How Much Delay Interest Does the Builder Owe Me? The K-RERA Calculation at SBI MCLR Plus Two Percent

The RERA delay interest calculation for a Karnataka flat is one line of arithmetic: the amount you have paid the builder, multiplied by the State Bank of India's highest MCLR plus two percent, for the period from the day after the possession date in your agreement for sale until possession is handed over with the occupancy certificate. Rule 16 of the Karnataka Real Estate (Regulation and Development) Rules, 2017 fixes the rate, and the proviso to Section 18(1) of the Real Estate (Regulation and Development) Act, 2016 fixes the entitlement: an allottee who does not withdraw "shall be paid, by the promoter, interest for every month of delay, till the handing over of the possession, at such rate as may be prescribed". On the SBI table in force from 15 August 2026 the highest tenor is 8.80 percent, so the rate today is 10.80 percent a year, simple interest.

Part of the RERA and homebuyer disputes practice at S Jain & Attorneys, Bangalore.

Worked example. You have paid Rs 80,00,000 by the promised date and the flat is eighteen months late: Rs 80,00,000 x 10.80 percent x 18/12 = Rs 12,96,000, which is Rs 72,000 for every month of delay. This page is for the buyer who is keeping the flat and wants that number. If you are still choosing between refund and possession, or need the forum choice and the complaint steps, start with the pillar on builder delay and homebuyer remedies under RERA.

How much interest am I owed for the delay in my flat?

You are owed the Rule 16 rate on everything you had paid the builder, for every day between the promised date and the day you get the keys with the occupancy certificate. Section 18(1) says "at such rate as may be prescribed", and Section 2(za) adds two explanations that matter here: the rate the promoter charges you for a late instalment must equal the rate he pays you for a late flat, and the promoter's interest runs "from the date the promoter received the amount or any part thereof". Karnataka prescribed the rate in Rule 16 of its Rules notified on 10 July 2017: "the State Bank of India highest marginal cost of lending rate plus two percent". Here is the Rs 80 lakh example laid out the way the Authority's orders lay it out, one row per payment.

The third row is smaller because that money reached the builder late in the delay. A filed memo also splits each row at every date on which SBI changed its MCLR, and ends with a line the orders themselves use: interest to continue "likewise" from the memo date until handover with the occupancy certificate.

Key takeaway. The rate is fixed by Rule 16 and the principal is fixed by the receipts. What a builder can really argue about is the start date and the end date, which is why almost every section below is about a date.

RERA delay interest calculation: what rate does K-RERA apply, and where does the number come from?

K-RERA applies the SBI highest MCLR plus two percent, and the highest MCLR is the longest tenor on SBI's published table, which runs from overnight to three years. On the table effective 15 August 2026 the figures run from 7.85 percent overnight to 8.80 percent for three years, so the Rule 16 rate is 10.80 percent a year. SBI revises the table from time to time, so take the figure from SBI's website on the day you build the memo. The orders confirm the reading. The Karnataka Real Estate Appellate Tribunal in Appeal 104/2020, decided on 23 April 2021, directed interest "at the rate of 10.75% i.e., 2% above MCLR rate" under Section 18 read with Rule 16. Bench 5 of the Authority, in the order of 11 July 2025 in complaint 959/2024, directed "SBI MCLR + 2 %" from the day after the promised date "till the date of handing over possession along with occupancy certificate", and the 2026 orders in complaints 174/2024, 855/2024 and 617/2025 use the same formula.

The harder question is which MCLR figure applies when the delay runs across several SBI revisions, and Rule 16 does not answer it. In the Authority's own calculation table in the order of 1 July 2024 in complaint 875/2023, each payment row carried the MCLR "as on" a date close to that payment, plus two, held for the whole row. An adjudicating officer's order of 28 May 2020, later carried to the Tribunal in Appeal 262/2020, directed the MCLR "prevailing as on today", meaning the order date. Most recent orders simply direct "SBI MCLR + 2%" between two dates. The safe course is one row per SBI revision, the highest-tenor figure for each period, and a note under the table saying which reading you used, so a bench can accept it or substitute its own figure.

From which date does the interest start?

The day after the completion date in your agreement for sale, which is the date Section 18(1)(a) points to: possession "in accordance with the terms of the agreement for sale or, as the case may be, duly completed by the date specified therein". In complaint 959/2024 the agreement gave 31 December 2022, and Bench 5 ran the interest from 1 January 2023. If the agreement gives a grace period, the orders count it: in complaint 875/2023 the promised month was August 2018 with six months of grace, and the Authority treated February 2019 as the date the buyer "was supposed to get" the flat.

Three date arguments come up in almost every case. First, the builder points to the completion date he declared to K-RERA at registration under Section 4(2)(l)(C), often later than the date in your agreement. That declaration is a promise to the regulator. Section 18 works from the agreement with you. Second, the builder points to a revised date. If you signed a fresh agreement for sale carrying a later date, expect to be held to it: in complaint 174/2024 the buyers argued for 31 December 2018, but the executed agreement said 30 August 2022, and Bench 4 took 30 August 2022 because the executed agreement "governs the contractual relationship". Third, the builder produces a customisation agreement signed after the promised date. In complaint 959/2024 a zero-cost customisation agreement was held void for want of consideration, and a paid one signed on 26 March 2023, after the promised date of 31 December 2022, was held not to be an extension either, because "customisation comes after that". The Tribunal took the same view in Appeal 104/2020 of a customisation agreement whose price was never paid.

The same document can cut the other way. In complaint 617/2025 the Chairman's bench ran the interest from the agreed date of 30 June 2023 only up to 30 May 2025, the day the buyer signed an interior design supplementary agreement. Two benches, two readings. When the builder asks you to sign anything after the promised date has passed, add one line above your signature and email it the same day: this agreement does not revise the possession date in the agreement for sale and does not waive the interest accrued or accruing under Section 18.

Common mistake. Calculating from the date the builder declared to K-RERA at registration, or from the last "revised timeline" email, instead of from the completion date in the agreement for sale. Every month conceded at the start is a month of interest gone.

Does the builder's RERA extension or the COVID extension stop my interest?

No. An extension of registration changes the project's status with the regulator, not your entitlement under Section 18. Section 6 lets the Authority extend a registration for force majeure, defined there as war, flood, drought, fire, cyclone, earthquake or other natural calamity, for a total of not more than one year, and nothing in it touches Section 18. In complaint 959/2024 the builder argued that the Authority's nine-month COVID-19 extension pushed the start date out. Bench 5 held that the extension "is only to complete the construction of the apartments and not for extending the period for calculation of the delay period interest". Bench 4 said the same in complaint 174/2024: an extension of registration "pertains to the regulatory status" of the project and "cannot automatically extinguish the statutory rights available to an allottee under Section 18".

The Supreme Court's judgment in Newtech Promoters and Developers v State of Uttar Pradesh, delivered on 11 November 2021, is the foundation. The Court called the allottee's right under Section 18(1) "unqualified" and "unconditional", arising when the promoter fails to give possession within the agreed time "regardless of unforeseen events or stay orders of the Court/Tribunal" not attributable to the allottee, and read the proviso as entitling the buyer who stays to interest "for the period of delay till handing over possession". Your clock runs from your agreement.

Is interest payable on the bank loan portion too?

Yes. The loan money was disbursed to the builder, and Section 2(za) runs the promoter's interest from the date he "received the amount or any part thereof". In complaint 959/2024 the builder said interest was due only on the buyers' personal contribution of about Rs 12.6 lakh and not on the Rs 1.78 crore the bank had released. Bench 5 rejected it: the burden of repaying the loan "lies on the Complainants immediately after release of the said amount", and interest was ordered on the full Rs 1,79,91,712 in the memo. The Tribunal reads the principal the same way in refund cases: in Appeal 61/2024, decided on 6 March 2026, it held that refund "will encompass both categories", the amount paid directly by the allottee and the amount borrowed in the allottee's name and paid to the promoter.

The document that closes this argument is a certificate from your bank listing each disbursement to the builder with its date. In complaint 959/2024 the buyers produced one dated 10 June 2025, and the order records the builder's acknowledgment of the amounts against it. Before you build the memo, fix these four inputs.

Until when does the interest run?

Until possession is handed over, which the orders read as handover with the occupancy certificate. Bench 5 in complaint 959/2024 spelt it out as "till the date of handing over possession along with occupancy certificate", and the Tribunal in Appeal 104/2020 ran the interest until the buyer "takes actual possession of the villa after obtaining Occupancy certificate". The reason is in the Act: Section 11(4)(b) makes the promoter responsible for obtaining the certificate, and Section 19(10) obliges you to take physical possession within two months of its issue, so the certificate is the event the statute uses to end the promoter's obligation and start yours. The Tribunal added that "partial OC is not known to RERA statute".

Two variations appear in the 2026 orders. Where possession was handed over during the case, the interest ran to the handover date: in complaint 174/2024 the buyers had taken the keys on 4 December 2023 and the interest was ordered up to that day. Where the builder had made an offer of possession, the Chairman's bench in complaint 855/2024 ran the interest to the date of the offer, 8 July 2025. If the builder offers possession before the certificate exists, you are not obliged to accept, which is the subject of the guide on what to do when there is no occupancy certificate.

Deadline warning. Section 19(10) gives you two months from the occupancy certificate to take physical possession, and the interest stops at handover. Once the certificate issues, delay on your side is not the builder's delay. Take possession within the two months, with your reservation in writing, and update the memo to that day.

Is it simple or compounding, monthly or yearly?

Simple interest, computed on days, not compounding. The adjudicating officer's order of 18 June 2019 underlying Appeal 104/2020 directed "simple interest at the state bank of India highest marginal cost of lending rate of interest plus 2%", and the order of 28 May 2020 underlying Appeal 262/2020 said "simple interest @ 2% above the MCLR of SBI". The Authority's own table in complaint 875/2023 makes the arithmetic visible: a row of Rs 50,84,428 for 2,409 days at 10.15 percent gives Rs 34,06,058, which is exactly amount x rate x days / 365. No row earns interest on earlier interest. The words "for every month of delay" in the proviso describe when the entitlement accrues, not a compounding period, and Section 2(za) Explanation (i) requires the same rate both ways.

What is left out of the principal?

Four things, listed by Bench 4 in the order of 4 June 2026 in complaint 174/2024 when it refused the buyers' memo "in its present form": instalments not paid during the delay, because, as the order reasons, interest under Section 18 is compensatory and is meant to compensate the allottee for the promoter holding the allottee's money during the period of delay, amounts paid after possession was handed over, customisation charges, which "do not form part of the basic sale consideration", and GST components, which "cannot form part of the principal amount". In complaint 959/2024 the buyers had themselves left the customisation advance out of their memo, and the order notes it with approval.

A maintenance deposit collected before possession is outside the delay interest but not lost: in Appeal 104/2020 the Tribunal kept the adjudicating officer's award of 9 percent a year on a Rs 20,48,000 deposit from the date of deposit until possession, because such a deposit is meant to be collected only on possession.

What else can I claim over and above the interest?

Compensation, before a different officer. Section 18(3) makes the promoter liable to compensate for failing to discharge any other obligation under the Act or the agreement, and Section 71(1) gives that power to an adjudicating officer who is or has been a District Judge, applying the Section 72 factors: the disproportionate gain from the default, the loss caused, the repetitive nature of the default, and anything else needed in furtherance of justice. The Supreme Court in Newtech drew the line at paragraph 86: refund, interest on the refund and "interest for delayed delivery of possession" are for the Authority, and "adjudging compensation and interest thereon" is exclusively for the adjudicating officer. So the interest memo goes to the Authority in Form N, and the compensation claim goes in Form O under Rule 30.

What the compensation heads fetch is best read from Appeal 104/2020. Rent actually paid while waiting was allowed, but only for the two leases in the buyer's own name, twelve months at Rs 44,000 and eleven months at Rs 49,775, a total of Rs 10,75,525, and a third lease in his sons' names was rejected. A claim of Rs 50 lakh for mental torture was refused, the Tribunal endorsing the adjudicating officer's reliance on the Supreme Court's Ghaziabad Development Authority and Lucknow Development Authority decisions. Rent receipts and a lease in your own name, then, and no inflated head.

Can the builder net off what he already paid under a subvention or compensation letter?

Yes, and your memo should do the netting before he asks. In complaint 959/2024 the builder had paid the pre-EMI interest under a subvention arrangement up to 30 September 2023. The buyers' memo showed the principal "after deducting the amounts paid by the Respondent towards bank interest on subvention", and when the builder said he had paid more, the Authority had both sides file fresh memos so the credit could be fixed. The final figure of Rs 47,89,179 was the netted one. A compensation letter or credit note is treated the same way: a payment on account of the delay, deducted for the period it covers, and not a settlement unless you signed it as one.

The netting runs the other way too. If you paid instalments late, the builder is entitled to Rule 16 interest on them for the days of delay, at the identical rate under Section 2(za) Explanation (i). Bench 4 in complaint 174/2024 directed both computations under Rule 16 and ordered that "only the net amount" be paid, so build that column into your own memo. One note for buyers under a subvention scheme: where the builder stopped paying the pre-EMI altogether, the Authority in complaint 875/2023 treated the breach as a ground for refund of the entire amount with interest, which is the other limb of Section 18 and belongs to the pillar post.

Does the interest stop if I sign a possession letter or a no-dues declaration?

Not by itself. The entitlement is statutory, and Section 89 gives the Act overriding effect over anything inconsistent in any other law. A pre-printed possession letter reciting "full and final satisfaction" is a contractual document the builder drafted. The Supreme Court in Pioneer Urban Land and Infrastructure v Govindan Raghavan, decided on 2 April 2019, held that a term "will not be final and binding if it is shown that the flat purchasers had no option but to sign on the dotted line, on a contract framed by the builder", and treated an agreement that charged the buyer 18 percent on late instalments while paying nothing comparable for a late flat as one-sided and unfair. The Tribunal in Appeal 104/2020 went further: even a registered sale deed executed before the occupancy certificate did not end the buyer's status as an allottee or his interest under Section 18, because Section 17 requires conveyance together with possession after the certificate.

The document is not harmless, though: a possession letter without reservation is the builder's best evidence that the delay ended the day you signed. So sign what you must to get the keys, strike the "full and final" recital, add one line reserving your claim under Section 18 up to handover with the occupancy certificate, and email the builder the same day recording that you signed under protest.

How do I present the memorandum of calculation?

As a table with one row per payment, in the Authority's format, served on the builder with the documents that prove every number. K-RERA calls it the memo of calculation, or MOC. In complaint 959/2024 the buyers "were directed to file MOC as per the format provided by RERA and serve the same on Respondent with supporting documents", the builder filed objections and his own memo, and after arguments both sides filed fresh memos. The documents that order lists are the ones to assemble: payment receipts, the agreement for sale, the bank loan statement, the bank's certificate of disbursement, the tripartite agreement if there is a subvention, and the email trail on the delay.

1. Fix the promised date from the agreement for sale, including any grace period, and write the day after it as the start date.
2. List every payment the builder received, with date and amount, each bank disbursement as its own row. Leave out GST, customisation charges, stamp duty and anything paid after handover.
3. Choose the memo date, usually the filing date, and count the days for each row. For money paid after the promised date, count from the date the builder received it.
4. Split every row at each date on which SBI revised its MCLR, apply the highest-tenor figure for that period plus two, and compute amount x rate x days / 365. Say under the table which SBI figures you used.
5. Deduct what the builder has already paid for the delay, as dated rows, and add a column for any instalment you paid late with the Rule 16 interest you owe, so the net figure is visible.
6. End with the line the orders use: interest to be calculated likewise from the memo date until possession is handed over with the occupancy certificate.
7. File in Form N under Rule 29(1) with the fee of one thousand rupees by demand draft, annex the memo and documents, and serve the builder. Rent or other compensation goes in Form O before the adjudicating officer. Before the final hearing, serve an updated memo to that date.

What it costs and how long it takes

The statutory fees are small and fixed: one thousand rupees by demand draft for Form N under Rule 29(1), one thousand rupees for Form O under Rule 30(1), and five thousand rupees for an appeal to the Tribunal under Rule 33, filed in Form R in triplicate. A promoter who appeals must first deposit with the Tribunal the full amount ordered to be paid to you including interest and compensation, or thirty percent of any penalty, under the proviso to Section 43(5).

On time, read the orders rather than the rule. Section 29(4) asks the Authority to decide within sixty days and to record reasons where it cannot. Complaint 959/2024 went through eight hearings between 30 October 2024 and 10 June 2025 and was decided on 11 July 2025, and complaint 875/2023 had four hearings between December 2023 and June 2024 and was decided on 1 July 2024. Eight to fourteen months from filing to order is the pattern in these public orders. After the order, Rule 17 gives the builder sixty days to pay. If he does not, Section 40(1) makes the amount recoverable as arrears of land revenue through the Karnataka Land Revenue Act, 1964 under Rule 25, Newtech held that principal and interest together form "a composite amount" recoverable that way, and Section 63 exposes the promoter to a daily penalty that can reach five percent of the estimated project cost. If the builder slides into insolvency while you wait, the guide on homebuyer rights when the builder enters the NCLT explains what happens to the order.

What I tell clients about these memos

Where these complaints turn is on two dates and one column: the start date the bench accepts, the end date it accepts, and whether the bank disbursements sit in the principal. A memo built from the agreement date, carrying the bank certificate, leaving out GST and customisation, netting off what the builder already paid and ending with the "likewise" line gives a bench very little to trim. Most buyer memos I see fail on the opposite side: they claim on unpaid instalments, include the GST, ignore the pre-EMI the builder paid, and run to a date that a supplementary agreement or a possession letter has already closed. The builder's counsel then spends the hearing on those errors, and the buyer walks out with a direction to file a fresh memo and three more months of waiting.

The memo itself is a small document. Its columns, in the order the Authority's own table uses, are these.

Mistakes buyers make in the calculation

Claiming on the whole agreed price rather than on what was paid, the ground on which Bench 4 rejected a memo in complaint 174/2024. Using the date declared to K-RERA at registration instead of the agreement date. Including the GST and the customisation charges. Conceding that only "own contribution" counts, when complaint 959/2024 and Appeal 61/2024 say otherwise. Compounding, which no order does. Claiming rent without a lease in your own name, which cost the buyer one of three leases in Appeal 104/2020. Putting rent into the Form N complaint when Newtech sends compensation to the adjudicating officer in Form O. Signing a supplementary agreement or a possession letter without a written reservation, which is how the interest in complaint 617/2025 ended in May 2025 rather than at handover. And stopping the memo at the memo date without the "likewise" line.

If you are reading this from outside India, the Ask Me answer on filing at K-RERA from abroad covers the power of attorney, and the shorter answer on what to do when the builder has delayed possession is the place to send a family member starting from zero. For the firm's work on these disputes, see the RERA and homebuyer disputes practice page and the wider property and real estate practice.

Frequently Asked Questions

This article is for general informational purposes only and does not constitute legal advice. Consult a qualified advocate for advice on your specific situation.

Related Guides

Delay interest is one part of the firm's RERA and homebuyer disputes practice, which sits within the wider property and real estate law practice.

• Builder Delay and Fraud: How Homebuyers in India Can Fight Delayed Possession and Recover Compensation
• No Occupancy Certificate? A Bangalore Buyer's Remedies
• Builder in Insolvency? Homebuyer Rights After the Supreme Court's Mantri Ruling (2026)