What to Know Before Cancelling an Apartment Booking

For most buyers, booking a home is the outcome of months sometimes years of planning. Yet, cancellations happen. One of these has to do with the inevitable economic shocks, such as losing a job or paying for an unexpected medical expense, that can disrupt painstakingly drawn budgets. However, personal circumstances change too; relocation orders, family commitments or simply a better offer of property elsewhere can make a buyer walk away.

Then there are the delays. When projects keep missing their targets for handover, it is no surprise that early cut of losses is considered by buyers than to let skies fall yet again. While some are waiting for approvals, others reserve the right to cancel their purchase in case of any legal snags including land-dispute and non-compliance with the Real Estate (Regulation and Development) Act (RERA).

In some cases, the decision is purely strategic: a more attractive property comes along with stronger returns, better amenities, or flexible payment terms.

How can a flat booking be cancelled?

There is no uniform government rulebook for property booking cancellations. The process hinges almost entirely on the builder-buyer agreement a document too many homebuyers skim in haste. This agreement spells out cancellation clauses, refund timelines, penalties, and deductions.

The first step is a formal, written intimation to the developer letter or email stating the decision to cancel. This needs an acknowledgement from the builder. Supporting documents follow: a copy of the booking agreement, proof of identity, payment receipts, and if a refund is due, bank account details.

What cancellation charges apply?

Cancellation is rarely cost-free. On the basis of construction progress and as per terms of respective contract, Developers usually deduct a fixed or flat amount typically around Rs 25,000 to Rs 2 lakhs or up to 10 per cent of the total price.

Refunds typically exclude statutory levies. However, the GST payment on under-construction properties will not be refunded but unregistered buyers have the option of claiming a GST refund within 2 years from the date of getting a cancellation letter. Against this stamp duty can be partially refunded so long as the agreement is not registered, again dependent on the state.Registration fees, usually 1–2 per cent of property value, are not returned.

What does RERA say about cancellations?

While RERA rules vary by state, the broad framework still ensures that builders cannot unnecessarily delay or deduct an amount. If a builder fails to deliver possession, buyer could terminate the agreement and seek refund within 45 days along with an additional 2 per cent interest.

But if the buyer cancels without fault on the developer's end, as per RERA, some reasonable deductions can be made from what was mentioned in the agreement. If there is the violation of any regulation, complaints regarding non-compliance can be filed with the state RERA authority.

What are the tax implications?

The ITAT clarified that the amount received in excess of earnest money at time of cancellation be classified as capital gain and taxed accordingly. There is no provision for reimbursing income tax already paid during the transaction.

What precautions should buyers take?

Every term in the builder-buyer agreement matters. If cancellation clauses are missing, buyers can demand a full refund. Unders the Indian Stamp Act, 1899, application for stamp duty refund claims to be made within six months. None of the payments will be delivered through direct cash, and records are to be kept in safe place.

Disputes, verbal assurances in disputes mean nothing.

But what if the builder refuses a refund?

When both the builder and buyer have signed a home purchase agreement with a clause for cancellation of it, in case buyers back out from buying their flats on completion, builders are expected to refund the installments paid so far by them to book flats. Buyers can prepare an application before consumer forums or approach state RERA if they refuse to make repayments. The complaints can sue for refund with interest and in some cases damages for delay.