How RERA Penalties Are Sized: The Estimated Project Cost Ladder for Bengaluru Buyers
MoHUA's RERA FAQ explains that penalties on promoters are measured against the estimated cost of the real estate project, defined to include land, taxes, cess and development charges. This guide lays out the 5 and 10 per cent ladder under Sections 59 to 64, the agent penalties, and what a Bengaluru buyer can and cannot expect from them.
Ten per cent of the estimated cost of the whole project. That is the ceiling on the penalty a promoter faces under Section 59 of the RERA Act for failing to register a project that must be registered, according to the Ministry of Housing and Urban Affairs' FAQ on the Act. For a large Bengaluru project, that base is not the price of one flat but the total cost of developing the entire scheme, including the land.
Buyers often hear that RERA has "big penalties". This guide explains how those penalties are measured, what the different percentages apply to, and how they relate to a buyer's own remedies. It uses MoHUA's FAQ and does not comment on any case or builder.
The short answer. MoHUA's FAQ says RERA penalties on promoters are calculated on the "estimated cost of the real estate project", which Section 2(v) defines as the total cost of developing the project, including land cost, taxes, cess, development and other charges. Not registering can cost up to 10 per cent, with an additional 10 per cent or up to three years' imprisonment for continued default. Breaches of Section 4 or other provisions can cost up to 5 per cent, and ignoring the Authority's orders up to 5 per cent cumulatively. Ignoring the Appellate Tribunal can cost up to 10 per cent or imprisonment. The trade-off: penalties pressure the promoter to comply, but they are separate from the refund, interest or compensation a buyer must claim through their own complaint.
What is the "estimated cost of the real estate project"?
The base on which promoter penalties are measured. The FAQ says Section 2(v) defines it as "the total cost involved in developing the real estate project and includes the land cost, taxes, cess, development and other charges."
It explains why the definition matters: "The determination of the estimated cost of the real estate project is necessary due to Chapter VIII of the Act, which provides that penalties would be imposed on the promoter, for violations prescribed under the Act, based on the estimated cost of the real estate project."
Because land is included, the base can be large. A simple, hypothetical illustration shows the scale. If a project's estimated cost were Rs 200 crore, a penalty of up to 5 per cent would mean up to Rs 10 crore, and up to 10 per cent would mean up to Rs 20 crore. The actual amount in any case is decided by the Authority, and the percentages are ceilings, not fixed charges.
What penalties apply to promoters?
A ladder of 5 and 10 per cent ceilings, with imprisonment at the top. The FAQ sets them out section by section.
| Section | Violation, as MoHUA's FAQ describes it | Maximum penalty |
|---|---|---|
| Section 59 | Failing to register a project that must be registered | Up to 10% of estimated project cost; continued default: additional fine of 10%, imprisonment up to 3 years, or both |
| Section 60 | Default on matters covered under Section 4, the registration application | Up to 5% of estimated project cost |
| Section 61 | Default on any other provision of the Act, rules or regulations | Up to 5% of estimated project cost |
| Section 63 | Failing to comply with orders of the Authority | Penalty for every day of default, cumulatively up to 5% of estimated project cost |
| Section 64 | Failing to comply with orders of the Appellate Tribunal | Daily penalty cumulatively up to 10% of estimated project cost, imprisonment up to 3 years, or both |
The structure rewards early compliance. Registration failures and ignoring the Appellate Tribunal sit at the top, with the possibility of imprisonment. Defaults in the application, other breaches and ignoring the Authority's orders carry a 5 per cent ceiling.
What about real estate agents?
Agents face penalties measured on the flat or plot they helped sell, not the whole project. The FAQ says that under Section 62, an agent who fails to register when required "shall be liable to a penalty upto of rupees ten thousand per day of default, which may cumulative extend upto five percent of the cost of the plot / apartment, for which the sale has been facilitated by him."
Under Section 65, it says an agent who fails to comply with the Authority's orders faces a daily penalty that may cumulatively extend up to five per cent of the cost of the plot or apartment whose sale was facilitated.
For a Bengaluru buyer dealing with a broker or a listing service, this is a reason to ask for the agent's RERA registration number. PropNewz explained who counts as an agent in our guide to RERA rules for brokers, listing sites and property expos.
Does a penalty on the builder help the buyer?
Indirectly. A penalty is imposed by the regulator for a violation of the Act, and the FAQ explains where the money goes: under Section 76, penalties recovered are deposited in the Consolidated Fund of India for an authority set up by the Centre, and in the State Account for an authority set up by a state government. Under Section 75, the FAQ adds, grants, fees and interest go to the Real Estate Regulatory Fund, which pays for the Authority's and Tribunal's salaries and expenses. So a penalty is not, in itself, a payment to the buyer. A buyer's own remedies come from other provisions. The FAQ says, for example, that under Section 18, if the promoter fails to hand over possession, the allottee can withdraw with a full refund plus interest and compensation, or stay in the project and receive interest for every month of delay.
That distinction matters when deciding what to file. A complaint that asks only for a penalty against the builder may not, by itself, secure a refund or delay interest for you. A complaint framed around your own rights, under the relevant sections, asks for relief for you. The FAQ also says the Adjudicating Officer, in deciding compensation disputes under Sections 12, 14, 18 and 19, considers factors such as the amount of disproportionate gain or unfair advantage, the amount of loss and the repetitive nature of the default.
Penalties still matter to buyers. The prospect of a 5 or 10 per cent penalty on the whole project's cost gives a promoter a strong reason to register, disclose accurately and follow orders, which protects everyone in the project.
Who decides the penalty amount?
The Authority, within the ceiling. The FAQ says Sections 35 to 38 give the Regulatory Authority powers to call for information, conduct investigations, issue interim orders or directions, and impose penalty or interest. It also says the Authority must be guided by the principles of natural justice, conducting hearings fairly and giving all parties a chance to be heard before deciding.
For a buyer reading about a penalty order, the percentages in the Act are maximums. The order itself will state the amount and the reasons. If you are part of the same project, ask a lawyer whether the order is relevant to your own complaint, bearing in mind that the penalty is paid to the government rather than to you.
Where do penalties connect to the separate account?
Through Section 4. The FAQ treats defaults on matters covered in Section 4, the registration application, as attracting up to 5 per cent under Section 60. Section 4(2)(l)(D) is where the FAQ places the requirement to deposit 70 per cent of allottee money in a separate account used only for construction and land cost.
A buyer cannot see inside that account, but can check whether the promoter's disclosures on the RERA website are being updated, and whether payments are going to the account named in the agreement. Our explainer on the 70 per cent separate account and how withdrawals are certified covers that in more detail.
What should a Bengaluru buyer take from the penalty ladder?
That penalties are the regulator's tool and your complaint is yours. Use both, but do not confuse them.
- Check the project's RERA registration before you pay, since non-registration sits at the top of the penalty ladder.
- Ask for the agent's RERA registration number if a broker or listing service is involved.
- Keep copies of the promoter's disclosures on the RERA website at the time you book.
- If something goes wrong, identify the section that gives you a personal remedy, such as Section 18 for delay.
- Frame any complaint around your own relief, such as refund, interest or compensation, not only a penalty on the builder.
- If the builder ignores an order in your favour, note that Sections 63 and 64 provide for daily penalties, and ask the Authority about enforcement.
- Take legal advice before filing, so the complaint asks for the right relief under the right section.
Frequently asked questions
What is the estimated cost of a real estate project under RERA?
MoHUA's RERA FAQ says Section 2(v) defines it as the total cost involved in developing the project, including land cost, taxes, cess, development and other charges. The FAQ explains that the definition matters because penalties on promoters under Chapter VIII are based on this estimated cost.
What is the penalty for not registering a project under RERA?
MoHUA's FAQ says Section 59 makes a promoter who fails to register an obligatory project liable to a penalty of up to ten per cent of the estimated project cost. Continued default can bring an additional fine of ten per cent, imprisonment of up to three years, or both.
Does a RERA penalty go to the buyer?
Not directly. MoHUA's FAQ says that under Section 76, penalties recovered are deposited in the Consolidated Fund of India or the State Account, depending on which government set up the Authority. A buyer's own remedies, such as refund with interest or compensation, come from separate provisions and orders.
Can a real estate agent be penalised under RERA?
Yes. MoHUA's FAQ says Section 62 makes an agent who fails to register liable to a penalty of up to Rs 10,000 per day of default, cumulatively up to five per cent of the cost of the plot or apartment whose sale the agent facilitated.
This article explains MoHUA's general FAQ on the RERA Act for information only and is not legal advice. The FAQ notes that it is not a final interpretation of the Act. For a specific dispute, check the Karnataka RERA website and consult a lawyer.
Last updated 2026-11-11. PropNewz Team.
Contact Us
Stay updated with latest news and new projects!
Tell us what you want, We'll do the rest.
Share your budget and where you're looking. An advisor who has actually walked the sites will shortlist a handful of RERA-registered projects and tell you which to skip.