Quick Answer
A buyer who pays an instalment late owes interest under Section 19(7) of the RERA Act, at the rate in the state rules. Section 2(za) makes that rate equal to what the builder pays you for its own delay. In most states it is SBI's highest MCLR + 2%, which is 10.95% a year on SBI's rates from 15 October 2026. Uttar Pradesh uses MCLR + 1%. Interest runs only on the overdue amount, from the due date until you pay.
At a Glance
Duty to pay on time:
Section 19(6)
Interest on late payment:
Section 19(7)
Same rate both ways:
Section 2(za)
Waiver by agreement:
Section 19(8)
Most states:
SBI highest MCLR + 2%
Rate today (most states):
10.95% (8.95% + 2%)
What the Act Says
Three provisions work together. Section 19(6) requires an allottee who has signed an agreement for sale to make the payments due, in the manner and within the time the agreement specifies. Section 19(7) makes the allottee liable to pay interest, at the rate the state prescribes, for any delay in those payments. Section 19(8) allows both of those obligations to be reduced if the promoter and the allottee mutually agree.
The definition of "interest" in Section 2(za) does the rest. Its explanation says the rate a promoter charges an allottee for default must equal the rate the promoter is liable to pay the allottee for its own default. It also fixes the period: interest owed by an allottee runs from the date of default until the date of payment.
Why this matters
Before RERA, builder-buyer agreements often charged buyers a steep rate for late instalments while promising very little when the builder was late. Section 2(za) ended that imbalance: whatever rate applies to the builder's delay applies to yours, and the state rules, not the builder's draft, set it.
The Rate, State by State
The Act leaves the rate to the state rules. We list a state here only where we confirmed the rule; for any other state, check the interest rule in its RERA rules, usually the rule headed "rate of interest payable by the promoter and the allottee".
State
Prescribed Rate
Source
Maharashtra
SBI highest MCLR + 2%
Maharashtra Real Estate Rules 2017, Rule 18
Haryana
SBI highest MCLR + 2%
Haryana Real Estate Rules 2017, Rule 15
Uttar Pradesh
SBI MCLR + 1%
UP Agreement for Sale/Lease Rules 2018, Rules 9.2 and 9.3. The UP Appellate Tribunal held the same rate applies to buyer defaults (Parsvnath Developers v Pankaj Agarwal, 11 June 2021)
Most other states
Commonly SBI highest MCLR + 2%
Confirm in your state's rules before relying on it
"Highest MCLR" means the highest of SBI's MCLR tenors, which is currently the 3-year rate. SBI raised its MCLR by 15 basis points from 15 October 2026, taking the 3-year rate to 8.95%. So the rate in an MCLR + 2% state is 10.95% today, and 9.95% in Uttar Pradesh. Most rules add that if SBI stops using MCLR, the benchmark lending rate SBI sets for lending to the public takes its place.
The figure moves
SBI revises MCLR regularly, and Authorities usually apply the rate in force on the date of their order. Check SBI's current MCLR page before quoting a number to a client, and expect the final figure in any order to reflect the rate on that day.
Worked Example
A buyer in Maharashtra receives a construction-linked demand of ₹5,00,000 and pays it 90 days late. At 10.95% a year, worked out as simple interest on the overdue amount:
₹5,00,000 × 10.95% × 90 ÷ 365 = ₹13,500
The interest is on the ₹5 lakh that was late, not on the price of the flat, and it stops on the day the payment reaches the promoter. Check your agreement and state rules for how the interest is to be compounded, if at all; this example uses simple interest. Paid on the due date, the same instalment costs nothing extra.
When the Builder Asks for More Than the Rules Allow
An agreement for sale signed for a registered project cannot override Section 2(za). If a demand letter charges 18% or more on a late instalment, or charges interest on the whole sale price, the buyer can:
1
Reply in writing
Point to Sections 2(za) and 19(7) and your state's interest rule, and ask the promoter to recompute at the prescribed rate on the overdue amount only.
2
Pay the undisputed part
Paying the instalment itself stops further interest from running, even while the rate is in dispute.
3
Complain to the Authority
If the promoter will not correct it, file a complaint with the RERA Authority under Section 31. Interest disputes go to the Authority, not the Adjudicating Officer. See our
complaint guide.
Repeated Default and Cancellation
Interest is not the only consequence of paying late. Under Section 11(5), a promoter may cancel an allotment only in terms of the agreement for sale, and an allottee who thinks a cancellation does not follow the agreement can approach the Authority. Most state model agreements require written notice and a chance to pay before cancellation, and limit how much of the money paid the promoter can keep. Read the cancellation clause before signing, and take any default notice seriously.
A buyer can also be in the right while paying late. If the promoter is itself behind schedule, a construction-linked demand may not yet be properly due, and Uttar Pradesh's rules state that a promoter in default cannot claim interest from the allottee. Disputes like this are for the Authority to decide.
Why Agents Should Know This
Payment schedules come up at every booking. An agent who can explain what a late instalment really costs, and that the rate is the same one the builder owes for late possession, gives better advice than one who repeats the builder's demand letter. It also helps you spot an agreement clause that a buyer can challenge. For the other side of the same rule, see possession delay, refund and interest.
Frequently Asked Questions
What interest rate does a buyer pay for delayed payment under RERA?
The rate prescribed in your state's RERA rules. Most states, including Maharashtra and Haryana, prescribe the State Bank of India's highest MCLR plus 2%. With SBI's highest MCLR at 8.95% from 15 October 2026, that works out to 10.95% a year. Uttar Pradesh uses MCLR plus 1%.
Can a builder charge 18% or 24% interest on late payments?
Not in an agreement governed by RERA. Section 2(za) says the interest the promoter charges an allottee for default must equal the interest the promoter pays the allottee for its own default, and that rate is fixed by the state rules. A higher rate in the agreement can be challenged before the RERA Authority.
From when does interest on a late instalment run?
Under Section 2(za), from the date the allottee defaults until the date the amount is paid. It is charged only on the overdue amount, not on the full price of the property.
Is the rate the same as what the builder pays me for late possession?
Yes. That is the core of Section 2(za): the rate is the same in both directions. If your state's rate for delayed possession is SBI MCLR plus 2%, the rate on your late instalments is the same.
Which SBI MCLR is used?
The rules refer to SBI's highest MCLR, which is currently the 3-year tenor. Most rules add that if MCLR is no longer in use, it is replaced by the benchmark lending rate SBI fixes for lending to the public. Authorities usually apply the rate in force on the date of their order, so the figure moves when SBI revises MCLR.
Can the builder cancel my booking if I pay late?
Only in terms of the agreement for sale. Section 11(5) lets a promoter cancel an allotment only as the agreement allows, and an allottee can approach the Authority if a cancellation is not in line with the agreement. Most model agreements require written notice before cancellation and limit what can be forfeited.
Can the builder waive interest on my late payment?
Yes. Section 19(8) allows the allottee's payment obligations and interest liability to be reduced when the promoter and the allottee mutually agree. Get any waiver in writing.
My bank delayed the home loan disbursement. Do I still owe interest?
Generally yes, because the payment obligation under Section 19(6) is yours, not the bank's. Raise the delay with the promoter in writing at once, and keep the bank's correspondence. Some promoters agree to a waiver under Section 19(8) when the delay is clearly the lender's.
Official Sources
Real Estate (Regulation and Development) Act 2016, Sections 2(za), 11(5), 19(6)–(8) and 31.
Maharashtra Real Estate (Regulation and Development) Rules 2017, Rule 18; Haryana Real Estate (Regulation and Development) Rules 2017, Rule 15; Uttar Pradesh Real Estate (Agreement for Sale/Lease) Rules 2018, Rules 9.2 and 9.3.
State Bank of India, MCLR rates effective 15 October 2026 (sbi.co.in).
Change Log
25 Oct 2026: Page published, using SBI's MCLR from 15 October 2026 (highest, 3-year: 8.95%).
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