Karnataka Real Estate Regulatory Authority (K-RERA) has ruled that builders cannot pass project-related costs, including GST on BWSSB bills, to home buyers before handing over apartments, a decision that could reduce surprise payments during possession in Bengaluru.
The ruling addresses a recurring point of friction between buyers and developers. Buyers often face additional demands close to possession after committing substantial amounts towards a flat. By placing responsibility for specified pre-handover statutory costs on builders, K-RERA has sought to bring greater clarity to the financial obligations attached to a property purchase.
The decision is particularly significant because possession-stage payments can affect a buyer’s final cost even after the main sale consideration has been agreed. The report did not provide the case number, project name or a detailed text of the authority’s order, but described the ruling as covering project costs, including GST on bills raised by the Bangalore Water Supply and Sewerage Board.
Farook Mahmood, president emeritus of the Bangalore Realtors Association of India, welcomed the decision and said it clearly defined pre-handover statutory costs as the builder’s liability. He said the ruling could encourage developers to maintain digital payment tracking, itemised cost sheets and escrow-linked disclosures. Mahmood also cautioned that small and mid-sized developers could face short-term cash-flow pressure and that some might attempt to recover the expenses through higher base prices.
For developers, the ruling places greater emphasis on separating construction, land and statutory costs and disclosing them transparently. Anuj Sanjay Jain, director of SNN Raj Corp, said the decision offered developers an opportunity to provide buyers with detailed breakdowns of construction costs, land costs and statutory dues. Such disclosures, he said, could help buyers make informed decisions and reduce disagreements.
The industry response has also highlighted the need for clarity on implementation. Suresh Hari, former chairman of CREDAI Bengaluru, welcomed the move but said its financial implications required careful examination. He said GST on BWSSB bills could pose a significant challenge and called for consistent guidelines under applicable laws. Hari also urged apartment owners to take an active role in managing common facilities and association finances after possession.
Koshy Varghese, director of VDB Property Ventures, said many developers were already paying such dues and questioned why some continued to pass them on to buyers. He said professional accountability and digital payment systems could help both parties verify transactions more quickly.
The ruling has been welcomed by home buyers’ associations, but buyer representatives said the decision does not remove the need for scrutiny. They advised purchasers to examine sale agreements, seek itemised statements and retain payment records. The broader implementation test will be whether developers disclose all costs at the outset and comply with the ruling without shifting the burden through opaque pricing. Developers and buyers will now await clearer implementation guidance under applicable laws.
