RERA Section 18: refund with interest or delay interest, and the rate in your state

Rules and rates as of 12 October 2026.

The short version

If your builder misses the possession date in your agreement, Section 18 of the Real Estate (Regulation and Development) Act, 2016 gives you two routes. You can walk out and get your money back with interest, or you can stay in the project and be paid interest for every month of delay until you get the keys. The interest rate is not in the Act. Each state fixes it in its own RERA rules, and most of the ones we could read tie it to the State Bank of India's lending rate.

This explainer covers what the law says, what the Supreme Court has said about it, how the rate works in different states, what that means in rupees, and what two orders passed in Haryana this year show.

What Section 18 actually says

Section 18(1) applies when the promoter fails to complete, or cannot give possession of, an apartment, plot or building in line with the agreement for sale, or by the date given in it. It also applies if the promoter stops business because its RERA registration is suspended or revoked.

• If you withdraw: the promoter must, on demand, return the amount it received for that unit, with interest at the prescribed rate, plus compensation.
• If you do not withdraw: the proviso says the promoter shall pay you "interest for every month of delay" until possession is handed over, at the prescribed rate.

Section 18(2) separately covers losses from a defective title to the land, and Section 18(3) covers compensation when the promoter fails other obligations under the Act, rules or agreement. Section 19(4) restates your right to a refund with interest and compensation. Section 2(za) says the rate a promoter pays you for default is the same rate you would pay the promoter for your own default.

What the Supreme Court said

In M/s Newtech Promoters and Developers Pvt Ltd v State of UP (11 November 2021, Civil Appeal Nos. 6745-6749 of 2021, a bench of Justices U.U. Lalit, Ajay Rastogi and Aniruddha Bose), the court held at paragraph 25 that the right to a refund under Sections 18(1)(a) and 19(4) is "an unconditional absolute right to the allottee". It is "not dependent on any contingencies or stipulations", and applies "regardless of unforeseen events or stay orders of the Court/Tribunal". The same paragraph says an allottee who does not want to withdraw is entitled to interest for the period of delay till possession at the prescribed rate.

In practice, that means a builder's plea of a pandemic, approvals or a court stay does not by itself defeat a refund claim. It does not mean every claim succeeds: the delay has to be measured against the date in your agreement, and authorities look at the facts.

The rate: one formula, different rule numbers

The Act leaves the rate to be "prescribed", so it is set by each state's rules. In the rule texts we could open, the formula is SBI's highest marginal cost of lending rate (MCLR) plus two percentage points. The rule number, and the time the builder gets to pay a refund, differ.

State	Rule	Rate formula	Refund deadline
Haryana	Rule 15, Haryana RERA Rules 2017	SBI highest MCLR + 2%; SBI's replacement benchmark if MCLR is not in use	90 days (rule 16)
Telangana	Rule 15, Telangana RERA Rules 2017	SBI highest MCLR + 2%	90 days (rule 16)
Uttar Pradesh	Rule 15, UP RERA Rules 2016	Not printed in the official English text we read (see note below)	45 days (rule 16)
Maharashtra	Maharashtra RERA rules (text not read)	SBI highest MCLR + 2%, as applied by MahaREAT in Manojkumar Singh v Era Realtors, 7 September 2026; the rule itself would not load	Not verified
Karnataka, Tamil Nadu	State RERA rules	Not verified by us: the official rule PDFs would not load	Not verified

A note on Uttar Pradesh: the English version of the 2016 rules on the UP RERA website carries the heading for rule 15 ("Rate of interest payable by the promoter and the allottee") but the text under it is a misplaced line about website backups. Other published accounts give UP a different margin over MCLR from the two points in Haryana and Telangana. We have not been able to confirm the UP figure against an official text, so check it with a lawyer or the UP RERA office before relying on any number.

Also note the base moves. SBI's MCLR page shows rates effective 15 September 2026, with the three-year tenor highest at 8.80%. That puts the Haryana and Telangana formula at 10.80% today. The RBI raised the repo rate on 7 October, so SBI may revise MCLR; the order in your case will say which rate it applied.

Worked example

Say you paid ₹80 lakh for a flat, the agreed possession date has passed, and the delay runs to 30 months. We use the formula from the Haryana and Telangana rules, at today's figure: 8.80% + 2% = 10.80% a year, as simple interest. This is illustrative; the rate in a real order depends on the date and state.

• Monthly delay interest if you stay: ₹80,00,000 × 10.80% ÷ 12 = ₹72,000 a month.
• For 30 months: ₹80,00,000 × 10.80% × 30 ÷ 12 = ₹21,60,000.
• If the rate were one point lower (9.80%): ₹80,00,000 × 9.80% × 30 ÷ 12 = ₹19,60,000. The margin matters.

If you withdraw instead, the clock is different: interest runs from the date the builder received each payment until the refund. Suppose the whole ₹80 lakh was paid 36 months before the due date and the refund comes 30 months after it. That is 66 months: ₹80,00,000 × 10.80% × 66 ÷ 12 = ₹47,52,000, so ₹1,27,52,000 in all, before any compensation. Real payments come in instalments, so each one gets its own period.

What 2026 orders show

No separate compensation for staying. In Rajiv Nayyer and Chitrakshi Nayyer v M/s Sunrays Heights Pvt Ltd, decided on 24 April 2026 by the Adjudicating Officer of the Haryana RERA in Gurugram, the buyers had already been awarded delay interest at 10.85% by an earlier Authority order of 18 April 2024. They then sought rent, bank interest and mental agony on top. The officer reasoned that Section 18(1) provides compensation to allottees who exit the project, held there was no reason to allow separate compensation "for same cause of action", and dismissed the complaint. That is one officer's reading; other forums may differ.

A builder's appeal needs money on the table. In M/s DLF Limited v Gautam Rana (Haryana Real Estate Appellate Tribunal, 1 May 2026), the Authority had ordered a refund after deducting 10% of the sale consideration, with interest at 10.90% from cancellation till refund. The Tribunal dismissed the builder's appeal as not maintainable because it had not made the mandatory pre-deposit (₹73,26,417 per the registry), saying "There is no provision for waiver or exemption of pre-deposit."

Before you file

Which route suits you depends on how far the project has progressed, what you have paid, your home loan, and the wording of your agreement. A lawyer who practises before your state RERA can read your documents and tell you what to claim. This article explains the law; it is not legal advice.