K-RERA to penalise non-compliant builders

Bengaluru: Ina strict move to enforce compliance under the Real Estate (Regulation and Development) Act, the Karnataka Real Estate Regulatory Authority (K-RERA) has decided to impose penalties on builders who fail to submit annual audit reports for their housing projects.

Despite issuing multiple deadlines, many builders have not submitted the mandatory audit reports for the financial year 2024–25. Left with no alternative, K-RERA has now ordered the imposition of annual penalties based on the estimated cost of the housing projects. The authority has clarified that the penalty order will come into effect immediately.

The Real Estate (Regulation and Development) Act was enacted by the Centre in 2016 to protect homebuyers’ interests and regulate the rapidly growing real estate sector. The Karnataka government implemented the Act through K-RERA in 2017. Under Section 4(2)(l)(D) of the Act, it is mandatory for every promoter or builder to submit a Chartered Accountant-certified annual audit report for each housing project after the close of every financial year.

The audit report must include details such as funds collected for the project, expenditure incurred, and the percentage of project completion. For this purpose, K-RERA has prescribed Form No. 7 and enabled online submission through a dedicated portal.

While K-RERA issues annual reminders and deadlines for submission of audit reports, a majority of builders have allegedly ignored these directions.

Some builders submit reports at their convenience, creating compliance challenges for the authority. The regulator, however, has not disclosed the exact number of builders who have complied or defaulted.

The financial year 2024–25 ended on March 31, 2025, and builders were required to submit audit reports by September 30. However, most failed to do so. K-RERA subsequently extended deadlines to September 12, November 15, and December 12, but compliance remained poor. Consequently, the authority has invoked its powers under Section 38(1) of the RERA Act to levy penalties.

Deadline Extended Till January 20

Meanwhile, K-RERA has extended the deadline for submission of audit reports for the 2023–24 financial year without penalty until January 20.

The authority has warned that if builders fail to submit reports along with the applicable penalty between January 20 and March 31, 2026, action will be initiated from April 1, 2026.

K-RERA has made it clear that recovery proceedings will be initiated as per the provisions of the RERA Act and rules against non-compliant builders, reiterating its commitment to transparency and protection of homebuyers’ interests.

Penalty Structure (Per Year):

Projects up to Rs 25 crore: Rs 20,000

Rs 25 crore to Rs 50 crore: Rs 25,000

Rs 50 crore to Rs 100 crore: Rs 50,000

Above Rs 100 crore: Rs 1,00,000