How to Calculate Possession Delay Penalty Under RERA
The exact formula for RERA Section 18 delay interest, worked example with 2026 SBI MCLR rate, and step-by-step guide to filing your delay compensation claim.
Interest = Amount Paid × (SBI MCLR + 2%) × Days Delayed / 365
SBI MCLR (6-month, 2026): ~8.75% → effective rate ≈ 10.75% per annum
Confirm eligibility and agreed possession date
Check your sale agreement for the exact possession date clause. RERA Section 18 delay interest applies from the day after the agreed possession date. If the agreement says "Q3 2024" without a specific date, assume the last day of that quarter (September 30, 2024) as the possession deadline.
Note the current SBI MCLR rate
RERA mandates interest at "SBI MCLR + 2%". The SBI 6-month MCLR rate (as of 2026) is approximately 8.75%. This makes the delay penalty rate approximately 10.75% per annum. Check the current rate at sbi.co.in/web/interest-rates/mclr to use the most recent figure for your calculation.
List all payments made and their dates
Gather all payment receipts from the builder. For each payment (booking amount, construction milestones, final payment), note the amount and payment date. The delay penalty applies on each payment from the date it was paid until actual possession — so earlier payments attract more total interest.
Calculate interest for each payment tranche
Formula: Interest = Amount × Rate × (Days from Payment Date to Actual Possession / 365). Example: You paid ₹20 lakh on booking (Day 0) and ₹30 lakh in installments, total ₹50 lakh. If delayed by 730 days (2 years): Simple interest = ₹50 lakh × 10.75% × (730/365) = ₹10.75 lakh total interest. For more precision, calculate each tranche separately using its payment date.
Choose between interest or full refund
You have two options under RERA Section 18: (a) Stay in the project and claim monthly interest until actual possession — file a complaint to preserve your rights even while waiting. (b) Exit the project and claim a full refund of all amounts paid plus interest — file a refund-with-interest complaint and terminate the agreement. Choose based on your confidence in the builder completing the project and the project's long-term value.
File the delay penalty complaint on state RERA portal
Visit your state RERA portal and file Form-M. Attach: sale agreement with possession date, all payment receipts, your interest calculation worksheet, and any builder communications about delay. Pay the filing fee (₹1,000–₹5,000). The adjudicating officer schedules a hearing within 30–60 days and issues a binding order within 60 days of the hearing.
Frequently Asked Questions
Is RERA delay penalty taxable in the hands of the buyer?
Yes. RERA delay interest received from a builder is taxable as "Income from Other Sources" in the year of receipt. It is not treated as capital gains. The full amount is added to your taxable income and taxed at your slab rate. The builder should deduct TDS at 10% under Section 194A before paying, and issue Form 16A. If TDS is not deducted, include the gross amount in your ITR and claim credit for any TDS if deducted.
What if the builder offers a settlement amount lower than my calculated penalty?
You can accept a settlement — it is legally binding if documented in writing. However, before accepting, compare: (a) settlement amount vs your RERA-calculated interest, (b) whether the settlement includes waiver of future claims, (c) whether the settlement deed has a "full and final settlement" clause that bars future disputes. Consider consulting a RERA advocate before signing any settlement if the gap is significant (>₹2 lakh).
Does the delay penalty apply if I failed to make payments on time?
If you defaulted on payment installments, the builder can invoke the agreement's default clause (typically forfeit of 10% of value or cancellation). However, if the builder caused the delay (construction stopped, title issues) and you withheld payment in response, RERA adjudicators typically rule in favor of buyers who can show the payment withholding was a response to builder default — not unprompted non-payment.