A buyer who picked up an affordable parcel on the outskirts of Hyderabad in 2026, intending to build a weekend home, discovered a step no one had mentioned. The land was still classified as agricultural, and putting it to any non-agricultural use without first converting it was not allowed. In Telangana, that conversion is not a formality a buyer can leave for later. It is a legal prerequisite governed by its own Act, with its own tax and its own penalty for skipping it, and it shapes whether farm land you buy can lawfully become a home or a plot.

The short answer. In Telangana, converting agricultural land to non-agricultural use is governed by the Telangana Agricultural Land Conversion for Non-Agricultural Purposes Act, 2006, and no agricultural land may be put to a non-agricultural purpose without the prior permission of the competent authority. The conversion tax is 2 percent of the basic value of the land within the Greater Hyderabad Municipal Corporation area, and 3 percent in other notified areas. The trade-off is clear: converting costs a tax and takes an approval, but using agricultural land for a non-agricultural purpose without permission attracts a fine of 50 percent over and above the conversion tax, so skipping the step is the more expensive path.

The anchor number for a Hyderabad buyer in 2026 is the conversion tax, 2 percent of basic value inside GHMC and 3 percent outside, applications for which are now filed online through the Telangana Dharani portal. NALA conversion in Telangana is therefore a step to complete before any non-agricultural development, not after.

What law governs agricultural land conversion in Telangana?

Conversion is governed by the Telangana Agricultural Land Conversion for Non-Agricultural Purposes Act, 2006, which defines conversion as a change of land use from agricultural to non-agricultural purposes. This Act replaced the older Andhra Pradesh Non-Agricultural Lands Assessment Act of 1963, so it is the current, governing framework for the state. For a buyer, the significance is that conversion in Telangana is not a loose administrative practice but a statutory process with defined authorities, charges, timelines and penalties. Knowing the Act is the starting point, because it is the Act, not a seller's assurance, that decides what you must do before you can lawfully build on or otherwise develop the land. Our guide to the Dharani and Bhu Bharati land records framework for Telangana buyers covers the record system that sits alongside this process.

Is conversion a prerequisite before you build?

Yes, conversion permission is a legal prerequisite before agricultural land is put to any non-agricultural use. Under Section 3(1) of the Act, no agricultural land may be put to a non-agricultural purpose without the prior permission of the competent authority, so a buyer must obtain conversion before non-agricultural development begins. This is a prerequisite about land use, not a comment on how a sale is registered, and the two should not be confused. If you are buying land you intend to build on, the practical reading is that conversion is a step you plan and budget for as part of the purchase, rather than a problem to solve after you have started construction. For the specific requirements that apply to registering the purchase itself, rely on the Dharani portal and the state registration department rather than assuming the two processes are one.

How much is the NALA conversion tax?

Under Section 4 of the Act, the conversion tax is 2 percent of the basic value of the land for land within the Greater Hyderabad Municipal Corporation area, and 3 percent of the basic value in other notified areas. These rates were fixed by a government order from 2016, which substituted the much higher earlier rates, so a buyer should be careful to use the current figures rather than older ones that may still circulate. Because the tax is a percentage of the basic value, the amount depends on the official value of the specific land, which is why you should confirm the current basic value before estimating the cost. The table below summarises the framework a Hyderabad buyer should hold in mind.

Treat the table as the statutory skeleton, and confirm the current basic value and any updated procedure on the Dharani portal before you rely on a specific figure.

Who processes the conversion and how do you apply?

Under Section 5 of the Act, the Revenue Divisional Officer, or any officer notified by the government, is the authority competent to order conversion of land use from agricultural to non-agricultural purpose. Applications are now filed online through the Telangana Dharani portal, where an applicant books a slot and the Revenue Divisional Officer processes the conversion. There is also a built in protection on timing: the competent authority must issue or reject the conversion request within fifteen days, or within seven days after any deficit tax is paid, and if no order is passed within the prescribed time, the required permission is deemed to have been given. For the exact procedure, fees and the full list of documents, use the official Dharani portal rather than an informal checklist, since the documents and steps are updated from time to time and a stale list can cost you a wasted slot and a repeat visit.

What happens if you skip conversion, and can you appeal?

If agricultural land is put to non-agricultural use without the required permission, Section 6 provides that the land is deemed converted and the competent authority shall impose a fine of 50 percent over and above the conversion tax. That penalty is precisely why converting first is cheaper than building first and regularising later. There is also a route to challenge a decision: under Section 8, a person aggrieved by an order of the Revenue Divisional Officer may appeal to the Collector within sixty days of receiving the order. Separately, the Act does not apply to certain lands under Section 7, including state government lands, lands used for religious or charitable purposes, owner run household industries of a traditional occupation not exceeding one acre, and lands used for aquaculture, dairy and poultry.

These exemptions are narrower than they sometimes sound in a sales pitch, so a buyer should read them carefully rather than assume a plot falls within one. A weekend home or a plotted layout is a straightforward non-agricultural use that needs conversion, and it does not become exempt simply because the land once grew a crop or because the seller intends to keep part of it green. The exemptions are aimed at genuinely agricultural or public uses, not at ordinary residential development dressed up as something else. Where there is any doubt about whether an intended use is exempt, the safe assumption is that conversion is required, because building first on the strength of a shaky exemption is exactly the situation that invites the 50 percent penalty.

Conversion also sits alongside the separate question of whether the layout itself is approved. A converted plot in an unapproved layout is still a plot in an unapproved layout, with all the building permission and registration problems that brings. Our guide to buying unapproved plots in Hyderabad covers that second layer, and a careful buyer checks both the land use conversion and the layout approval, because clearing one without the other still leaves the plot exposed.

What should a Hyderabad buyer verify before buying farm land?

If you are buying agricultural land you intend to develop, plan the conversion as part of the purchase with this checklist.

1. Confirm the current land classification, since agricultural land needs conversion before any non-agricultural use.
2. Check whether your intended use is exempt under Section 7, such as certain small traditional household industries.
3. Estimate the conversion tax at 2 percent of basic value inside GHMC or 3 percent in other notified areas.
4. Confirm the current basic value of the specific land before you calculate the tax.
5. Plan to apply through the Dharani portal, where the Revenue Divisional Officer processes the conversion.
6. Budget for the 50 percent fine risk if land is used without permission, and avoid it by converting first.
7. Confirm the registration requirements for the purchase separately with the Dharani portal and the registration department.

Which law governs converting agricultural land in Telangana, and is prior permission required?

Conversion is governed by the Telangana Agricultural Land Conversion for Non-Agricultural Purposes Act, 2006. Section 3(1) states no agricultural land shall be put to a non-agricultural purpose without the prior permission of the competent authority, so you must obtain conversion permission before any non-agricultural development begins on the land.

How much conversion tax do I pay, and on what basis?

Under Section 4 of the 2006 Act, the conversion tax is 2 percent of the basic value of the land within the Greater Hyderabad Municipal Corporation area, and 3 percent of the basic value in other notified areas. These rates were fixed by the government from 2016, so verify the current basic value of your specific land before paying.

Who processes the conversion and how do I apply as a Hyderabad buyer?

Under Section 5, the Revenue Divisional Officer is the authority competent to order conversion. Applications are now filed online through the Telangana Dharani portal, where you book a slot and the officer processes the conversion. For the official procedure, fees and full document list, use the Dharani portal directly rather than an informal list.

What happens if land is used for non-agricultural purposes without conversion, and can I appeal?

Section 6 says land put to non-agricultural use without permission is deemed converted, and the competent authority shall impose a fine of 50 percent over and above the conversion tax. Under Section 8, anyone aggrieved by the Revenue Divisional Officer's order may appeal to the Collector within sixty days of receiving it.

Last updated 2026-07-07. PropNewz Team.