Himachal Announces 2% Annual Cess on Surplus Land Held by Power Developers from 2026

Himachal Pradesh has announced a significant policy shift that will require individuals, companies, and power project developers to pay an annual land revenue on surplus land retained for non-agricultural use. The levy—set at 2% of the average market value of the project—will apply to excess land identified through special assessments carried out across the state. The new charge will come into force on January 1, 2026.

Chief Secretary Sanjay Gupta issued the official notification on Tuesday following an extensive verification exercise by district administrations to determine the additional land held by various project-executing agencies. The annual revenue liability for each entity will be determined on the basis of assessment reports prepared by the respective Deputy Commissioners.

Facing ongoing financial pressures, the state government views this measure as a practical way to boost revenue. A previous attempt to raise funds through a water cess on hydropower companies remains stalled after several producers challenged it in court. The land revenue model is now being positioned as a more legally sustainable alternative.

In the first phase, the government focused on hydropower producers, which control some of the largest land parcels in the state. Deputy Commissioners of Shimla and Kangra carried out special assessments under the Himachal Pradesh (Special Assessment) Rules, 1986, to determine the extent of surplus land beyond operational requirements. The 2% cess will be imposed under Rule 14 of the same framework.

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Major public sector undertakings—including Satluj Jal Vidyut Nigam Ltd (SJVNL), National Hydro Power Corporation (NHPC), and National Thermal Power Corporation (NTPC)—are expected to be part of the new revenue regime. Independent producers, such as the former Jaypee-operated Karcham Wangtoo project in Kinnaur, may also face significant liabilities due to large tracts of unused land still in their possession.

Settlement Officers in Shimla and Kangra, working with the Directorate of Energy, finalised the average market value of various hydropower projects. Their reports, submitted on December 1, have since been approved. As per Tuesday’s order, officers will now publish relevant extracts of the assessment reports in the Rajpatra (e-Gazette), inviting objections from affected individuals and organisations before the levy is formally enforced.