How Much Interest Will I Get on a RERA Refund?

When a builder fails to hand over your flat on time and you decide to leave the project, RERA entitles you to your money back with interest. If you decide to stay, you get interest for every month of delay. Either way, the interest is often a very large part of what you're owed, sometimes more than half the original price for a project that's many years late. So it's natural to ask: how much, exactly?

This guide explains how the interest is worked out: the rate, the dates it runs from and to, what amounts it's calculated on, and what can change the figure. It ends with a worked example you can adapt to your own case.

Where the right comes from

Section 18(1) of the Real Estate (Regulation and Development) Act, 2016 says that if the promoter fails to complete or is unable to give possession in accordance with the agreement, or by the date specified in it, the allottee can:

• withdraw from the project, in which case the promoter must return the amount received, with interest at the prescribed rate, including compensation; or
• stay in the project, in which case the promoter must pay interest for every month of delay, till the handing over of possession, at the prescribed rate.

The Supreme Court explained in Newtech Promoters and Developers v. State of UP (2021) that the buyer's right to a refund on delay is unconditional, subject to the agreement's terms, and that the choice between leaving and staying is the buyer's.

Section 2(za) defines "interest" as the rate payable by the promoter or the allottee, as the case may be, and says the rate the promoter pays on default must be equal to the rate the allottee pays on default. That parity is one of the most important changes RERA made.

The prescribed rate

The Act leaves the actual rate to each state's rules. In most states, including Uttar Pradesh and Haryana, the rules fix it as the State Bank of India's highest marginal cost of lending rate (MCLR) plus 2%. Many other states use the same formula. The rules also usually say that if SBI's MCLR is no longer in use, it will be replaced by whatever benchmark lending rate SBI fixes for lending to the general public.

A few points about the rate:

• "Highest MCLR" means the highest of SBI's MCLR rates across its different tenors, which is usually the longest-tenor rate.
• It changes over time as SBI revises its rates. Authorities usually apply the rate prevailing on the date of the order to the whole period, rather than recalculating month by month, though practice varies and you should check how your authority does it.
• It's simple interest, not compound, unless an order says otherwise.
• It's the same rate the builder can charge you for late payments. Clauses charging buyers 18% or 24% while paying them a token amount are, after RERA and the Supreme Court's decision in Pioneer Urban Land and Infrastructure v. Govindan Raghavan (2019), not enforceable against buyers in that one-sided form.

To find the current figure, check SBI's published MCLR rates and add 2%. Your lawyer or the authority's order will state the figure used.

Interest on a refund: how it's calculated

For a refund, interest is usually calculated:

• on each payment you made, separately;
• from the date of that payment;
• until the date the refund is actually paid (orders often say "till realisation").

So a payment you made in 2013 earns interest for much longer than one you made in 2017. That's why a clean table of payment dates matters so much. See our guide on documents for a RERA complaint.

The formula for each payment is simple:

Interest = amount paid × rate × (number of days from payment to refund ÷ 365)

Add up the interest on every payment, add the total amount paid, and you have the refund figure as on a given date. Because interest keeps running until payment, the figure grows every day the builder doesn't pay.

Interest for delay when you stay

If you stay in the project, interest is calculated differently:

• on the total amount you've paid (or the amount paid as of each month, if payments continued after the due date);
• from the due date of possession under your agreement;
• until a valid offer of possession after the occupancy or completion certificate, often plus a short period (two months is common in Haryana's practice), or actual handover if earlier.

Orders usually direct the builder to pay the accumulated interest up to the order within a fixed time, and then monthly interest each month until possession. Often, the interest can be adjusted against your remaining dues at possession, with the balance paid to you.

The key questions are therefore: what is the due date, and when was a valid offer made? See our guide on refund or delay interest.

Working out the due date

For delay interest, and sometimes for deciding whether you're entitled to a refund at all, the due date of possession is crucial. It comes from your agreement. Some agreements give a plain date. Many, especially in Gurugram and Noida, say something like "within 42 months from the date of approval of building plans, or start of construction, whichever is later, with a grace period of 6 months".

Authorities then work out the date from the facts:

• where possession is linked to an event like plan approval, they look at when it actually happened, which is often on the project's RERA page;
• where the event is vague or entirely in the builder's control, they've often counted from the date of the agreement or allotment instead;
• grace periods are allowed or refused depending on their wording, and whether the builder showed a reason for them.

Getting the due date right can add or remove years of interest.

What amounts interest is calculated on

Usually, the amount actually paid to the builder for the unit, including amounts your bank paid on your behalf under a home loan. Some questions come up often:

• GST and other taxes. Taxes collected by the builder and paid to the government aren't really the builder's money. Authorities have taken different views on whether interest is payable on them and whether the builder must refund them. Separate them in your payment table so the point can be dealt with clearly.
• Stamp duty and registration charges, where paid to the builder for onward payment, are similar.
• Charges for specific items like club membership or maintenance deposits are usually refunded with the rest if you withdraw.
• Amounts paid by the builder under a subvention scheme (pre-EMI interest to your bank) aren't your payments to the builder, and may be adjusted in the calculation. See our guide on subvention schemes.
• Compensation already received under the agreement, for instance a few rupees per square foot for delay, is usually adjusted against the delay interest.

What can reduce the figure

Builders commonly argue for less. Points they raise include:

• Force majeure periods. Construction bans during pollution emergencies, COVID-19 lockdowns and court orders. Authorities have sometimes excluded specific, documented periods, but rarely accept general claims. See our guide on force majeure.
• Your own late payments. If you paid instalments late, the builder may claim interest on those delays at the same prescribed rate, to be set off.
• A valid offer of possession, which stops delay interest, if made after the occupancy certificate and without improper demands.
• Grace periods in the agreement.
• A settlement or waiver you signed. Authorities look closely at these; standard-form waivers signed to get possession are often given little weight, following the Supreme Court's view in Arifur Rahman Khan v. DLF Southern Homes (2020).

What can increase it

• Time. Interest keeps running until actual payment, so delay by the builder in paying increases the amount.
• Compensation, claimed separately before the adjudicating officer, for losses beyond interest: rent paid while waiting, extra loan interest, harassment. See compensation claims.
• Refund of improper charges collected earlier, such as super area increases that weren't justified.
• Costs, which authorities sometimes award against a builder that behaved unreasonably.

A worked example: refund

Here's a made-up example. To keep the arithmetic easy, assume the prescribed rate works out to 11% a year, and that the refund is paid on 1 April 2026. Neha paid her builder in four instalments:

• Rs 10,00,000 on 1 April 2014 (12 years before the refund): interest = 10,00,000 × 11% × 12 = Rs 13,20,000
• Rs 15,00,000 on 1 April 2015 (11 years): interest = 15,00,000 × 11% × 11 = Rs 18,15,000
• Rs 15,00,000 on 1 April 2016 (10 years): interest = 15,00,000 × 11% × 10 = Rs 16,50,000
• Rs 10,00,000 on 1 April 2017 (9 years): interest = 10,00,000 × 11% × 9 = Rs 9,90,000

Total paid: Rs 50,00,000. Total interest: Rs 57,75,000. Refund due on 1 April 2026: about Rs 1,07,75,000, more than double what she paid.

If the builder delays payment by another year, a further year's interest on Rs 50 lakh, about Rs 5,50,000 at the same rate, is added.

In real cases, payments are often made on odd dates and in many instalments, the rate may differ, and some amounts may be treated differently. But the principle is exactly this.

A worked example: delay interest

Same assumptions, but now Neha wants the flat. Her due date was 1 April 2018. The builder obtained the occupancy certificate and made a valid offer on 1 April 2025. She had paid Rs 50,00,000 by the due date.

Delay: 7 years. Interest = 50,00,000 × 11% × 7 = about Rs 38,50,000, plus a short period after the offer if the authority allows it. If her final instalment due at possession was Rs 8,00,000, it would usually be adjusted, and the builder would pay her the balance of about Rs 30,50,000.

Notice the difference: the refund route paid interest on each payment from its own date until refund; the delay route paid interest on the amount paid from the due date until the offer. Which is better depends on the facts, including the flat's market value. See our guide on refund or delay interest.

Checking the order

When you receive an order, check:

• the principal amount, against your payment table;
• the rate used, and the date it was taken from;
• the start date for each payment or for delay;
• the end date ("till realisation", or a fixed date);
• any periods excluded; and
• any amounts adjusted.

If there's an obvious arithmetical or clerical mistake, Section 39 lets the authority rectify mistakes apparent from the record within two years, which is quicker than an appeal. If there's a more serious error, an appeal lies to the tribunal within 60 days. See appeals.

Interest in consumer cases is different

If you take the consumer commission route instead of RERA, the rate isn't fixed by rules. The commission decides what's fair on the facts. Over the years, rates in builder cases have varied, and the Supreme Court has discussed what's reasonable in several judgments and cautioned against overlapping awards. Consumer commissions also decide compensation together with the refund. So the figure can be higher or lower than RERA's formula. See our guide on RERA or consumer court.

Your home loan and the refund

If you took a home loan, the bank usually has a charge over your rights in the unit under the tripartite agreement. When the builder refunds, the bank will want its outstanding loan repaid first. Orders often direct payment to the bank of the amount due on the loan, with the balance to you. The interest you paid the bank isn't automatically refunded by the builder as part of RERA interest, but it can be part of a compensation claim before the adjudicating officer, with your loan statements as evidence.

Tax on the interest

Interest received on a refund, and delay interest, may be taxable income in your hands, and builders sometimes deduct tax at source before paying. The treatment depends on the nature of the payment and your circumstances, and the income-tax law has itself been rewritten recently. Ask a chartered accountant before you receive a large payment, so that you know what to expect and can plan.

If the builder pays less than ordered

Builders sometimes pay the principal and argue about the interest, or pay interest only up to the order date. If the order says interest runs "till realisation", it runs until you're actually paid in full. Don't accept a part payment as full settlement without checking the calculation. If the builder doesn't pay the balance, you can seek recovery of the remainder. See our guide on when the builder doesn't pay.

Special situations

You bought from an earlier buyer

If you bought your unit from the original allottee before possession, with the builder's endorsement, you're an allottee too. The Supreme Court held in Laureate Buildwell v. Charanjeet Singh (2021) that a later purchaser isn't automatically barred from claiming for delay. In practice, authorities have sometimes calculated a later purchaser's interest from the date the transfer was endorsed rather than from the original due date, depending on the facts and on what was agreed between seller and buyer. If you're buying resale, agree in writing who keeps any delay claim.

The builder cancelled your booking

If the builder cancelled your allotment, for example for non-payment, the question is whether the cancellation was valid and how much the builder could keep. If it wasn't valid, you may be entitled to restoration or a full refund with interest. If it was valid, you're usually entitled to a refund of what you paid minus a permitted deduction, with interest on the balance from the date it should have been refunded. In Gurugram, the authority's 2018 regulations cap forfeiture at 10% of the consideration. See cancellation and forfeiture.

You withdrew before the due date

Section 18's refund right arises on delay. If you simply changed your mind before the due date, the agreement's cancellation clause governs, and the builder can usually keep a reasonable deduction. Interest isn't normally payable in the same way.

False advertising or defects

Section 12 lets you withdraw with a refund and interest if you paid on the basis of false information in an advertisement or brochure and suffered loss. Section 14(3) entitles you to compensation if defects aren't fixed. Interest and compensation in these situations follow similar principles. See amenities.

The builder is in insolvency

If the builder goes into insolvency, your claim is filed with the resolution professional. Claims are usually calculated up to the date the insolvency began, and what you actually receive depends on the resolution plan, which may pay homebuyers less than their full claim, often in exchange for completing their flats. A RERA order makes the amount of your claim clear, but doesn't give you priority over other homebuyers, following Vishal Chelani v. Debashis Nanda (2023). See our guide on builder insolvency.

Doing the calculation yourself

You don't need special software. A simple spreadsheet works:

1. In column A, list each payment date.
2. In column B, the amount paid on that date.
3. In column C, the end date: the refund date (or today's date for an estimate), or, for delay interest, the offer date.
4. In column D, the start date for interest: the payment date for a refund, or the due date of possession for delay interest (using the later of the payment date and the due date for payments made after the due date).
5. In column E, the number of days between D and C.
6. In column F, the interest: B × rate × E ÷ 365.
7. Total columns B and F.

This gives you a figure close to what an authority would calculate, and helps you check the builder's numbers, the authority's order, or any settlement offer. If the builder offers you a "full and final" settlement, compare it with this figure before accepting.

A note on settlement offers

Builders often offer less than the full interest in exchange for quick payment or a firm possession date. Sometimes that's a good deal: a smaller sum paid now can be worth more than a larger order that takes years to recover. Sometimes it isn't. The only way to judge is to know what the full figure is. Work it out first, then decide. Make sure any settlement is recorded before the authority if a complaint is pending, so that it can be enforced if the builder breaks it. See settlement.

Plots, shops and offices

The same interest rules apply to plot buyers and to buyers of commercial units in registered projects. For a plot, "possession" means a developed plot in the approved layout, with the internal roads and services the agreement promised, so delay interest runs until that is offered. For a shop or office sold with an assured return, the assured return is a separate contractual promise; whether unpaid returns can be claimed before RERA, and how they interact with delay interest, depends on the documents. See plot and commercial buyers.

Frequently asked questions

What interest rate does RERA give on refunds?

The rate in your state's rules. In UP, Haryana and many other states, it's SBI's highest marginal cost of lending rate plus 2%.

From when is interest calculated on a refund?

Usually from the date of each payment until the refund is actually paid.

From when is delay interest calculated if I keep the flat?

From the due date of possession under your agreement until a valid offer of possession after the occupancy certificate, sometimes with a short additional period.

Is the interest simple or compound?

Simple, unless the order says otherwise.

Can the builder charge me a higher rate for late payments?

No. Under Section 2(za), the rate must be the same for both sides.

Is interest payable on GST I paid?

Authorities have taken different views. Show taxes separately in your payment table so the point can be decided clearly.

Does interest stop when the order is passed?

Not if the order says interest runs till realisation. It continues until you're paid.

Is compensation included in the interest?

No. Compensation for losses such as rent and harassment is claimed separately before the adjudicating officer.

A general guide to interest under Section 18 of the Real Estate (Regulation and Development) Act, 2016. Prescribed rates differ between states and change with SBI's lending rates, and authorities differ in how they apply them. The examples use assumed figures. This article isn't legal or tax advice for your specific situation.