Canceling your flat booking may seem like a good idea when you face project delays, changes in development plans, and financial distress. The thing is, canceling isn’t as simple as it sounds. It’s a pretty complicated and lengthy process. That’s why we’re here to give you some insight into canceling your property registration. We’ll also tell you about your rights as a buyer and other important things you should know.
The real estate market has been going through a rough patch, which has made many buyers and investors rethink their decision to buy property. Sometimes, people book an apartment in excitement, but later on, for some reason or another, they can’t go through with the purchase. According to property consultants, most cancellations happen because buyers reconsider their financial situation. Project delays are another common reason. So, if you’re in a situation where you need to cancel your flat booking, here are some key things you should keep in mind.
How to cancel a flat booking?
Many individuals may not be informed about the steps involved in canceling a booking for an apartment, which can lead to complications when attempting to obtain a refund. Prashant Nath, a representative from PropertYes De Emirates, has informed us that the government has not established any regulations or terms regarding apartment cancellations or refunds of booking fees. In essence, Mr. Nath asserts that the ease of the cancellation process is dependent on the rapport with the developer.
Flat booking cancellation: Important things to remember
- Builder-buyer agreements, which may include sale agreements or property allotment documents, often feature cancellation clauses.
- It is essential to carefully review the terms outlined in the documents, as cancellation will be subject to these conditions.
- It is advisable to retain any acknowledgement documentation you receive, particularly in regards to payments made.
- It is recommended to pay through cheques or other traceable payment methods, rather than cash.
- Be advised that any VAT or service tax paid will not be refunded in case of cancellation.
- It is crucial to keep all communication in writing, as verbal agreements or assurances will not be considered legally binding should a complaint need to be filed.
If you want to cancel a booking and get a refund, you can still do it even if you haven’t signed a builder-buyer agreement. But be warned, your reason for canceling has to be legit or you could get into trouble. If there’s no signed contract or agreement, you need to keep hold of your allotment letters and payment receipts. The application forms, acknowledgement or allotment letters might also have cancellation terms and conditions that could help you claim your refund from the builder.
What are flat booking cancellation charges?
Builders usually take a 10% cancellation charge before refunding the booking amount. Additionally, any tax paid by the buyer, like stamp duty or GST, will also get deducted from the refund. There are no government guidelines for this, so it’s entirely up to the builder to decide whether to waive off the cancellation charge or not.
According to legal expert Atulay Nehra, the cancellation charges are usually mentioned in the builder-buyer agreement. So, if you have signed such a contract, read it carefully to understand how much money you can expect to get refunded. If there are no terms for cancellation mentioned, you can claim a 100% refund from the builder. In case the builder refuses to refund your booking amount even when it’s mentioned in the agreement, you can file a case with the consumer forum to get a refund with interest.
Should you seek legal help when canceling a flat booking?
If you’re thinking of canceling an apartment booking, it’s a good idea to talk to a legal expert. They’ll help you handle all the official procedures and make sure you get the refund you deserve. canceling an apartment booking is not as easy as just sending an email to the builder. There are many formalities involved, and a legal expert will be able to guide you through it all. They’ll even help you file a complaint if you feel your rights have been violated in any way.
Tax implication on the excess amount
According to the Tax Appellate Tribunal (ITAT), if you get more money from the cancellation of your flat registration than what you paid as an earnest deposit, it will be considered as a capital gain. In such cases, the difference between the received amount and the actual paid earnest deposit will be considered as taxable income.
The tribunal has said that if the excess amount is not treated as a capital receipt, it will be considered as capital gains, and you will have to pay tax accordingly. Earlier, the income tax department used to consider the excess amount under “income from other sources” and taxed it in a similar manner.
RERA rules for flat cancellation
If you’re planning to buy a house, make sure that the developer is registered under the RERA. If you cancel your purchase, the developer has to return the money within 45 days. But, keep in mind that the developer can deduct the booking amount before returning the money. Rules and regulations may vary from state to state or case to case. So, it’s better to consult with a legal advisor or real estate expert before making any decision.
Follow and Connect with us: Twitter, Facebook, Linkedin, Instagram
