1. The True Landed Cost
The price quoted by the sales team is almost never the final amount you pay. For a premium property, these additions can be substantial. First, if the property is under construction, a 5% Goods and Services Tax (GST) is applicable on the total value for
non-affordable housing. Ready-to-move-in homes with a Completion Certificate (CC) are exempt from GST, which can be a significant saving. Beyond GST, you must account for stamp duty and registration fees, which vary by state but typically add another 6-8% to the cost. Additionally, premium projects often have ancillary charges like preferential location charges (PLC) for a better view, floor rise charges, and fees for amenities like club membership and car parking. Always ask for a detailed cost sheet that lists every single charge to understand the true, all-inclusive number before committing.
2. Your Home Loan Eligibility vs. Final Price
One of the most common pitfalls is paying a booking amount before securing formal loan approval. Getting a pre-approval provides a clear estimate of how much a bank is willing to lend you. This number is critical. Lenders typically finance 75-90% of the property value, meaning you must fund the remaining 10-25% as a down payment from your savings. Crucially, this down payment does not include other out-of-pocket expenses like GST, stamp duty, and registration, which must also be paid by you. Before booking, confirm your final loan eligibility and ensure you have a clear plan to fund the entire gap between the loan amount and the total landed cost. A shortfall discovered after paying the booking amount can lead to financial stress or losing the token money.
3. The Builder's RERA Track Record
The Real Estate (Regulation and Development) Act, 2016 (RERA) has made it easier for buyers to verify a builder's credibility. Every state's RERA website is a public database where you can check critical numbers. First, verify the project's RERA registration and the officially declared completion date. This date is legally binding, and if the builder delays possession beyond this, you are entitled to either a full refund with interest or interest for every month of delay. Second, check the builder's history of past projects listed on the portal. Review their delivery timelines to see if they have a pattern of delays. A builder with a consistent record of on-time delivery is a much safer bet. This check helps you gauge the risk of your investment getting stuck.
4. The 1% TDS on Property Purchase
This is a compliance number that often surprises first-time buyers. As per Section 194-IA of the Income Tax Act, if the property value exceeds ₹50 lakh, the buyer is legally responsible for deducting 1% of the sale consideration as Tax Deducted at Source (TDS). This duty falls on you, the buyer, not the seller or the builder. You must deduct this 1% from each payment made—including the booking amount and subsequent instalments—and deposit it with the government using Form 26QB within 30 days. After depositing the tax, you must issue a Form 16B certificate to the seller as proof of compliance. Failing to do so can attract interest and penalties from the tax department, adding an avoidable expense to your purchase.
5. The Cost of Cancellation
While you may be certain about the purchase, unforeseen circumstances can arise. It is crucial to understand the financial implications of cancelling your booking. Under RERA, a builder cannot ask for more than 10% of the property's cost as an advance or booking amount before a formal sale agreement is signed. If you cancel for reasons not attributable to the developer (like a personal financial issue), the builder is entitled to forfeit a portion of this amount as specified in the agreement. However, if the builder is at fault, such as by delaying possession, you are entitled to a full refund with interest. Before you pay, carefully read the cancellation clause in your allotment letter or booking form to know the exact forfeiture amount. This number represents your financial risk if you have to back out of the deal.
