RERA Chartered Accountant Certification & Audit

Section 4(2)(l)(D) of the Real Estate (Regulation and Development) Act, 2016 requires every promoter to maintain 70% of all amounts realised from allottees in a dedicated escrow bank account. Funds from this account can only be withdrawn for land cost and construction cost of that specific project. Before each withdrawal, the promoter must obtain a certificate from a Chartered Accountant certifying that the withdrawal is in proportion to the percentage of completion and is for permissible purposes. The bank holding the escrow account must receive this certificate before processing the withdrawal.

Yes — Section 4(2)(l)(D) and the related regulations of state RERA Authorities do not provide a de minimis threshold. Every withdrawal from the escrow account, regardless of amount, requires the tripartite certification: CA certificate on proportionality to completion and permissible use, Architect certificate on percentage of completion, and Engineer certificate on structural progress. The bank is obligated to obtain these certificates before releasing funds.

The calculation is broadly: (Percentage of project completion certified by Architect) × (Estimated total project cost) = Total permissible cumulative withdrawal to date. From this, subtract all prior cumulative withdrawals from the escrow account. The balance is the maximum permissible withdrawal in the current cycle. The Estimated total project cost is taken from the project cost estimate certified at the time of RERA registration. This is why an accurate project cost estimate at registration is critical — it defines the escrow withdrawal ceiling throughout the project.

An unauthorised escrow withdrawal — meaning a withdrawal without the required CA, Architect, and Engineer certificates — is a violation of Section 4(2)(l)(D) of RERA. The state RERA Authority can treat it as misappropriation of allottee funds, impose a penalty of up to 5% of the project cost under Section 62, and in serious cases treat it as grounds for project suspension or cancellation of registration. Allottees can also use evidence of unauthorised escrow withdrawals to support refund claims before the Adjudicating Officer.

The RERA Act and most state regulations do not designate a specific CA firm that must be engaged — the requirement is that the certification be by a 'Chartered Accountant' in the sense of a person holding a Certificate of Practice issued by the Institute of Chartered Accountants of India (ICAI). However, the CA issuing the certificate must have access to the project's financial records and the bank statements of the escrow account in order to make the proportionality calculation — this is not a certificate that can be issued sight-unseen. The certifying CA must be prepared to stand behind the certificate if queried by the Authority.

The RERA project account audit is a project-specific audit distinct from the promoter company's statutory audit under the Companies Act. While the Companies Act 2013 requires a statutory audit of the entire company's accounts, RERA requires that each registered real estate project maintain separate accounts and that these project-specific accounts be audited independently. The RERA project audit examines: total allottee collections, escrow deposits and withdrawals, project expenditure classified between land cost, construction cost, and other costs, and the reconciliation of allottee-wise collections with the booking register.

The deadline for annual project audit and upload varies by state Authority. Most state RERA regulations require the audited project accounts to be uploaded to the portal within a prescribed period after the end of the financial year — commonly 6 months (i.e., by 30 September for the financial year ending 31 March) or as specified in the state's regulations. PNPC tracks state-specific deadlines for all clients and initiates the project audit process by April to ensure compliance by the portal deadline.

Most state RERA Authorities prescribe the format of the project accounts through their regulations or notifications. The standard format includes: a receipts and payments account (all inflows and outflows for the project), a statement of accounts for the dedicated escrow account (opening balance, deposits, withdrawals, closing balance), a schedule of project cost (actual vs estimated), an allottee-wise collection schedule, and a CA report/certificate on the accounts. Some states provide specific templates on their portals.

The RERA project audit itself does not formally extend to GST — GST compliance is audited separately through GST audit or annual return reconciliation. However, the project accounts that are audited for RERA purposes must be consistent with the GST returns filed — the allottee collections reported in the RERA accounts must reconcile with the GST output declared in GSTR-1 and GSTR-3B. An inconsistency between the two creates dual exposure: a potential Authority inquiry on the RERA side and a GST demand on the tax side.

With effect from 1 April 2019, the GST Council rationalised rates for residential real estate. Under-construction residential apartments that qualify as 'affordable housing' (carpet area up to 60 sq.m. in metropolitan cities or 90 sq.m. elsewhere, and value up to ₹45 lakh) are taxed at 1% GST (effective rate — no ITC). Under-construction non-affordable residential apartments are taxed at 5% GST (effective rate — no ITC). Under-construction commercial units are taxed at 12% GST with ITC eligible. Completed units sold after the Occupancy Certificate (OC) is issued are not subject to GST — only stamp duty and registration charges apply.

Yes. Section 194-IA (under the Income-tax Act, 1961 — renumbered, with the same substantive rule, under the Income-tax Act 2025 which took effect 1 April 2026; confirm the current section citation with your CA before quoting it in a filing) requires a buyer (allottee) to deduct TDS at 1% of the total consideration at the time of making payment to a resident seller (promoter), if the consideration for the immovable property is ₹50 lakh or more. This TDS must be deducted at each payment by the allottee, deposited to the government using Form 26QB, and a TDS certificate in Form 16B issued to the developer. For RERA projects, this means the developer's gross receipts from allottees are reduced by 1% TDS — which must be accounted for in the project accounts and the escrow deposits.

Under Section 35 of RERA, the Authority may cause an investigation into the affairs of a registered project if it has reason to believe that a violation has occurred. During such inspection, the Authority's representatives are empowered to examine and take copies of: all books of accounts, registers, documents, and records of the project; the escrow bank account passbook and statements; all escrow withdrawal certificates issued by the CA; allottee-wise collection records; and the promoter's correspondence with allottees. The Authority may also seek a physical inspection of the project's construction progress.

The state RERA portal quarterly update requires the promoter to upload, among other things, the total amounts received from allottees, the amounts deposited in the escrow account, the amounts withdrawn from the escrow account, the current escrow balance, and any changes in project financial parameters. While the CA does not necessarily 'sign' the quarterly update in most states, the financial data in the update must be accurate and consistent with the project's books of accounts. A quarterly update that misrepresents collections or escrow movements exposes the promoter to Authority inquiry and potential criminal liability under Section 60.

The RERA Act and most state RERA regulations do not prohibit the same CA or CA firm from acting as both the promoter company's statutory auditor under the Companies Act and the auditor of the project-specific accounts for RERA purposes. However, where the project accounts form a material part of the promoter company's overall financials, the same CA firm performing both roles provides better integration and consistency across the two audit reports. This is the arrangement PNPC typically recommends — one integrated engagement covering both the statutory company audit and the RERA project audit.

If the project accounts reveal that the amount maintained in the escrow account is less than 70% of cumulative allottee collections (a 'shortfall'), the CA cannot issue a clean escrow withdrawal certificate — and indeed, the shortfall itself represents a pre-existing compliance violation. The CA should bring the shortfall to the attention of the promoter and advise on remediation: replenishing the escrow account to restore the 70% threshold before any further withdrawals are processed. Issuing a withdrawal certificate on a project with a known escrow shortfall would expose the CA to professional liability.

Construction finance (term loans or project finance from banks, NBFCs, or Housing Finance Companies) adds complexity to RERA escrow accounting. Loan disbursements from the lender are typically made directly to contractors or into the developer's account — they are not allottee collections and therefore do not create a 70% escrow deposit obligation. However, the lender bank may have a charge on the project's cash flows and may require the escrow account to be operated under a tripartite agreement. Withdrawal certifications must account for the source of construction funds (own funds, allottee escrow, or loan disbursement) to avoid double-counting.

Section 60 of RERA provides that if any promoter knowingly provides false information in the RERA application or the documents uploaded to the portal, or fails to maintain proper books of accounts as required under the Act, the Authority may impose a penalty which may extend to 5% of the estimated cost of the real estate project. The penalty is over and above any civil liability arising from the non-maintenance of accounts (such as allottee refund claims based on inability to verify collections and escrow movements).

Yes, if the plotted development project is required to register under RERA (i.e., it meets the area or unit thresholds under Section 3), the same CA obligations apply: 70% of collections from plot purchasers must be maintained in a dedicated escrow account, escrow withdrawals require CA certification, and annual project accounts must be maintained and audited. The 'land cost' in a plotted development context typically refers to the cost of acquiring the original land; the 'construction cost' covers infrastructure development such as roads, drainage, boundary walls, and common facilities.

Real estate developers are assessed under income tax primarily on the 'project completion method' — profits are recognised when the project is substantially complete or possession is given to allottees. However, the stamp-duty-value deeming provisions historically numbered Section 43CA (sale of immovable property held as stock-in-trade below stamp duty value), Section 50C (on land/building held as a capital asset sold below stamp duty value), and Section 56(2)(x) (property received below fair market value) can create deemed income at the transaction level irrespective of project completion. Additionally, the developer is responsible for deducting TDS historically under Section 194-IC on payments under a Joint Development Arrangement (JDA) to the landowner. Note: these are Income-tax Act 1961 section numbers; the Income-tax Act 2025 (effective 1 April 2026) preserves the underlying rules but has renumbered and consolidated sections, so confirm the current citation with your CA before use in any filing.

Section 194-IC (Income-tax Act 1961 numbering; renumbered under the Income-tax Act 2025 effective 1 April 2026, so verify the current section reference before citing it in a filing) requires a developer/promoter who pays any monetary consideration to a landowner under a JDA (other than in kind, i.e., as units developed) to deduct TDS at 10%. This TDS is in addition to the capital gains treatment (historically Section 45(5A)) of the landowner's gain from the JDA at the time of completion certificate. For RERA purposes, the landowner who receives units (rather than cash) under a JDA is not the 'promoter' for RERA compliance — the developer-side party is the registered promoter and bears all RERA obligations.

Maintenance deposits — amounts collected from allottees before possession as a pre-payment of future maintenance charges — are allottee collections. The 70% escrow obligation in RERA applies to 'amounts realised from allottees' without specifically carving out maintenance deposits. However, many state Authorities have taken the position that maintenance deposits collected under a separate maintenance agreement (not part of the sale consideration under the AFS) are outside the escrow obligation. The safest position, until the relevant state Authority clarifies, is to include maintenance deposits in the collection record and either include them in the 70% calculation or separately document the basis for their exclusion.

Yes. Any order or penalty imposed by the state RERA Authority can be challenged before the Real Estate Appellate Tribunal under Section 44 of RERA. The Appellate Tribunal must hear and dispose of appeals within 60 days. Pending the appeal, the Appellate Tribunal may stay the Authority's order on the promoter depositing a specified amount as security. Appeals against the Appellate Tribunal's order lie before the High Court. In most cases, staying an escrow-related penalty requires depositing either the penalty amount or a specified proportion of it as security with the Tribunal.

RERA does not specify a statutory records retention period in the central Act, but the general principle under Indian law is that records supporting filed returns and statutory documents should be retained for at least 8 years from the end of the relevant financial year (broadly consistent with the income tax assessment reopening limitation period — cited under Section 149 of the Income-tax Act 1961; this has been renumbered under the Income-tax Act 2025 effective 1 April 2026, so confirm the current section reference with your CA). For RERA-specific records, we recommend retention for the duration of the project plus the 5-year defect liability period under Section 14(3), plus a further 6 years — making the total recommended retention period approximately 10 to 15 years from project commencement for long developments.

PNPC structures RERA CA certification services on an annual retainer basis covering: a specified number of escrow withdrawal certificates per year (typically 12 to 24, with additional certificates at a per-certificate rate beyond the retainer cap), quarterly compliance financial data preparation (4 per year), and annual project account audit. The retainer is indexed to project size (estimated project cost) and complexity (number of phases, number of allottees, presence of FDI). A fixed-fee engagement letter is issued at the start of each project year so developers can budget predictably.

PNPC's CA offices in Chennai, Bangalore, Hyderabad, and Mumbai-connected network cover all major RERA-active states including MahaRERA (Maharashtra), TNRERA (Tamil Nadu), K-RERA (Karnataka), HRERA (Haryana), UP-RERA (Uttar Pradesh), RERA Rajasthan, AP-RERA, Telangana RERA, and Kerala RERA. For projects in smaller states or union territories, PNPC coordinates with associated CA firms in those jurisdictions while retaining the primary CA engagement relationship. PNPC's Dubai office covers RERA advisory for NRI and UAE-based developers with Indian real estate projects.

Yes. PNPC offers a consolidated RERA compliance mandate for developers with multiple registered projects. Each project has its own escrow account, withdrawal certificate cycle, quarterly update calendar, and annual audit — but these are managed under a single coordination framework with a dedicated engagement manager. The advantage of a consolidated mandate is consistent CA certification across all projects, a single point of contact for all Authority interactions, and integrated project accounts that are consistent across the developer's portfolio for income tax and GST purposes.

This is a serious compliance situation requiring immediate action. The recommended steps are: (1) Engage a CA immediately to compile a full retrospective reconciliation of all escrow withdrawals and compare them against what would have been permissible at each withdrawal date. (2) Assess whether the total withdrawals to date are within the proportionate limit or whether there is an excess withdrawal (which constitutes potential escrow misappropriation). (3) If total withdrawals are within the proportionate limit, obtain retrospective CA, Architect, and Engineer certificates for each past withdrawal — these will not be fully compliant (as RERA requires contemporaneous certification) but demonstrate good-faith documentation. (4) Consider voluntary disclosure to the state Authority with a remediation plan before the Authority discovers the lapse.

PNPC Global has been providing Chartered Accountant services to the real estate sector since the 1990s — well before RERA's enactment in 2016. Since RERA came into force in 2017, PNPC has issued escrow withdrawal certificates for projects across MahaRERA, TNRERA, K-RERA, HRERA, UP-RERA, and AP-RERA; conducted annual project account audits for residential and commercial developers; and assisted developers in responding to Authority inquiries with comprehensive financial documentation. Our real estate CA team understands construction-phase accounting, contractor billing cycles, allottee payment schedule management, and the intersection of RERA, GST, and income tax that every Indian developer must navigate.

The starting point is a project review call with PNPC's RERA compliance team. We review the project's current RERA registration status, existing escrow account records, any prior escrow withdrawal history, and the quarterly update compliance position. Based on this review, we issue a fixed-scope engagement letter covering escrow withdrawal certification, quarterly compliance data preparation, and annual project audit — with a pricing structure that reflects the project's scale and activity level. Contact PNPC's Chennai, Bangalore, Hyderabad, or Dubai office, or submit an inquiry through the website. Most developers who engage PNPC after an initial review have their compliance structure in place and the first withdrawal certificate issued within two weeks of signing the engagement letter.