supply alignment with market demand.

With infrastructure investments and urban expansion gaining pace, the tax reduction is expected to complement broader development goals. The policy decision underscores the state government’s focus on revitalising real estate, unlocking stalled potential, and ensuring sustained growth in the years ahead.