RERA 2024–25: The Compliance Renaissance Reshaping Indian Real Estate

A Deep-Dive Advisory for Homebuyers, NRIs, and Tax Professionals

The Real Estate (Regulation and Development) Act, 2016 (RERA) has matured beyond its foundational years. With the reforms introduced in FY 2024–25, RERA now enters a compliance-first, digitally enforced phase, one that redefines how taxpayers, NRIs, and real estate professionals must assess, invest, and advise in property-related matters.

This post delivers a strategic and compliance-oriented analysis of the latest RERA reforms—focused not merely on procedural shifts, but on their impact across tax advisory, investment strategy, and legal enforceability.

I. RERA’s New Architecture: From Regulation to Real-Time Enforcement

1. Dynamic Project Tracking: Transparency Moves to the Frontline

State authorities now mandate monthly digital disclosures:

• Construction milestones

• CA-certified fund utilization reports

• Geotagged photo evidence of on-site work

• Approvals and layout changes

Why It Matters:
Buyers and consultants can now track live progress—and identify red flags—through state RERA dashboards. The veil of builder opacity is lifting, and with it, the margin for delayed discovery of fraud.

Professional Insight: CAs advising on property-linked capital gain exemptions under Section 54 must ensure possession timelines align with disclosure data.

2. Escrow Compliance Strengthened with Regulatory Hooks

What was once a reporting requirement is now an integrated fund-tracing system:

• Banks must directly link builder accounts with RERA portals.

• All withdrawals from escrow must be CA-certified and tagged to specific construction stages.

• Diversion of funds invites automatic penal review.

Why It Matters:
The era of misusing buyer money is closing. Buyers gain transactional security, while professionals must now include escrow vetting as part of standard investment advisory.

II. Technology as Compliance Catalyst

3. Artificial Intelligence for Fraud Surveillance

Select states (e.g., Maharashtra, Karnataka) are rolling out AI engines to detect anomalies:

• Mismatches in declared construction vs satellite imaging

• Irregularities in fund withdrawals

• Delays beyond declared milestones

Why It Matters:
Projects are now monitored algorithmically, reducing dependence on complaints. This ensures early warnings for buyers and advisors scanning investment opportunities.

4. Blockchain in Land Records and Title Verification

Pilot states are integrating blockchain to:

• Maintain tamper-proof digital title chains

• Link sale deeds, mortgages, and RERA filings

• Cross-validate encumbrances

Why It Matters:
Buyers no longer need to rely entirely on builder declarations. CAs and legal advisors can access verified title data—bringing due diligence into the digital domain.

III. Sharpened Compliance & Legal Precision

5. Refined Legal Definitions—Closing the Loopholes

Recent notifications have updated RERA definitions to remove interpretive ambiguity:

• “Promoter” now includes landowners in joint development

• “Carpet Area” excludes external wall thickness

• “Common Areas” must be physically accessible to all unit holders

Why It Matters:
Legal drafting becomes watertight. Contracts must reflect these updated standards. Tax professionals should ensure agreement-to-sale documents align with these definitions, particularly when assisting with exemptions and deductions.

6. Default = Penalty: Delay Now Has a Clock

• Delay beyond 3 months from declared possession triggers automatic penal interest, linked to SBI MCLR + 2%.

• Delay beyond 6 months enables buyers to initiate refund without judicial direction.

Why It Matters:
The law has turned possession into a legal deadline. The burden of enforcement shifts away from the buyer—compliance is now pre-coded into the system.

7. Digital Adjudication Portals and Time-Bound Hearings

Most state tribunals are now:

• Hybrid (physical + digital hearings)

• Time-boxed (targeting 90–120 days for final orders)

• Equipped with e-filing, dashboard tracking, and AI cause-listing

Why It Matters:
Buyers and NRIs can now seek redressal without geographical constraints. Consultants can support Form 12 drafting and case tracking remotely and efficiently.

IV. Compliance-Backed Advisory for Buyers, NRIs & Professionals

Advisory Focus Area	What Must Be Done	Recommended By
RERA Status Check	Verify registration ID, project details, complaints	CA/Advisor
Escrow Fund Flow	Insist on utilization certificate, validate stage-linked payments	Consultant/CA
Agreement Compliance	Must reflect updated RERA definitions, timelines, clauses	Legal Advisor
Tax Impact Review	Verify GST compliance, OC timelines, Sec 80C/54 impact	Tax Consultant
Delay Enforcement	Initiate refund process beyond 6-month delay via Form 12	CA + Legal Team

V. Legal & Tax Risk in Non-Compliant Projects

If a project is not RERA-registered or enters NCLT proceedings, the buyer:

• Cannot enforce refund/interest under RERA

• Loses capital gains exemption eligibility under Section 54

• Risks denial of 80C/24(b) deductions due to project non-completion

• May be treated as an unsecured financial creditor in IBC proceedings

Strategic Note:
Once insolvency is admitted by NCLT, homebuyers file claims using Form C or Form F, and Form 12 under RERA loses precedence. Advisors must now monitor not just tax risk—but systemic resolution risk.

Conclusion: A New Compliance Era Demands a New Advisory Standard

RERA in 2024–25 is not a static law—it is now a dynamic, digital, and enforceable compliance system. For taxpayers, NRIs, and investors, property buying is no longer about location alone—it is a legal investment decision with tax, fund-flow, and litigation consequences.

For professionals—especially CAs, lawyers, and wealth advisors—the role is no longer limited to tax-saving. It must extend to:

• Legal document review

• RERA registration verification

• Escrow fund monitoring

• GST and ITR linkage

• Litigation tracking

The advisory must precede the investment—not follow the regret. 

When Compliance Fails — The Forgotten Duty of Due Diligence in Real Estate Investment

A Strategic Framework for Taxpayers, NRIs, and Professionals Navigating RERA, NCLT, and Risk Exposure

Introduction

The Real Estate (Regulation and Development) Act, 2016 (RERA) was enacted to bring transparency, legal enforceability, and buyer protection in a previously unregulated sector. But RERA is not a guarantee. It is a regulatory umbrella available only when projects and stakeholders comply with it.

For individual taxpayers, salaried professionals, and NRIs investing in Indian real estate, the assumption that “someone else is checking compliance” can lead to irreversible damage. Across jurisdictions, failed or non-RERA-registered projects are not only defaulting on timelines—they are collapsing entirely, leaving buyers caught in insolvency proceedings before the National Company Law Tribunal (NCLT).

When that happens, tax-saving expectations, possession timelines, refund hopes, and even legal remedies under RERA fall apart.

This post identifies the precise compliance touchpoints that must be verified before any property booking and outlines how failed projects shift from RERA redressal to NCLT liquidation, and what that means for the taxpayer.

The Missed Compliance That Becomes a Litigation Trap

When buyers invest in a project not registered under RERA, they are left without:

• The ability to enforce possession timelines

• The right to claim interest or refund under Section 18 of RERA

• Any structured access to escrow disclosures, layout plans, or statutory approvals

The legal vacuum left by non-registration leads to a migration of disputes from RERA Tribunals to civil courts, and increasingly, to the NCLT under the Insolvency and Bankruptcy Code (IBC), 2016.

Transition from RERA to NCLT: What Happens When a Builder Fails

A growing number of stalled or fraudulent real estate projects are being dragged to the NCLT by aggrieved homebuyers, banks, or financial creditors. This shift bypasses RERA entirely.

Key Legal Developments:

• Homebuyers are recognised as financial creditors under Section 5(8)(f) of the IBC (Supreme Court: Pioneer Urban Land and Infrastructure Ltd. v. Union of India).

• A group of 100 or more allottees, or 10% of total allottees (whichever is less), can file for insolvency against a defaulting builder using Form G.

• The builder can be taken into corporate insolvency resolution process (CIRP) under Section 7 of the IBC.

• Buyers must file Form CA with supporting documents to participate in the CIRP and submit claims under Form C or Form F depending on classification.

In several cases, after the admission of insolvency, the builder’s company is liquidated, or the project is transferred to another developer under a resolution plan. But in both outcomes, homebuyers rarely recover the full investment, and timelines are extended by years.

Legal Forms and Procedures: When Real Estate Projects Collapse

Form	Purpose	Applicable To
Form G	Public announcement of insolvency	Filed by IRP post-admission
Form C	Submission of claims by financial creditors (homebuyers)	Buyers individually
Form F	Consolidated claim submission by authorized representative	When 10% buyers act jointly
Form CA	Expression of interest in the CIRP process	Prospective resolution applicants
Form 12 (under RERA)	Complaint against promoter	RERA Tribunal filing

While Form 12 remains the route under RERA to seek possession, refund, or penalty, the minute insolvency is admitted by NCLT, the RERA complaint becomes subordinate to the IBC process. This makes proactive due diligence before booking the only safeguard for the taxpayer.

Consequences of NCLT Proceedings on Taxpayers and Buyers

Once a project enters CIRP or liquidation, the following complications arise for taxpayers:

• Section 80C and Section 24(b) benefits become uncertain due to indefinite possession timelines.

• Section 54/54F exemptions (for capital gains rollover) may be denied for non-completion.

• GST paid may be unrecoverable if the builder becomes insolvent and no input credit or output reconciliation occurs.

• Any payment made outside escrow is untraceable and unsecured.

Strategic Compliance Points Buyers Must Validate Before Investing

1. RERA Registration Verification

• Check project registration number on State RERA portal

• Download layout plans, approvals, and quarterly progress updates

2. Escrow Fund Compliance

• Verify that 70% of project collections are deposited in a project-specific escrow

• Ask for escrow account number, banker confirmation, and fund utilization certifications

3. Title and Approval Chain

• Demand:

  • Clear title certificate

  • Encumbrance certificate

  • Building plan sanction

  • Commencement certificate

  • Environment and fire NOCs (if applicable)

4. Agreement for Sale

• Insist on registered, RERA-prescribed agreement before paying more than 10% of cost

• Verify clause for possession date, penalty, refund, carpet area, and dispute resolution

5. GST & Tax Eligibility

• Builder must be GST-registered

• Tax invoices must include valid GSTIN

• Ensure eligibility for deduction under Section 80C and 24(b)

• Plan Section 54/54F exemptions only if OC is likely within stipulated timeline

Summary Table: RERA vs NCLT Path

Feature	RERA-Compliant Project	Non-Compliant Project (leading to NCLT)
Possession enforcement	Yes (via Form 12 to RERA)	No (subject to CIRP outcome)
Refund with interest	Yes under Section 18	Unlikely post liquidation
Escrow protection	Mandatory	Rarely followed
Tax benefit validity	High (if completed)	Questionable
Legal clarity	High	Complicated & delayed
Buyer legal status	Protected consumer	Financial creditor under IBC

Closing Note

For a taxpayer, investing in a non-compliant or unregistered project is not merely a financial mistake—it is a complete surrender of legal protection. The promise of future possession or tax deduction collapses the moment the project shifts from RERA jurisdiction to NCLT proceedings.

Compliance is not post-investment paperwork—it is the firewall before commitment.

Real estate due diligence must now be seen not just as a legal formality, but as a critical tax, financial, and regulatory strategy. Tax professionals and advisors should treat every property investment as a multi-layered risk assessment, not just an asset transaction.

GST on Property Cancellations: A Buyer’s Guide to Refunds & Legal Rights

When buying an under-construction property, buyers pay Goods and Services Tax (GST) along with the booking amount. However, if the buyer cancels the booking, getting a refund of the GST can be challenging, as many builders refuse to return it.

A recent ruling by the Madras High Court in Emerald Haven Realty Developers (Paraniputhur) Pvt. Ltd. vs. S.V. Ramesh (2023) clarified that GST refunds depend on the timing of cancellation. Similarly, the Maharashtra AAR ruling in Bai Mamubai Trust (2021) provided guidance on when buyers are entitled to a refund.

Key Takeaways for Buyers:

✔ GST is applicable only on under-construction properties, not on ready-to-move properties.
✔ Cancellation timing determines whether GST can be refunded.
✔ Buyers should ensure their agreement has a GST refund clause.
✔ Act quickly before the builder files GST returns to improve refund chances.

GST Applicability on Property Bookings

Type of Property	GST Applicability	Rate of GST
Under-Construction Property	GST applicable	5% (without ITC) / 1% (affordable housing)
Ready-to-Move Property (with OC)	No GST applicable	NIL
Land Sale	No GST applicable	NIL

If a buyer cancels the booking, the refund of GST depends on whether the builder has already filed GST returns.

GST Refund on Property Cancellations: What Buyers Must Know

Cancellation Timing	GST Refund Policy	What Buyer Should Do
Before GST return is filed	Builder can adjust GST and issue a full refund	Notify builder early and demand a refund
After GST return is filed	Refund must be applied under Section 54 of CGST Act	Ask the builder for a credit note or apply for refund
After project completion (OC issued)	No GST refund applicable	Buyer cannot claim GST back
Cancellation charges applied	18% GST applicable on cancellation fees	Ensure builder provides a proper tax invoice

How Buyers Can Secure a GST Refund

✅ Check the Sale Agreement for a GST Refund Clause

• Before signing, ensure the agreement states GST will be refunded if cancellation occurs.
• The builder should be required to issue a credit note if GST has already been deposited.

✅ Act Before the Builder Files GSTR-3B

• If a buyer cancels before the GST return is filed, the builder must refund the GST.
• If cancellation happens later, the buyer must apply for a refund from the government.

✅ Request a Credit Note from the Builder

• If cancellation occurs after GST filing, a credit note helps in adjusting GST liability.
• Builders can issue credit notes until 30th September of the following financial year.

✅ Apply for a GST Refund Under Section 54

• If the builder refuses to refund GST, the buyer can apply for a refund through the GST portal.
• Required documents: Agreement copy, cancellation letter, GST invoice, and proof of payment.

Steps to Take if the Builder Denies a GST Refund

✔ Step 1: Send a written request to the builder citing GST laws and court rulings.
✔ Step 2: Request a credit note if GST has already been deposited.
✔ Step 3: File a complaint with GST authorities under Section 54.
✔ Step 4: Approach RERA or Consumer Court for unfair trade practices.

Conclusion

🔹 Buyers must carefully review their agreement before booking a property.
🔹 If cancellation is likely, act quickly before GST returns are filed.
🔹 Demand a credit note if GST is already paid.
🔹 Use legal channels like GST authorities and RERA if the builder refuses to refund GST.

Understanding GST laws can help buyers protect their money and avoid unnecessary losses in property transactions. Always ensure proper documentation and take action at the right time to secure your rights!