Homebuyers may find themselves in situations where they need to cancel a flat booking due to various reasons—financial constraints, change of plans, or concerns about the project. If you are considering cancelling your flat booking, here’s what you need to know about refund policies, legal aspects, and financial implications.
1. Can You Get a Full Refund if the Agreement is Not Registered?
If you have paid a booking amount but haven’t signed a registered agreement, the builder is legally required to refund the entire amount.
For example, if a buyer pays ₹3 lakh as a booking amount for a property worth ₹1 crore but later decides to cancel, the builder must return the full amount.
💡 Key Point: A builder-buyer agreement is typically created after you pay at least 10% of the property value. Once this agreement is signed and registered, the cancellation process becomes more expensive.
2. What to Do If the Builder Refuses to Refund Your Booking Amount?
If the builder denies a refund, you have legal options:
- Approach the Real Estate Regulatory Authority (RERA) of your state to file a complaint.
- File a case with the Consumer Forum for justice under consumer protection laws.
It is always advisable to document all payments and request official receipts from the builder to strengthen your claim.
3. What Happens If the Agreement is Already Registered?
Once the builder-buyer agreement is registered, the builder has the legal right to forfeit the entire booking amount. The agreement typically includes clauses that favor the builder in case of cancellation.
Additional Costs You Might Incur
Apart from losing the booking amount, buyers may also face losses such as:
✔ Stamp duty & registration charges
✔ GST & other applicable taxes
4. Legal Aspects: Buyer Rights Under RERA
Under the Real Estate (Regulation & Development) Act, 2016 (RERA):
- A buyer is not legally considered an “allottee” until the builder-buyer agreement is registered.
- Builders cannot deduct any amount from your advance payment unless an agreement is in place.
- Buyers should always demand written receipts and make payments via bank transfers or cheques for proof.
5. Tax Implications of Cancelling a Flat Booking
If a buyer receives a refund with an excess amount, the additional money will be considered capital gains under income tax laws.
📌 Income Tax Appellate Tribunal (ITAT) Ruling:
- The extra amount will not qualify as long-term capital gains unless specific tax conditions are met.
- Buyers should consult a tax expert before claiming exemptions.
6. Important Tips to Avoid Financial Loss in Case of Cancellation
✅ Review the builder-buyer agreement carefully before signing.
✅ Make payments digitally to maintain transaction records.
✅ Demand a receipt for any amount paid as a booking advance.
✅ Consult a legal expert if you are unsure about cancellation policies.
Final Thoughts
Cancelling a flat booking can be a costly affair, especially if the agreement is registered. Understanding your rights under RERA, legal options, and tax implications can help you make an informed decision while minimizing financial losses.
