Last reviewed: 25 September 2026. MahaRERA complaints over delayed possession are one of the steadiest streams of real-estate litigation in Maharashtra, and Section 18 of the RERA Act, 2016 is the provision that decides most of them. Buyers usually know they have "some right" to interest but not the mechanics — the rate, the forum, the difference between interest and compensation, or when a builder's force-majeure letter is actually backed by a MahaRERA order. Promoters, on the other hand, often under-provision for this liability because they treat every delay complaint as negotiable. Neither side benefits from guessing. This piece sets out the Maharashtra position end to end: what Section 18 gives you, how the interest rate is fixed, how to choose between exiting and staying, how a claim actually moves through MahaRERA, and how the interest you receive is taxed.
Section 18 in plain terms — what the law actually gives you
Section 18(1) applies when a promoter "fails to complete or is unable to give possession of an apartment, plot or building" by the date stated in the agreement for sale (or as extended under Section 6), or discontinues the business as a developer, or the project's registration lapses/is revoked. The relief on offer depends on what the allottee chooses to do, not on what the promoter offers:
| Buyer's choice | Relief | Who decides it |
|---|---|---|
| Withdraw from the project | Full refund of amount paid + interest at the prescribed rate + compensation | MahaRERA Regulatory Authority (Section 18(1)) |
| Continue with the project | Interest for every month of delay from promised date till actual handover | MahaRERA Regulatory Authority (second proviso, 18(1)) |
| Defective title to the land | Compensation for loss caused by defective title, whenever discovered | Adjudicating Officer (Section 18(2)/71) |
| Misleading advert (S.12) / structural defect (S.14) / other breach (S.19) | Compensation assessed on actual loss | Adjudicating Officer (Section 18(3)/71) |
How MahaRERA calculates the interest rate
The Act leaves the rate to be "prescribed" by rules, and Maharashtra has done that in Rule 18(1) of the Maharashtra Real Estate (Regulation and Development) Rules, 2017: interest payable by the promoter or the allottee, as the case may be, is the State Bank of India's highest Marginal Cost of Lending Rate (MCLR) plus 2%. If SBI ever stops publishing MCLR, the rule falls back to whatever benchmark lending rate SBI specifies in its place. Two points get missed in practice:
| Point | Practical effect |
|---|---|
| The rate is not fixed in the Act | It moves whenever SBI revises its MCLR — always quote SBI's current published one-year MCLR on the date of computation, not a number from an old article or a builder's letter. |
| Mutuality (second proviso to Rule 18) | The same SBI-MCLR+2% rate applies to interest the allottee owes the promoter for delayed installments — a clause charging the buyer 18-24% while the builder pays statutory rate is inconsistent with the rule and challengeable. |
| Interest runs from | The date each installment/amount was paid by the allottee, till the date it is refunded, or from the agreed possession date till actual handover for the continue-and-claim route. |
Refund-and-exit vs continue-and-claim — which to choose
| Factor | Refund + interest (exit) | Monthly interest (stay) |
|---|---|---|
| Best when | Project is badly stalled, funding is doubtful, or you've found a better/faster alternative | Project is genuinely progressing, just late, and you still want that specific flat |
| What you get | Principal back + interest for the entire holding period + compensation | Interest for the delay period only; you keep the allotment and eventually get possession |
| Risk | Recovery depends on the promoter's solvency/RERA enforcement machinery — refund orders can take time to actually realise | You remain exposed to further delay; you must keep filing/pressing if the builder stops paying interest voluntarily |
| Typical use | Investors, buyers who've lost confidence in the project | End-users who need the specific unit and locality |
Force majeure and extensions — when a "delay" isn't legally one
Section 6 allows a promoter to apply to MahaRERA for extension of the registered project completion date on account of force majeure — a natural calamity or circumstance beyond the promoter's control affecting the regular development of the project. Two things buyers should always check before accepting a builder's delay explanation: first, that MahaRERA has actually granted an extension order for that project (extensions are typically for up to one year at a time and are visible on the MahaRERA project page); second, that the extension covers the specific period being claimed as force majeure. General economic slowdown, labour shortage or the promoter's own cash-flow problems are not force majeure grounds and do not, by themselves, extend the buyer's Section 18 entitlement. Separately, MahaRERA Order 66/2026 pushed eligible projects' registered completion dates out by four months on the regulator's register without changing the possession date in individual sale agreements.
Worked example 1: buyer exits and claims a refund
A Thane buyer paid ₹42 lakh over three years toward a ₹70 lakh flat with a promised possession date of March 2024, extended once by MahaRERA to March 2025 for a documented force-majeure reason. By August 2026 the project is still not ready and there is no further approved extension. The buyer withdraws under Section 18(1):
- Refund of ₹42 lakh already paid.
- Interest on each tranche at SBI's highest MCLR + 2%, running from the date that tranche was paid until the date of actual refund — computed tranche-wise, not on the total in one shot, since each payment has a different start date.
- A separate claim for compensation (legal costs, alternate rent paid while waiting) can be added, but that portion goes to the Adjudicating Officer if contested, not decided automatically with the refund order.
In practice, the tranche-wise interest calculation is where most disputed claims go wrong — a lump-sum interest figure on the total paid, ignoring payment dates, routinely gets revised downward (or upward) on scrutiny.
Worked example 2: buyer stays and claims monthly interest
A buyer who paid ₹55 lakh against a promised March 2025 possession date wants to keep the flat — the project is visibly progressing, just behind schedule. Under the second proviso to Section 18(1), the buyer files for interest on ₹55 lakh at SBI-MCLR+2%, running month-on-month from April 2025 until actual possession, payable by the promoter (commonly ordered as a monthly or periodic payment rather than a single lump sum at the end). The buyer is not required to prove any loss — the interest is a statutory entitlement for the delay itself, unlike a Section 18(3) compensation claim.
Filing a Section 18 claim with MahaRERA — process and timeline
| Step | What happens |
|---|---|
| 1. Complaint | Create an account on the MahaRERA application portal (reached from maharera.maharashtra.gov.in) and file Form A under Section 31, with the project's MahaRERA registration number, agreement for sale, payment proofs and the promised/extended possession date. The portal also offers the MahaRERA Conciliation Forum as an option before a formal complaint |
| 2. Forum | Refund/interest under 18(1) → Regulatory Authority. Compensation under 18(2)/18(3)/12/14/19 → Adjudicating Officer (Section 71) — file the right form; a compensation-only claim filed before the Authority is liable to be redirected, losing time |
| 3. Hearing | Notice to the promoter, written reply, hearing before the Authority/AO; interim orders are possible in clear-cut delay cases |
| 4. Order | Contested matters commonly take a few months for a first-instance order; undisputed delay-interest claims can move faster |
| 5. Appeal | Either side may appeal to the Maharashtra Real Estate Appellate Tribunal (MahaREAT) under Section 44, generally within 60 days of the order; a promoter's appeal requires a statutory pre-deposit of the amount ordered before it will be entertained |
Tax treatment of RERA interest
Winning the order is only half the exercise; the interest then has to be reported correctly. For amounts received from 1 April 2026 (tax year 2026-27 onward) the Income-tax Act, 2025 applies. Interest received for an earlier year (FY 2025-26 or before) stays under the Income-tax Act, 1961, so the old section numbers are shown in brackets.
| Receipt | Usual tax treatment | TDS by the promoter |
|---|---|---|
| Interest on a refund (exit route) | Income from other sources, section 92 (old 56), taxed in the year received | Section 393(1) Table S.No. 5(ii)/(iii) (old 194A) when the builder is required to deduct |
| Monthly delay interest (stay route) | Income from other sources, section 92 (old 56), in each year received | Same as above |
| Refund of principal | Return of your own money, not income | None |
| Compensation assessed by the Adjudicating Officer | Depends on what it compensates (for example, costs incurred or loss of a capital asset); decided on the facts of the order | Check the order and the builder's TDS certificate |
Keep the order, the builder's interest computation and the TDS certificate together. Match the interest and TDS against your AIS/Form 26AS before filing, because a lump-sum receipt covering several years of delay is taxed in the year received and can push you into a higher slab or bring advance-tax obligations.
NRI homebuyers. A large share of MahaRERA complainants are NRIs. A builder paying interest to a non-resident deducts tax under section 393(2) (old 195) rather than the resident rule, usually at a higher rate unless a lower-deduction certificate or treaty rate applies. The refund and interest should be credited to your NRO account where the original payments came from NRO or rupee funds; repatriating it abroad then follows FEMA limits and needs Form 15CA and, where applicable, a CA certificate in Form 15CB. Our CA services for NRIs cover the return, the TDS credit and the remittance paperwork in one place.
Common mistakes we see
- Computing interest on the total amount paid from a single date, instead of tranche-wise from each actual payment date.
- Accepting a builder's "force majeure" or "unavoidable delay" letter at face value without checking for a corresponding MahaRERA extension order on the project page.
- Filing a compensation claim (structural defects, misleading brochure promises) before the Regulatory Authority instead of the Adjudicating Officer, and losing months to a forum objection.
- Signing a possession letter or taking possession without reserving the right to claim accrued interest — always claim before or alongside taking possession, in writing.
- Promoters quoting a contractual interest rate to buyers for delayed installments that is higher than the statutory SBI-MCLR+2% mutuality rate — this is inconsistent with Rule 18 and gets struck down on challenge.
- Leaving RERA interest out of the income-tax return because it was "compensation", then receiving a mismatch notice once the builder's TDS return reaches AIS.
Frequently asked questions
What does Section 18 of RERA actually give a homebuyer if possession is delayed?
Two options, buyer's choice. If you don't want the flat any more, Section 18(1) lets you exit and get a full refund of the amount paid, with interest, plus compensation. If you still want the flat, the second proviso to Section 18(1) entitles you to interest for every month of delay from the promised date until you actually get possession — you don't have to exit to get paid.
Can I claim both a refund and interest under RERA?
Yes — refund and interest are not alternatives, they go together under Section 18(1): "return the amount received by him in respect of that apartment... with interest at such rate as may be prescribed... including compensation." What you cannot do is claim a refund and keep the flat, or claim the monthly-interest route and later demand a refund of the same period without withdrawing from the project.
What interest rate does MahaRERA use for delayed possession?
Rule 18(1) of the Maharashtra RERA Rules, 2017 fixes it at the State Bank of India's highest Marginal Cost of Lending Rate (MCLR) plus 2%, reset as SBI revises its MCLR. It is not a flat figure written into the Act — always pull SBI's current published one-year MCLR before computing a claim, since it moves with RBI policy.
Do I have to pay the same interest rate if I delay my own installment payments?
Yes. Rule 18 applies the identical SBI-MCLR+2% rate both ways — promoter to allottee for delayed possession, and allottee to promoter for delayed payment under the agreement for sale. MahaRERA and the courts have read this mutuality strictly, so a builder cannot contractually charge you 18% while offering the statutory rate on its own default.
Is a builder's force majeure extension automatic?
No. Section 6 lets a promoter apply to MahaRERA for an extension of the registered completion date for reasons beyond its control (natural calamity, for instance), but it must be applied for and the Authority must record its own satisfaction and grant it — usually up to one year at a time. A builder citing "force majeure" in a possession-delay letter without a corresponding MahaRERA-approved extension order is not automatically protected; ask for the extension order before accepting the excuse.
How do I file a Section 18 complaint with MahaRERA, and how long does it take?
Create an account on the MahaRERA application portal (reached from maharera.maharashtra.gov.in) and file the complaint in Form A under Section 31, citing the project's registration number, your agreement for sale, payment receipts and the promised/extended possession date. Refund-with-interest claims under Section 18(1) go before the Regulatory Authority; compensation claims tied to Section 12/14/19 violations go before the Adjudicating Officer under Section 71 — this split follows the Supreme Court's ruling in Newtech Promoters (2021). Contested matters commonly take a few months to a first order; a further appeal to MahaREAT can add several more.
What is the difference between "interest" under Section 18(1) and "compensation" under Section 18(3)?
Interest under 18(1) is a formula-driven, near-automatic entitlement for the delay itself — no need to prove actual loss. Compensation under Section 18(3) (and for Section 12 misleading-advertisement or Section 14 structural-defect claims) requires the Adjudicating Officer to assess the real loss suffered, considering the adjudging factors under Section 72 — it takes longer and needs evidence of harm, not just a missed date.
Is the interest I receive from the builder under a RERA order taxable?
Generally yes. Interest received on a refund or for delayed possession is taxed as income from other sources in the year it is received — section 92 of the Income-tax Act, 2025 (old section 56) for receipts from 1 April 2026. A builder paying such interest may have to deduct TDS under section 393(1) Table S.No. 5(ii)/(iii) (old 194A), so check Form 26AS/AIS and claim the credit in your return. Compensation for loss is assessed on its own facts, so take advice before treating it as tax-free.
We draft and file MahaRERA complaints and replies for allottees and promoters, compute tranche-wise interest correctly, handle the Regulatory Authority/Adjudicating Officer split so the right claim goes to the right forum the first time, and report the interest correctly in your return.
RERA Registration & ComplianceIncome Tax ServicesTalk to usThis article explains the general legal position under the RERA Act, 2016 and the Maharashtra RERA Rules, 2017 as commonly applied by MahaRERA; it is not advice on your specific project or complaint, and MahaRERA/MahaREAT orders can turn on project-specific facts. For a project-specific view, see our RERA complaint and notice response guide, check whether your project needed RERA registration in the first place, read the MahaRERA booking cancellation and refund rules, and review the MahaRERA project registration process the promoter was required to follow.