Cancelling a Flat Booking: Cancellation Charges, Refund Timelines and What the Builder Can Keep

If you cancel a flat booking without any fault on the builder's part, the builder can usually keep a capped deduction and must refund the rest. In Maharashtra, before a registered agreement, the cap runs from nil within 15 days to 2% of the cost after 60 days. In Haryana, forfeiture cannot exceed 10% of the consideration, with the balance due within 90 days.

Key takeaways

• The stage matters most. Before a registered agreement, a builder cannot take more than 10% of the cost as an advance (section 13 of RERA), and Maharashtra limits deductions on a cancelled booking to 2%.
• After a registered agreement, 10% of the price is the practical ceiling. The Supreme Court treated a 20% forfeiture clause as unfair in Godrej Projects v Anil Karlekar (3 February 2025) and upheld a 10% limit.
• GST paid on instalments comes back either through a builder's credit note or, once that window closes, through a refund claim you file within two years of the cancellation letter.
• Stamp duty on a registered agreement is refundable only through the state's own process and deadline, with a deduction.
• If your loan has been disbursed, the bank is repaid first from the refund, and pre-EMI interest you paid is gone.

What the builder can keep, state by state

This is the buyer's own decision to leave, with no fault on the builder's side. Token money paid before allotment is covered in token money refunds; a builder's default, which earns a full refund with interest, in possession delay refund rights.

Maharashtra: capped slabs before the agreement

MahaRERA's order of 12 August 2022 (Order No. 35/2022) set a table inside its model allotment letter for cancellations by the buyer before the agreement for sale is executed:

• Within 15 days of booking: no deduction.
• Days 16 to 30: up to 1% of the unit's cost.
• Days 31 to 60: up to 1.5%.
• After 60 days: up to 2%.

The balance must be refunded within 45 days of cancellation. A builder may be more generous than the table but not less. MahaRERA has applied the 2% ceiling against developers who tried to keep 10% on a pre-agreement cancellation, and its appellate tribunal has gone further in some cases, holding that nothing at all can be forfeited before a sale agreement.

Haryana: 10% of the consideration

The Haryana Real Estate Regulatory Authority, Gurugram, notified a regulation on 5 December 2018 limiting forfeiture of earnest money to 10% of the consideration where the buyer withdraws or the builder cancels. Any clause providing more is void and not binding on the buyer. The balance must be returned within 90 days of cancellation. More on the Haryana regulator in our HRERA guide.

Uttar Pradesh and Karnataka

The agreement formats used under both states' rules let the promoter forfeit the "booking amount" when the buyer withdraws without fault on the promoter's side, and refund the rest. We could not pin a single state-set percentage for either. In practice the booking amount is limited by section 13 of RERA, which bars a builder from taking more than 10% of the cost before a registered agreement. Read your agreement's definition of "booking amount" carefully and test anything above 10% against the Supreme Court's reasoning below.

The 10% line in the courts

In Godrej Projects Development Ltd v Anil Karlekar (2025 INSC 143), buyers of a Gurgaon flat had signed an agreement that labelled 20% of the basic sale price as earnest money. The Supreme Court upheld the consumer commission's view that forfeiting 20% was unreasonable and that 10% of the basic sale price was the fair measure. It held that a one-sided forfeiture clause imposed on buyers with no bargaining power can be an unfair trade practice.

Two practical points follow. First, a clause allowing more than 10% is vulnerable even if you signed it. Second, 10% is a ceiling, not an entitlement, and a state rule like Maharashtra's pre-agreement table can set it far lower. For which forum to pick, see consumer court vs RERA vs NCLT.

Getting the GST back

Under-construction flats attract GST (5% on ordinary flats, 1% on affordable housing), and it is charged on each instalment. On cancellation there are two routes.

• Credit note from the builder. The builder issues a credit note and refunds the tax with the rest of your money. Under section 34 of the CGST Act, a credit note must be declared no later than 30 November following the end of the financial year of the original supply, so this works best for recent instalments.
• Your own refund claim. Where that window has closed, CBIC Circular 188/20/2022-GST (27 December 2022) lets an unregistered buyer take a temporary registration and file Form GST RFD-01, with the builder's certificate that it has not refunded the tax. The claim must be filed within two years of the date of the builder's cancellation letter.

Stamp duty on a registered agreement

If you registered the agreement for sale, you paid stamp duty on it. Getting it back needs a registered cancellation deed and a refund application to the state's stamp authority within its deadline, and the state keeps a deduction. In Maharashtra, the window for flat buyers whose builder agreement is cancelled has been widened to two years from cancellation, and the Supreme Court held in Harshit Harish Jain v State of Maharashtra (2025 INSC 104) that a refund right that had already accrued could not be cut short by a later amendment. Other states set their own terms; check yours before signing the cancellation deed.

If your home loan has been disbursed

Under the tripartite agreement between you, the builder and your lender, the builder usually refunds the lender first. Standard clauses let the builder deduct its own dues, then pay the bank what you owe it, with only the rest coming to you. Interest you paid during construction, and any interest the builder paid for you under a subvention scheme, is not refunded. Get the lender's written payoff figure before you cancel, and make sure the loan account is closed, not left open with a small balance.

Worked example: cancelling a Rs 1.2 crore flat

Case A, Maharashtra, before any agreement. You paid a 10% booking of Rs 12 lakh and cancel on day 45.

• Maximum deduction: 1.5% of Rs 1.2 crore = Rs 1.8 lakh.
• Refund due within 45 days: Rs 12 lakh minus Rs 1.8 lakh = Rs 10.2 lakh.

Case B, Haryana, after the agreement. You have paid Rs 24 lakh plus 5% GST of Rs 1.2 lakh. Rs 10 lakh of the Rs 24 lakh came from your home loan, on which you paid pre-EMI interest for six months. Assume an 8.5% rate for illustration.

• Maximum forfeiture: 10% of Rs 1.2 crore = Rs 12 lakh.
• Refundable principal: Rs 24 lakh minus Rs 12 lakh = Rs 12 lakh, due within 90 days.
• To the bank first: Rs 10 lakh. To you: Rs 2 lakh.
• GST: Rs 1.2 lakh, by credit note or your own refund claim.
• Pre-EMI interest lost: Rs 10 lakh x 8.5% x 6/12 = Rs 42,500.

Case B costs you about Rs 12.4 lakh (the Rs 12 lakh forfeited plus Rs 42,500 of interest), before any stamp duty deduction. Case A costs Rs 1.8 lakh. That gap is the strongest argument for deciding early.

When cancelling is the wrong move

• If the builder is actually at fault. A delay or an unapproved change turns your case into a builder-default refund with interest. Cancelling "voluntarily" can throw that away.
• If a resale or transfer is allowed. Selling your allotment, even after a transfer fee, may cost far less than a 10% forfeiture. Check the transfer clause in your builder-buyer agreement.
• If the problem is only cash flow. Ask for a revised payment schedule first. Builders often agree when the alternative is a dispute.
• If you sign a settlement without reading it. Cancellation letters sometimes include a waiver of all claims. Don't sign one until the refund is in your account.

Frequently asked questions

How much can a builder deduct if I cancel my flat booking?

It depends on the state and stage. In Maharashtra, before an agreement for sale, deductions range from nil within 15 days to 2% of the cost after 60 days. In Haryana the cap is 10% of the consideration. Elsewhere, the Supreme Court's 2025 Godrej ruling treats 10% of the basic sale price as the reasonable ceiling.

How long does the builder have to refund my money?

Maharashtra's model allotment letter requires the balance within 45 days of cancellation, and the Haryana regulation within 90 days. In other states, the timeline in your registered agreement applies. If the builder misses the deadline, you can complain to the state regulator or a consumer commission and ask for interest on the delayed amount.

Can I get the GST back after cancelling a flat?

Yes. The builder can issue a credit note and refund the tax, provided it declares the note by 30 November after the financial year of the original instalment. If that deadline has passed, you can claim a refund yourself through a temporary GST registration and Form RFD-01, within two years of the builder's cancellation letter.

What happens to my home loan if I cancel?

The builder normally repays your lender first under the tripartite agreement, after deducting its own dues, and only the balance reaches you. Interest you have already paid on disbursed amounts is not refunded. Get the lender's payoff figure in writing before cancelling, and confirm the loan account is fully closed afterwards.

Is a 20% forfeiture clause in my agreement valid?

Probably not in full. In Godrej Projects v Anil Karlekar (2025), the Supreme Court treated a clause forfeiting 20% of the basic sale price as an unfair trade practice and upheld a 10% limit. Haryana's regulation voids any clause above 10% of the consideration. You can challenge the excess before the regulator or a consumer commission.

Thinking about pulling out of a booking? Talk to Realty Hunting first; a transfer or a revised schedule can sometimes cost far less than a cancellation.

Sources

The figures and rules in this post were researched against these sources. Government and regulator sources are listed first. Rates, fees and rules change; check the current figure with the authority before you pay or sign.

1. haryanarera.gov.in (official)
2. gstcouncil.gov.in (official)
3. punekarnews.in
4. indiankanoon.org
5. research.grhari.com
6. ibclaw.in