“Unlimited” FSI in Telangana: Regulation Without a Rulebook

Floor Space Index (“FSI”), also called Floor Area Ratio (“FAR”), as adopted by the National Building Code of India, 2016, is the ratio of the total built-up area on all floors of a building to the area of the plot on which it stands. In most Indian States, it is the principal statutory control on buildable area, capped zone by zone. Telangana has long been the exception. For nearly two decades, its building rules have imposed no numerical ceiling, and no statutory scheme has replaced it. Instead, Government Orders issued from time to time govern buildable area. Two Government Orders issued in early 2026 unsettled this position, first mandating the purchase of Transferable Development Rights (“TDR”) for high-rise construction and then scaling back that requirement. The question hence is no longer whether Telangana caps buildable area, but whether pricing it by revisable Government Orders amounts to proper regulation.

The Regulatory Framework: From FSI Caps to Physical Controls

The building rules notified under G.O.Ms.No.423 dated 31 July 1998 tied buildable area to FSI limits graded by plot size and road width.^[1] Those limits generated persistent litigation and regularisation, and in 2006, G.O.Ms.No.86 dated 03 March 2006 notified the Hyderabad Revised Building Rules, 2006, which dispensed with the FSI restrictions on the premise that buildable area is better regulated by physical parameters such as height, setbacks and road width than by an abstract ratio.^[2]

This approach was consolidated in the Telangana Building Rules, 2012, notified by G.O.Ms.No.168 dated 07 April 2012 (the “Rules”).^[3] The Rules retain the no-cap construct but do not leave buildable area unregulated. In place of a ratio, (a) the building envelope governs setbacks graded to height and (b) road width and mandatory open space determine how much may be built on a site. ^[4] Buildings above 15 meters attract an infrastructure impact fee, and the owner must mortgage 10 per cent of the built-up area to the sanctioning authority until the receipt of the occupancy certificate. Rule 17 of the Rules introduces TDR, a certificate granted to a landowner who surrenders land for a public purpose, entitling the holder to additional built-up area or to sell the entitlement in the open market.^[5] Successive amendments enhanced the quantum granted and eased its transferability. ^[6]

The Judicial Constraint: Devender Reddy Case

In A. Devender Reddy v. State of Telangana^[7], the Telangana High Court held that TDR is a benefit the landowner may accept but which the corporation cannot impose. Where the owner declines TDR, the Greater Hyderabad Municipal Corporation must proceed under Section 147 of the Greater Hyderabad Municipal Corporation Act, 1955, contemplating the Land Acquisition Act, 1894, and now, after its repeal, the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013.^[8] With cash compensation available as a right, and TDR lacking a reliable market, landowners declined TDR. ^[9] The decision exposed the structural limit of the scheme: the State could not compel a landowner to accept TDR, so it compelled the developer to purchase it. ^[10]

The Regulatory Response: G.O.Ms.No.16 and G.O.Ms.No.95

G.O.Ms.No.16 dated 16 January 2026 not only amended the Rules for the Core Urban Region but also made TDR mandatory for high-rise construction. The same order classified the entitlement as 200 per cent within full tank levels and maximum flood levels, 300 per cent within buffer zones, and 400 per cent beyond buffers, if required for conservation or nala widening. As explained in the case of Devender Reddy, this enabled the State to encourage conservation through market incentives rather than direct compulsion.

Following representations by the development sector, G.O.Ms.No.95 dated 21 March 2026 revised the obligation.^[11] The flat 10 per cent was replaced with a graduated scale: three per cent above the tenth floor for buildings of 10-20 floors and five per cent for those exceeding it, with half payable at the permission stage and half before issuance of the occupancy certificate^[12]. Further, the height of buildings classified as high-rise was reset at 21 meters and the additional floors were graded according to the plot size and road width. However, the no-cap position continues to prevail in practice. This is because the buildable area above the tenth floor is now subject to a purchase obligation that has been doled out and dangled by the executive within the same financial year.

The burden also falls unevenly across plot sizes and road widths. The source of the power of G.O.Ms.No.16 is also in question. G.O.Ms.No.16 was issued under Section 15(1) of the Hyderabad Metropolitan Development Authority Act, 2008, a power to modify the Metropolitan Development Plan exercisable only on notice inviting objections, not the rule-making power used for every comparable amendment of the said Act since 2012.^[13]

However, an FSI regime is not merely a restriction on construction. Rather, it is a planning tool. It ties buildable area to the capacity of roads, water supply, drainage and other infrastructure, folding those decisions into a master plan subject to statutory safeguards. The regime that currently exists in Telangana lacks this. Instead of restricting, it permits additional construction through fees and revisable TDR purchases. Neither Government Order discloses the infrastructure capacity against which the additional density was assessed.^[14] The result is a system that sells development rights without planning for their consequences.

Conclusion

Telangana’s approach to regulating buildable area is therefore best understood as an evolving regulatory regime rather than a deregulated one. The State has not abandoned controls on buildable area., It has replaced conventional instruments with a framework based on physical planning parameters, regulatory fees, and, most recently, mandatory TDR purchases, all without formally adopting an FSI-based system. In a conventional regime, the cap is set by statute or by a Zonal Development Plan, implemented after survey, public notice, and consideration of objections, and can be changed only by following that planmodification procedure. In Telangana, building density is set instead by Government Order, invoking rules-making power that bypasses that procedure, without any operative plan against which it can be tested, and can be altered at executive discretion. The phrase “unlimited FSI,” though frequently used to describe Telangana's model, is therefore more rhetorical than legal, as the quantum of development continues to be shaped by regulatory constraints.

^[1] G.O.Ms.No.423, Municipal Administration and Urban Development Department, Government of Andhra Pradesh, dated 31 July 1998.

^[2] G.O.Ms.No.86, Municipal Administration and Urban Development Department, Government of Andhra Pradesh, Hyderabad Revised Building Rules, 2006, dated 03 March 2006.

^[3] G.O.Ms.No.168, Municipal Administration and Urban Development Department, dated 07 April 2012, notifying the Andhra Pradesh Building Rules, 2012, as adapted to Telangana, https://lrsbrs.hmda.gov.in/hmdaLMS/data/168.pdf.

^[4] Rules 4 (Table II), 5 (Table III), 7 (Table IV), 21 (Table VI) and 25(d), Telangana Building Rules, 2012. Table IV was substituted by G.O.Ms.No.50, MA&UD Department, dated 22 April 2019, and graduates permissible height to the abutting road width: a 12 metre road supports a height of up to 24 metres, an 18 metre road up to 30 metres, a 24 metre road up to 45 metres and a 30 metre road up to 55 metres, with all-round open space rising from seven metres to 16 metres. The impact fee under Rule 21 is graded by location and use. Rule 25(d) requires ten per cent of the built-up area to be made over to the sanctioning authority by notarised affidavit entered in the Prohibitory Property Watch Register, and the conditions of sanction release it only on production of the occupancy certificate.

^[5] Rule 17 of the Telangana Building Rules, 2012, read with G.O.Ms.No.330 dated 28 December 2017, G.O.Ms.No.50 dated 22 April 2019 and G.O.Ms.No.264 dated 05 November 2019, https://buildnow.telangana.gov.in/go-and-act/.

^[6] For a fuller treatment of the TDR framework, see An Overview on Transferable Development Rights in the State of Telangana and Andhra Pradesh, TLH (21 October 2020), https://tlh.law/insights/an-overview-on-transferable-development-rights-in-the-state-of-telangana-and-andhra-pradesh.

^[7] A. Devender Reddy v. State of Telangana, W.P. No. 3944 of 2019, decided by the Telangana High Court on February 26, 2019.

^[8] See also Salla Veera Reddy v. State of Telangana (Telangana High Court, Division Bench, reported 21 March 2026), affirming that the companion provision, Section 146, operates only by consent. It holds that Section 146 enables acquisition only by mutual consent and confers no power of compulsory acquisition.

^[9] S. Dakshina Murthy, Hyderabad: Telangana Amends Building Permission Rules, Makes TDR Mandatory for High-Rise Constructions, NewsMeter (17 January 2026), https://newsmeter.in/top-stories/hyderabad-telangana-amends-building-permission-rules-makes-tdr-mandatory-for-high-rise-constructions-761503.

^[10] The TDR and FSI is taxable in the hands of the promoter on reverse charge under Entry 5B of Notification No. 13/2017-Central Tax (Rate), inserted by Notification No. 05/2019-Central Tax (Rate) with effect from 01 April 2019, at 18 per cent. Residential apartments booked before completion are exempt, and tax on unsold residential apartments is capped at one per cent of value for affordable and five per cent for other residential apartments, with no cap for commercial apartments.

^[11] G.O.Ms.No.95, Municipal Administration and Urban Development Department, Government of Telangana, dated 21 March 2026. See Telangana Govt Relaxes TDR Rules for High-Rise Buildings After Builders' Objections, Telangana Today (22 March 2026), https://telanganatoday.com/telangana-govt-relaxes-tdr-rules-for-high-rise-buildings-after-builders-objections.

^[12] G.O.Ms.No.95, supra note 10, further allowed setback relaxation of up to ten per cent for high-rise buildings, subject to seven metres being maintained all round. The redefinition matters because Rule 7, which applies only to high-rise buildings, prescribes a minimum plot of 2,000 square metres, the road width and setback stipulations of Table IV, and prior Airport Authority and Fire Services clearances; buildings of 18 to 21 metres now fall outside all of it.

^[13] Section 15(3) of the Hyderabad Metropolitan Development Authority Act, 2008 permits modification of the Metropolitan Development Plan only after notice has been published inviting objections and suggestions, which the Government is bound to consider. G.O.Ms.No.330 and G.O.Ms.No.264, supra note 5, were each traced to Sections 585 and 592 of the 1955 Act, Sections 14, 32, 46 and 58 of the Telangana Urban Areas (Development) Act, 1975, Section 56(1) of the Act of 2008 and the municipal legislation, and G.O.Ms.No.95, supra note 10, returned to that footing. The Core Urban Region (Integrated Governance) Bill, 2026 was released in draft for public comment in July 2026 and had not been enacted as at the date of writing. G.O.Ms.No.55, MA&UD (GHMC-1) Department, dated 11 February 2026, constituting the Cyberabad and Malkajgiri Municipal Corporations, is the subject of W.P. No. 4891 of 2026 before the Telangana High Court, in which notice was issued on 19 February 2026; no stay has been reported.

^[14] A traffic impact assessment as a precondition for building permission was mooted by the Municipal Administration and Urban Development Department in or about 2019 but neither the Telangana Building Rules, 2012 nor G.O.Ms.No.16 or G.O.Ms.No.95 imposes such a requirement, and GHMC building permit orders issued in 2024 and 2025 carry such condition. See MA&UD to Launch Traffic Impact Policy Soon, Deccan Chronicle, https://www.deccanchronicle.com/nation/in-other-news/241221/maud-to-launch-traffic-impact-policy-soon.html; and New TDR Policy Set to Choke Civic Infrastructure in Hyderabad, The Hindu, https://www.thehindu.com/news/cities/Hyderabad/new-tdr-policy-set-to-choke-civic-infrastructure-in-hyderabad/article70776259.ece.