The directions were issued on April 13, 2026, in In Re: Phalodi Accident v. National Highways Authority of India, Suo Moto Writ Petition (Civil) No. 9 of 2025, reported as 2026 INSC 388. The Bench consisted of Justices J.K. Maheshwari and Atul S. Chandurkar.

Mandatory Highway Distance Restrictions

The order sets strict non-conversion buffer bands measured directly from the centre line (mid-point) of any National Highway:

Legal & Regulatory Reality

• 100% Rejection of CLU / Building Sanction: Revenue authorities and municipal planners will outright reject any application for Change of Land Use (CLU/DC Conversion) or building map approval.
• Prohibition on Permanent Structures: You cannot legally construct houses, shops, showrooms, hotels like Dhabas, or boundary-walled commercial buildings anywhere on the plot.
• No Unsanctioned Construction: Building without permission will lead to eviction and demolition by NHAI/PWD without any compensation for the demolished structure.

60-Day Removal Deadline

• District Magistrates and local authorities were ordered to clear all unauthorized dhabas, eateries, shops, and commercial encroachments within the Right of Way (RoW) of National Highways within 60 days..

Property Ownership and Land Valuation Impact

Does Land Value Drop to Zero?

No. The order limits new intensive building construction near the road, but it does not cancel land titles, confiscate property, or reduce land value to zero.

• Continued Farming Rights: Landowners retain legal title and can continue agricultural activities, cultivation, and farming without restriction.
• Compensated Government Acquisition: If the government or NHAI ever acquires this buffer land for road-widening, they are legally required under the RFCTLARR Act, 2013 to pay full market value plus a 100% solatium (bonus) and interest.
• Large Land Parcels: For deep plots, the frontage serves as a setback (for green space or parking), while main commercial buildings can be built behind the 75-metre mark.

Challenges for Small Plots Inside the 75m Line

If a small plot sits completely within the restricted buffer band, it has zero buildable depth:

• Automated CLU Rejections: Revenue officers and town planning boards will reject Change of Land Use applications and building plan maps.
• Permitted Open-Air Uses: Plots can still be used for farming, plant nurseries, or open storage where no concrete foundations are laid.
• Legal Remedies: Affected owners can file a Writ Petition in the High Court under Article 226 asking authorities to formally acquire the plot under “regulatory taking” principles or grant site-specific access relief.

Nationwide NHAI Action and Removal Drive (July 2026 Update)

Following the apex court’s ruling, the National Highways Authority of India (NHAI) conducted extensive field operations to clear hazards.

Key Outcomes of the Drive

• Corridor Survey: NHAI surveyed over 693 km of national highways.
• Legal Notices Served: Issued 1,403 formal notices against illegal commercial extensions, unauthorized shops, and unapproved median openings.
• Encroachments Removed: Demolished and cleared 361 illegal access points and roadside obstructions in coordination with local District Magistrates and Superintendents of Police.
• Median Cuts Closed: Permanently sealed 150 unauthorized median gaps used for informal crossings to prevent high-speed collisions.

State-Wise Implementation

• Rajasthan: High Court and revenue task forces issued direct orders to clear commercial structures inside the 75-metre line.
• Karnataka: Updated the Kaveri and Seva Sindhu portals to automatically flag and reject non-compliant DC-conversion applications.
• Haryana, Punjab, Maharashtra, & Uttar Pradesh: Local Town and Country Planning departments froze commercial licenses along major highways unless accompanied by NHAI safety clearance.

Hill-State Conflict: Demands for Exemption in Himachal Pradesh

While the 40m/75m buffer rules are straightforward on flat plains, they have triggered strong resistance in mountainous regions.

Activists, local residents, and organizations like the Bhumi Prabhavit Sangh in Himachal Pradesh (Kullu, Mandi, Bilaspur) are urging the state government to file an urgent review petition in the Supreme Court.

• Geographical Impossibility: Steep cliffs and gorges make 40m/75m setbacks physically impossible on mountain terrain.
• Economic Threat: Enforcing large buffers destroys roadside homestays, dhabas, and local trade.
• Demand for Hill Norms: Stakeholders urge the Supreme Court to allow realistic 3-to-5-metre setbacks in steep valleys.

Tamil Nadu Highway Belts Likely to Face Strict Enforcement

If strict anti-encroachment rules are fully enforced across Tamil Nadu, major transport and industrial belts will face heavy scrutiny:

• Chennai–Bengaluru Highway (NH-48): Sriperumbudur, Kanchipuram, Ranipet, Vellore, and Ambur. High roadside commercialization and encroached service lanes make this a prime demolition target.
• Chennai–Tiruchi–Madurai Highway (NH-45 / GST Road): Tambaram, Vandalur, Guduvanchery, Chengalpattu, Tindivanam, and Villupuram. Suburban fringes with dense commercial setups and residential layouts face significant risk.
• Salem–Coimbatore–Kochi Highway (NH-544): Salem, Sankagiri, Erode, Perundurai, Avinashi, and Coimbatore. A major freight corridor heavily lined with textile units, auto workshops, and dhabas.
• Madurai–Tirunelveli–Kanyakumari Corridor (NH-44): Southern high-speed transit stretch with numerous unapproved access points and illegal median cuts.
• East Coast Road (ECR) & OMR Outskirts: Mahabalipuram to Puducherry. Coastal tourist hubs, resorts, and venues violating buffer lines face access audits.
• Urban Bypasses & Ring Roads: Bypasses around Chennai (ORR), Coimbatore, and Trichy where unapproved developments front direct highway access routes.

Key Due Diligence Steps

The major due diligence steps that Highway Property Owners, Buyers, and Developers must take are

• Conduct Official Land Surveys: Do not rely on sale deeds or online maps. Hire a licensed surveyor to measure the exact setback distance from the centerline (midpoint) of the highway carriageway, not from the edge of the asphalt.
• Check Spatial & Layout Limits: Verify if the survey number falls inside the 40-metre (residential) or 75-metre (commercial) non-conversion buffer line to ensure sufficient buildable depth.
• Verify Right of Way (RoW) & Zoning: Confirm the official RoW, control lines, and latest state notifications to ensure the land permits your proposed development.
• Secure Required Clearances: Obtain an official No Objection Certificate (NOC) from the NHAI or State PWD alongside local town planning approvals before executing land conversions (CLU) or starting construction

Verifying Property Boundaries via Professional Land Survey

To confirm whether a land parcel falls inside or outside the Supreme Court’s mandated 40m (residential) and 75m (commercial) highway buffer limits, property owners can utilize professional land surveying solutions—such as those offered by Verified.RealEstate.

Through these legally valid, government-compliant survey reports the landowners to adjust building layouts. Verified RealEstate also assists in applying for required NHAI Access NOCs, or resolve Change of Land Use (CLU) compliance before investing in unapprovable construction.

Renting out homes, homestays, serviced apartments, and guest houses on websites like Airbnb or Booking.com is booming in Indian cities.

However, running these businesses is no longer just about getting good reviews and filling rooms. In 2026, GST (Goods and Services Tax) has become a major factor that can make or break your profits.

What is the ₹7,500 GST Rule?

The government has introduced a specific rule based on how much you charge per room, per day:

• If your room price is ₹7,500 or less: Your guests pay a low 5% GST. However, you (the owner) cannot claim Input Tax Credit (ITC).
• If your room price is above ₹7,500: The GST rate changes, and you might be allowed to claim ITC.

What is Input Tax Credit (ITC)?

Think of ITC as a cashback or discount on the tax you owe. When you run a rental business, you spend a lot of money on things like:

• New furniture and TVs
• Interior decoration and painting
• Facebook or Google ads to get guests
• Cleaning and repair services

All these services and items charge you GST when you buy them. If you have ITC, you can use that tax you already paid to lower the GST bill you owe to the government.

The Catch: If you price your room under ₹7,500, the government says you cannot use this “cashback.” All the GST you paid on furniture, repairs, and ads becomes an extra expense out of your own pocket.

Pricing is No Longer Just About Demand

Many hosts used to set prices based purely on the season or what neighbors were charging. Now, you have to do some math.

The Big Question: Are you saving more money by attracting guests with a lower 5% GST rate, or are you losing more money because you can’t claim back the tax on your heavy business expenses?

• For Small Hosts: If you rarely spend money on renovations or ads, staying under ₹7,500 with 5% GST is great and simple.
• For Premium Hosts: If you run a luxury villa and spend lakhs on maintenance and marketing, capping your price below ₹7,500 just to keep GST low might actually hurt your total profit.

Food and Extra Services Make Things Complicated

The idea of “Specified Premises” becomes important when a property also offers food, restaurant service, catering, banquet use or other hospitality services

.If you only provide a bed to sleep in, the room tariff is the main point to check, the tax is simple. But things get tricky if you offer:

• Free or paid breakfast/meals
• Event hosting or party spaces
• Pick-up and drop services

How you bundle these services changes how you are taxed. You cannot assume your business gets simple tax treatment just because you call it a “homestay.”

This is important for homestays and serviced apartments because many operators bundle food, cleaning, breakfast or guest services along with the stay.

GST depends on how the property is actually used and what services are provided.

Common Mistakes That Can Get You into Trouble

Tax officials are looking closely at home rentals because they operate like hotels. Avoid these major risks:

• Hiding your true room rates.
• Mixing personal money with business money.
• Not keeping proper bills from your vendors (plumbers, decorators, painters).
• Claiming tax benefits without the right paperwork.

If your bookkeeping is messy, you could face heavy fines, penalties, and legal notices.

Best Steps for Success in 2026

If you want to run a successful rental business today, treat it professionally:

• Get proper bills: Ensure the vendors you buy furniture or services from have proper GST numbers.
• Separate your money: Use a separate bank account for your rental business.
• Keep digital records: Store all receipts for repairs, ads, and property upgrades.
• Talk to an expert: Hire a tax consultant who understands the hospitality industry.

Don’t Forget Property Rules

Tax is only half the battle. Before you turn a residential home into a commercial rental, you must ensure it is legally allowed.

Websites like Verified.RealEstate can help you check for hidden risks before you invest, such as housing society restrictions, local zoning laws, land use permits, and ownership document gaps. A property might look profitable on paper, but local authorities can shut it down if the paperwork isn’t right.

Summary

A lower GST rate looks attractive to your guests, but it might reduce your actual take-home profit if your business expenses are high. In 2026, the most successful hosts are the ones who balance their room prices, business expenses, and tax rules together.

1. What is the Hill Area Conservation Authority (HACA)?

The Hill Area Conservation Authority (HACA) oversees the preservation and sustainable management of ecologically sensitive hill areas within Tamil Nadu. HACA regulations strictly control developmental activities to protect fragile ecosystems, biodiversity, and natural resources in hill areas.

2. Existing HACA Regulations in Tamil Nadu

Currently, entire villages within Tamil Nadu’s designated hill areas fall under the jurisdiction of HACA. This means all land within these villages, irrespective of individual ecological sensitivity, is uniformly regulated. Development in these regions is typically subject to rigorous approval processes, often restricting certain land uses to protect environmental integrity.

2. Proposed Regulatory Change: From Villages to Specific Survey Numbers

In a recent move, the Tamil Nadu government is considering a significant policy shift—from regulating entire villages uniformly to a more precise and targeted application of HACA regulations based on individual land parcels, identified by their unique survey numbers.

This proposed change aims to:

• Precisely target ecologically sensitive parcels.
• Allow controlled development in less environmentally vulnerable areas.
• Strike a balance between conservation needs and developmental opportunities.

3. Why the Change in Approach?

The move towards applying HACA rules to specific survey numbers rather than entire villages comes from several considerations:

• Enhanced Accuracy:
  Better targeting of ecologically sensitive zones, avoiding unnecessary restrictions on lands not environmentally sensitive.
• Balanced Development:
  Facilitating responsible construction and property development opportunities in areas with minimal ecological impact.
• Efficient Governance:
  Reducing unnecessary regulatory burdens, making the process of obtaining clearances simpler and more transparent for property owners.

4. Potential Implications for Property Owners

The proposed change will have notable impacts for property owners in Tamil Nadu’s hill areas:

• Increased Development Flexibility:
  Properties located in less sensitive survey numbers could have fewer restrictions, enabling easier approvals and potentially increasing land values.
• Clear Property Identification:
  Clearly identifying properties subject to HACA regulations based on survey numbers improves clarity, reducing confusion in transactions.
• Regulatory Compliance:
  Owners of properties within ecologically sensitive survey numbers must comply with stringent conservation measures and obtain relevant clearances.

5. How to Check if Your Property Comes Under HACA?

To easily verify if your property or intended purchase lies under HACA’s purview:

• Survey Number Verification:
  Confirm your property’s exact survey number through official documents like Patta or the land registry office.
• Online Verification:
  Utilize Verified.RealEstate’s Survey Number Finder tool for quick identification of your property’s survey number and jurisdiction.
• Legal Review and Opinion:
  Obtain expert Legal Opinion services from Verified.RealEstate to clarify regulatory status and understand legal implications of your property under HACA guidelines.

6. Importance of Professional Assistance in HACA Compliance

Navigating HACA regulations can be complex. Professional services help property owners effectively navigate this regulatory landscape by:

• Ensuring accurate identification and legal verification of survey numbers.
• Assisting in obtaining necessary conservation clearances and approvals.
• Performing thorough Due Diligence to prevent future legal complications.

7. Potential Benefits and Challenges of the Proposed Regulation

Benefits:

• Clearer identification and targeted protection of ecologically sensitive parcels.
• Better-managed growth with minimal environmental damage.
• Enhanced property valuation in less restricted survey numbers.

Challenges:

• Potential ambiguity in identifying sensitive survey numbers initially.
• Higher regulatory scrutiny for ecologically sensitive properties.

8. Next Steps for Property Owners and Developers

• Regularly monitor official government announcements to stay informed about finalized survey numbers.
• Utilize official tools and professional verification services for clarity.
• Engage proactively with local authorities during consultations for smooth project approvals.

Conclusion

The Tamil Nadu government’s proposed shift in applying HACA regulations—from entire villages to specific survey numbers—offers a promising approach to balance development needs with environmental conservation. Property owners and developers should stay informed, use verification tools, and seek expert legal opinions to safeguard their investments and ensure compliance.