Relief for Homebuyers as Karnataka RERA Cracks Down on Pre-Handover Charges

Regulator directs builder to withdraw GST on domestic water bills, correct payment statements and justify additional charges

By The Realty Times | Real Estate News Services

BENGALURU: In a significant relief for homebuyers, the Karnataka Real Estate Regulatory Authority (K-RERA) has taken a firm stand against developers imposing project-related expenses on buyers before the formal handover of apartments. The ruling reinforces builders’ responsibility for applicable project expenses until possession is officially handed over to buyers.

In a case involving an apartment in Bengaluru’s Kengeri area, the authority directed a developer to remove Goods and Services Tax (GST) charged on domestic water bills issued by the Bangalore Water Supply and Sewerage Board (BWSSB) and correct the relevant payment statements.

₹1.18 Lakh in Additional Charges Disputed

The homebuyer challenged additional charges linked to water bills and GST, alleging that ₹1,18,487 had been collected over and above the water-related dues specified in the sale agreement.

The developer argued that the charges were statutory expenses and disputed the buyer’s interpretation of the agreement. K-RERA directed the builder to justify the additional GST collection and provide a refund wherever applicable.

Builders Responsible for Expenses Until Handover

The authority reiterated that, under Sections 11(3) and 11(4) of the Real Estate (Regulation and Development) Act, 2016, promoters remain responsible for applicable project expenses, including municipal taxes, water and electricity charges, and maintenance costs payable to authorities, until the property is handed over to buyers.

The order also highlights that GST should not be imposed on water supplied by a public authority for domestic consumption in the circumstances covered by the ruling.

Delay Interest Also Under Scrutiny

The buyer had challenged the developer’s demand for delay interest covering more than 600 days, stating that payments were made whenever demanded. K-RERA observed that the builder had failed to provide adequate documentary evidence proving that the buyer had been notified of outstanding dues or had delayed payment.

The case underscores the importance of maintaining clear payment records and providing proper notices before imposing interest or additional charges.

What This Means for Homebuyers

The ruling sends a strong message to developers against transferring project-related liabilities to homebuyers without a valid legal basis. Buyers should carefully examine payment statements, retain receipts and written communications, and seek clarification on charges that are not clearly supported by their agreements.