Compliance · Buyer Disputes⚖️ Updated 9 Nov 2026 · ⏱ 10 min read
RERA Refund Rules on Cancellation What the Builder Can Keep, and What It Must Return
Who cancels decides almost everything. If you walk away, the builder may keep a limited deduction. If the builder fails, you get all your money back with interest. Here are the rules, the state caps and the GST and stamp duty side.
Quick Answer
If you cancel, the builder may deduct only what your agreement and state rules allow: up to 2% in Maharashtra under MahaRERA orders, up to 10% in Haryana (Gurugram), and about 10% elsewhere under Supreme Court practice. If the builder fails to deliver on time, Section 18 gives you a full refund with interest, usually SBI's highest MCLR + 2%, with no deduction.
At a Glance
Builder at fault:Section 18(1), 19(4)
Refund then includes:100% + interest + compensation
Buyer cancels:Agreement + state cap
Maharashtra cap:0% to 2% (MahaRERA)
Haryana (Gurugram) cap:10% of consideration
Rate today (most states):10.95% (8.95% + 2%)
Two Very Different Situations
Buyer cancels
Builder fails
Typical reason
Change of plans, loan rejected, family need
Possession date missed, registration revoked, false advert
Legal basis
Agreement terms, Section 11(5), state caps
Sections 18(1), 19(4), also 12 and 14
What comes back
Amount paid minus permitted deduction
Everything paid
Interest
Usually none, unless the refund itself is delayed
Prescribed rate from each payment date to refund
Compensation
No
Yes, claimed before the Adjudicating Officer
When You Cancel: What the Builder Can Deduct
The RERA Act has no single national forfeiture figure. Section 11(5) says a promoter may cancel an allotment only in terms of the agreement for sale, and the agreement must follow the model form in your state's rules. Section 13 also stops a promoter taking more than 10% of the cost before a registered agreement, which limits what is at stake at the booking stage. Beyond that, the cap comes from state regulations, Authority orders and the courts.
Where
Limit on deduction
Source
Maharashtra
Within 15 days of allotment: nil. 16–30 days: 1%. 31–60 days: 1.5%. After 60 days: 2% of the flat cost. Reported
MahaRERA orders of 12 Aug 2022 (Order 35/2022) and 3 Sep 2024 and the model allotment letter, as reported. Applied in Raymond Realty (2023) and Piramal Estates (13 Jan 2025) complaints
Haryana (HRERA Gurugram)
Forfeiture of earnest money not more than 10% of the consideration; a contrary clause is void. Confirmed
HRERA Gurugram (Forfeiture of Earnest Money by the Builder) Regulations 2018, Regulation 5
All India (courts)
10% of the basic sale price treated as reasonable earnest money; forfeiting 20% under a one-sided agreement was not allowed. Confirmed
Supreme Court, Godrej Projects Development Ltd v Anil Karlekar, 3 Feb 2025 (2025 INSC 143)
Other states
Check the cancellation clause of your state's model agreement for sale and any Authority regulation or order
State RERA rules and the Authority's orders page
Two MahaRERA orders show how this plays out. In the Piramal Estates complaints decided on 13 January 2025, buyers who had paid about 10% and then defaulted were refunded everything except 2% of the total consideration, and the Authority said forfeiting more than 10% had no basis in RERA. In a Godrej Properties complaint decided on 29 October 2024, a buyer who cancelled within a month got the full ₹15 lakh back, without interest, because the builder showed no loss. Both are reported decisions; read the order itself before relying on it.
"Booking amount is non-refundable"
That line on a booking form does not settle the matter. Authorities have refused to enforce it where it goes beyond the state cap or the model agreement, and the Supreme Court treats an excessive forfeiture as a penalty under Section 74 of the Contract Act. The deduction is usually worked out on the cost of the flat, not on what you paid, so check which base the builder is using.
When the Builder Fails: Section 18 Refund With Interest
Section 18(1) applies when the promoter fails to complete the project or give possession by the date in the agreement, or stops its business because its registration is suspended or revoked. The buyer who wishes to withdraw gets back the full amount paid, with interest at the prescribed rate, plus compensation. Section 19(4) gives the allottee the matching right to claim it. Refunds are also available where a buyer suffers loss from false information in an advertisement (Section 12).
The Supreme Court held in Newtech Promoters v State of UP (11 November 2021) that this right to a refund on demand is unconditional where possession is not given as agreed, regardless of unforeseen events or stay orders. It also split the work: the Authority orders the refund and interest, while compensation is decided by the Adjudicating Officer under Section 71.
Interest runs from the date the promoter received each payment until the date the refund is paid (Section 2(za)). The rate is set by state rules, in most states SBI's highest MCLR + 2%, which is 10.95% a year on SBI's rates from 15 October 2026. See the state-by-state rate table.
Worked Example
A buyer in Maharashtra books a ₹80 lakh flat and has paid ₹8 lakh.
Buyer cancels 75 days after allotment: deduction 2% × ₹80,00,000 = ₹1,60,000. Refund = ₹8,00,000 − ₹1,60,000 = ₹6,40,000, plus the GST refund. Builder misses possession by 2 years and buyer withdraws: refund ₹8,00,000 + interest ₹8,00,000 × 10.95% × 2 = ₹1,75,200, so ₹9,75,200, plus any compensation.
The interest figure is simple interest on one payment for illustration. In a real order it is worked out from the date of each payment, at the rate in force on the date of the order.
GST and Stamp Duty on a Cancelled Flat
GST. GST paid on an under-construction flat is refundable when the booking is cancelled. If the builder is still within the time allowed under Section 34 of the CGST Act, it issues a credit note and refunds the tax itself. If that time has passed, CBIC Circular 188/20/2022-GST (27 December 2022) lets an unregistered buyer take a temporary registration with PAN and file Form GST RFD-01 within two years of the date of the builder's cancellation letter, with a certificate from the builder. Only the tax on the amount actually repaid is refunded, and claims below ₹1,000 are not paid.
Stamp duty. This depends on your state's stamp law. In Maharashtra, Sections 47 and 48 of the Maharashtra Stamp Act allow a refund where a registered agreement for sale is cancelled by a registered cancellation deed within five years of execution; the application is reported to be due within six months of registering the cancellation deed. Other states set their own conditions. Registration fees are generally not refunded. Ask the sub-registrar or stamp office before signing the cancellation deed, because missing the deadline can lose the refund. Rates by state are in our stamp duty guide.
How to Claim Your Refund
1
Read the cancellation clause
Find the clause in the allotment letter and the agreement for sale. Note the deduction it claims and check it against your state cap.
2
Cancel in writing
Email and send a signed letter stating the reason and asking for the refund within the deadline in your state's rules. If the builder is in default, say you are withdrawing under Section 18.
3
Ask for the working
Request a statement showing amount paid, deduction and its basis, GST to be refunded, and the payment date.
4
Handle GST and stamp duty
Get the builder's credit note or cancellation letter and certificate for GST; register the cancellation deed and apply for stamp refund on time.
5
Complain to the Authority
If the builder refuses or delays, file under Section 31 on your state RERA portal. See our complaint guide.
If You're an Agent
Cancellation questions come to you first, often before the buyer has read a single clause. Useful things to tell a client:
☐ Before booking: read out the cancellation clause and the deduction it allows, and compare it with the state cap.
☐ Do not tell a client the booking amount is "fully refundable" or "lost for sure". Both are usually wrong.
☐ If the builder is late, explain the choice under Section 18: withdraw with full refund and interest, or stay and take monthly interest.
☐ Remind them about GST and stamp duty refunds and their deadlines.
☐ For a disputed amount, point them to the RERA Authority or a lawyer; do not negotiate a settlement you cannot explain.
Section 10 of the RERA Act bars registered agents from unfair trade practices, including false statements about a unit, and a wrong promise about refunds can come back to you. RERACertified sells the RERACertified™ Professional (RCP) course, which covers allottee rights, cancellation and refunds in its India Core and state modules. RCP is a private professional certification. It does not replace state RERA agent registration.
Frequently Asked Questions
How much can a builder deduct if I cancel my flat booking?
It depends on the state and on how far the deal has gone. In Maharashtra, MahaRERA has repeatedly limited the deduction to 2% of the flat cost, and the allotment-letter scale reported in its orders is nil within 15 days, 1% from 16 to 30 days, 1.5% from 31 to 60 days and 2% after that. HRERA Gurugram's 2018 regulations cap forfeiture at 10% of the consideration. Where no state cap applies, the Supreme Court has treated 10% of the basic sale price as a reasonable earnest-money forfeiture.
Can the builder keep my entire booking amount?
Usually not. A clause that forfeits everything paid is open to challenge. MahaRERA has ordered refunds where builders kept the whole booking amount, and in Godrej Projects v Anil Karlekar (3 February 2025) the Supreme Court upheld the view that forfeiting 20% of the basic sale price under a one-sided agreement was unreasonable, while 10% was reasonable.
Do I get interest on the refund if I cancel for my own reasons?
Generally no. Interest at the state's prescribed rate under Section 18 is for cases where the promoter is at fault, such as a missed possession date. When the buyer cancels for personal reasons, Authorities usually order the balance returned after the permitted deduction, without interest, unless the builder delays paying it.
What do I get if the builder fails to give possession on time?
Under Section 18(1) of the RERA Act you can withdraw and get back everything you paid, with interest at the rate in your state's rules, plus compensation. In most states the rate is SBI's highest MCLR plus 2%, which is 10.95% a year on SBI's rates from 15 October 2026. Interest runs from the date of each payment until the refund. No earnest money can be deducted in this case.
How soon must the builder pay the refund?
The state rules set a deadline counted from when the refund becomes due: 30 days in Maharashtra, 60 days in Karnataka, and 90 days in Punjab and Tamil Nadu, for example. Haryana and Telangana are reported at 90 days and Delhi, Uttar Pradesh and Rajasthan at 45 days. If the builder misses the deadline, the Authority can recover the amount as arrears of land revenue under Section 40.
Will I get the GST back if I cancel?
Yes, in most cases. If the builder can still issue a credit note, it adjusts the GST and refunds it to you. If that window has closed, CBIC Circular 188/20/2022-GST lets an unregistered buyer claim the refund directly in Form GST RFD-01 within two years of the date of the builder's cancellation letter. Refunds below ₹1,000 are not paid.
Can I get the stamp duty back on a cancelled agreement?
Sometimes, and only under your state's stamp law. In Maharashtra, a registered agreement for sale cancelled by a registered cancellation deed within five years of execution qualifies, and the application is reported to be due within six months of registering the cancellation deed. Other states have their own conditions and time limits, so check with the stamp office before signing the cancellation deed.
Where do I complain if the builder refuses to refund?
File a complaint with your state RERA Authority under Section 31. Refund and interest are ordered by the Authority; a separate claim for compensation goes to the Adjudicating Officer under Section 71. A consumer commission is an alternative forum for many buyers.
Official Sources
Real Estate (Regulation and Development) Act 2016, Sections 2(za), 10, 11(5), 12, 13, 18, 19(4), 31, 40 and 71.
Haryana Real Estate Regulatory Authority, Gurugram (Forfeiture of Earnest Money by the Builder) Regulations 2018, Regulation 5.
Supreme Court: Newtech Promoters and Developers Pvt Ltd v State of UP (11 Nov 2021); Godrej Projects Development Ltd v Anil Karlekar, 2025 INSC 143 (3 Feb 2025).
MahaRERA orders of 12 Aug 2022 (Order 35/2022) and 3 Sep 2024, and complaint orders against Raymond Realty (2023), Godrej Properties (29 Oct 2024) and Piramal Estates (13 Jan 2025), as reported by LiveLaw, Housing.com and the Free Press Journal.
State refund deadlines: Maharashtra Rules 2017, Rule 19; Karnataka Rules 2017, Rule 17; Punjab Rules 2017, Rule 17; Tamil Nadu Rules 2017, Rule 19.
CBIC Circular No. 188/20/2022-GST dated 27 December 2022; CGST Act 2017, Section 34.
Maharashtra Stamp Act, Sections 47 and 48.
State Bank of India, MCLR rates effective 15 October 2026 (sbi.co.in).
Change Log
Nov 9, 2026: Page published, using SBI's MCLR from 15 October 2026 (highest, 3-year: 8.95%).
Answer Cancellation Questions Correctly
RERACertified™ Professional (RCP) covers Sections 11 to 19 of the RERA Act, refunds, interest and your state's rules and forms.