Cancelling a Flat Booking: Refunds, Forfeiture Limits and Process Under UP RERA and HRERA

By ADiHomes Updated October 25, 2026 10 min read

Checked: 5 official sources citedreviewed October 25, 2026Report an error

Watercolour illustration of a couple walking away from a site sales office at dusk

Contents

Sometimes a buyer needs to walk away from a booked flat: a job moves cities, a loan is rejected, the family’s plans change, or the project itself goes wrong. How much money comes back depends on one question above all: who is at fault. If the builder has defaulted, lets you exit with a full refund and interest. If you are the one pulling out, the builder may keep a defined amount and must return the rest on a timetable. This guide sets out the rules in Uttar Pradesh and Haryana, the process for cancelling, what happens to GST, home loans and , and the mistakes that cost buyers money.

Builder at fault versus buyer at fault

Situation	What you can recover	Legal basis
Builder misses the agreed possession date, or stops business after RERA suspends or revokes registration	Everything paid, with interest at the prescribed rate, plus compensation	Section 18(1) and Section 19(4) of the RERA Act
Builder’s land title is defective	Compensation for the loss, not barred by limitation	Section 18(2)
Builder makes changes to sanctioned plans or specifications without required consent	Refund and compensation remedies under the Act	Sections 14 and 18(3)
Buyer cancels without fault of the builder	Amount paid minus the permitted forfeiture	State model agreement and rules
Builder cancels after buyer’s payment default	Amount paid minus booking amount and interest dues (UP model agreement)	Clause 9.3 of the UP model agreement

Uttar Pradesh: the model agreement rules

UP prescribes a model under its 2018 rules, and its cancellation clauses are specific.

When you cancel without the builder’s fault (clause 7.5)

The promoter may forfeit the booking amount paid for the allotment.
It must return 50 percent of the balance amount within 45 days of your cancellation.
The remaining 50 percent must be paid on re-allotment of the flat or at the end of one year from your cancellation, whichever is earlier.
The promoter must tell you the date of re-allotment and display it on the UP RERA website.

When the builder cancels for your default (clause 9.3)

If you miss payments on two consecutive demands despite notice, you owe interest at SBI’s home-loan MCLR plus 1 percent.
If the default continues for three consecutive months after notice, the promoter may cancel after giving at least 30 days’ prior intimation, and refund the money after deducting the booking amount and interest liabilities.
The promoter can use this clause only if it is not itself in default.

When the builder is at fault

The UP model agreement lets you terminate and requires a refund of the entire amount paid under any head, with interest at SBI’s MCLR plus 1 percent unless the rules provide otherwise, within 45 days of receiving your termination notice. UP’s rules separately require refunds with interest and compensation to be paid within 45 days of becoming due.

Worked example (illustrative)

Assume a Rs 80 lakh flat in Greater Noida West where you have paid Rs 24 lakh, including a booking amount of Rs 8 lakh, and you cancel for personal reasons.

Forfeited: Rs 8 lakh (the booking amount).
Balance: Rs 16 lakh.
Within 45 days: Rs 8 lakh.
On re-allotment or within one year: Rs 8 lakh.

If the same builder were at fault, you could claim all Rs 24 lakh with interest from each payment date. The difference shows why establishing fault, with dates and documents, matters before you cancel.

Haryana: the forfeiture cap

Haryana does not follow the UP clause word for word. HRERA Gurugram’s (Forfeiture of earnest money by the builder) Regulations, 2018 limit what a promoter may forfeit when a buyer cancels to 10 percent of the consideration, and HRERA orders on cancellations routinely allow the builder to keep no more than that. The Supreme Court took the same line in Godrej Projects Development Ltd v. Anil Karlekar (February 2025), a Gurugram case: it noted that the national consumer commission has treated 10 percent of the as a reasonable forfeiture since 2015, and it left in place the order to refund everything above that, although the builder’s agreement allowed 20 percent. We could not open the regulation text itself, so check with HRERA how taxes and brokerage are treated in the deduction. Interest on refunds where the builder is at fault is SBI’s highest MCLR plus 2 percent under the Haryana rules.

One trap in Gurugram: a booking that never matured into an executed agreement may not give you allottee status at all. In an order reported in August 2026, HRERA Gurugram dismissed a complaint over a provisional allotment in an Eldeco project, holding that a booking amount and a provisional did not create an allottee relationship when the allotment was conditional on an agreement for sale that was never executed. If you are about to cancel a provisional booking, ask for the refund terms in writing.

What happens to GST, the loan, TDS and stamp duty

EMI calculator

Loan amount (₹) Interest rate (% a year) Tenure (years)

Monthly EMI —

Indicative only. Your bank’s rate and fees decide the final EMI.

GST. GST paid on instalments of a cancelled booking should come back with the refund. The GST Council’s FAQ on real estate says a developer can issue a credit note under Section 34 of the CGST Act on cancellation and adjust the tax, provided the amount is refunded to the buyer. Ask the builder to show GST separately in the refund calculation.
Home loan. If the bank disbursed part of the price, the refund goes first toward the bank’s outstanding loan. In Madhu Kudapa v. Lodha (October 2026), the Supreme Court held that a buyer recovers what he paid from his own pocket with interest, and that the bank’s unrepaid loan money is not his to recover. Get a loan foreclosure statement and coordinate the refund with the bank to stop interest running.
or . Read the cancellation clause; it usually requires the builder to refund the bank directly.
TDS. If you deducted TDS on instalments, keep the certificates. The builder will have claimed it as tax paid; seek advice on how your refund and the builder’s tax credit should be reconciled.
on a registered agreement. Duty paid on a registered agreement for sale is usually not refunded automatically when you cancel. Check your state’s refund rules before cancelling.

Step-by-step: cancelling a booking

Step 1: Decide the ground. Is the builder late, has it changed the plan, or is this your own decision? Check the agreement’s possession date, any grace period and any RERA extension, such as the four-month extension HRERA Gurugram granted in August 2026 for completion dates on or after 28 February 2026.
Step 2: Compile the account. List every payment with date and mode, GST paid, and any credits or discounts.
Step 3: Read the clauses. Compare your agreement’s cancellation clause with the state model agreement. Clauses that forfeit more than the model or the regulations allow are open to challenge.
Step 4: Send a written cancellation or termination notice by email and registered post, citing the clause and section, and asking for the refund amount and schedule.
Step 5: Do not sign a blank or one-sided cancellation form. Builders often ask for a “surrender letter” that waives interest or compensation. Strike out such terms or refuse.
Step 6: Track the 45-day and one-year deadlines in UP, or the timeline in your Haryana agreement.
Step 7: Complain to RERA if needed. File before UP RERA or HRERA for the refund, interest and, through the adjudicating officer, compensation.
Step 8: Close the loan cleanly and collect the no-dues letter and release of any charge.

Mistakes that cost buyers money

Cancelling for “personal reasons” when the builder was already late, which turns a full-refund claim into a forfeiture.
Stopping instalments without a written termination, which can let the builder cancel for your default and forfeit the booking amount.
Accepting a refund cheque marked “full and final” without reading the covering letter.
Forgetting the bank: interest keeps accruing on the loan until the refund reaches it.
Not checking whether the booking amount in your agreement exceeds the 10 percent limit in Section 13 of the RERA Act, which affects how much can lawfully be forfeited.

As of October 2026

UP rules come from the state’s model agreement for sale and RERA rules; Haryana positions are summarised from regulations and orders reported elsewhere. Interest benchmarks move with SBI’s MCLR. This is general information, not legal advice; take advice on your own agreement before cancelling.

Frequently asked questions

How much can a Noida builder deduct if I cancel?

Under the UP model agreement, the promoter may forfeit the booking amount if you cancel without its fault. It must return 50 percent of the balance within 45 days and the rest on re-allotment or within one year, whichever is earlier.

What is the forfeiture limit in Gurugram?

HRERA Gurugram's 2018 forfeiture regulations cap forfeiture on a buyer's cancellation at 10 percent of the consideration. In February 2025 the Supreme Court also let stand a refund of everything above 10 percent of the basic sale price in a Gurugram case.

Do I get a full refund if the builder is late?

Yes. Under Section 18 of the RERA Act, if the promoter fails to give possession by the agreed date, you can withdraw and claim everything paid with interest at the prescribed rate and compensation.

Will the GST I paid be refunded?

It should be. The GST Council's real estate FAQ says a developer can issue a credit note and adjust tax on cancellation provided the amount is refunded to the buyer.

What happens to my home loan on cancellation?

The bank's outstanding loan is repaid from the refund. The Supreme Court held in October 2026 that the buyer recovers his own contribution with interest, not the bank's unrepaid loan money.

Sources

Updated 25 October 2026. This article is general information, not legal or financial advice; check current rules and project details before you decide.

Related guides

How to Check a Builder’s Track Record in Delhi NCR: RERA, NCLT and Site Checks October 25, 2026
Encumbrance Certificate and Title Search in UP, Haryana and Delhi: Where to Check Before You Buy October 25, 2026
Transfer of an Under-Construction Flat: Buying from the Original Allottee in Noida and Gurugram October 25, 2026