Construction Linked Payment Plan: Builder Payment Plans Explained

When you book an under-construction flat in Bangalore, the price is only half the story. The other half is when you pay it. A construction linked payment plan spreads your payments across building milestones, while other plans ask for most of the money upfront or on fixed dates. The plan you pick decides how much risk you carry if the project slows down.

Here's how the common builder payment plans work, what RERA says about advances, how GST applies to each instalment, and the red flags to look for in a payment schedule.

What Is a Construction Linked Payment Plan?

In a construction linked plan (CLP), you pay in instalments that fall due only when the builder reaches specific stages of construction. You pay a booking amount, then a larger instalment when the agreement for sale is registered, and then smaller tranches as the foundation, each slab, brickwork, finishing and handover are completed.

If you take a home loan, the bank also releases money in stages, usually after its own engineer or the builder's architect certificate confirms progress. You pay pre-EMI (interest only on the amount disbursed) until the full loan is released, after which the regular EMI starts.

A typical CLP schedule

Every builder's schedule is different, but a Bangalore CLP often looks roughly like this:

• Booking: up to 10%
• On registration of agreement for sale: taking you to about 20%
• Foundation or plinth completion: 10%
• Each slab or group of slabs: 3 to 5% per stage, adding up to about 40 to 50%
• Brickwork, plastering and flooring: around 10 to 15%
• On possession or occupancy certificate: 5 to 10%

The key point is that your money moves only when the building visibly moves. If work stops, so do your payments.

Other Builder Payment Plans You'll Come Across

Down payment plan

You pay most of the price, often 90 to 95%, within a short window after the agreement, and the balance on possession. In return, builders may offer a discount on the base price. The discount is real money, but so is the risk. If the project is delayed by two or three years, your funds are locked up and you may be paying rent and EMI at the same time.

Time linked payment plan

Instalments fall due on fixed dates, every three or six months, whether or not construction has progressed. This is the plan most likely to leave you paying for floors that don't exist yet. Avoid it unless the project is close to completion.

Possession linked or flexi plans (20:80, 30:70)

You pay a portion, say 20 or 30%, early on and the rest at possession. These are often used to attract buyers in slower launches. They lower your upfront outlay, but read the agreement closely: some versions are tied to a subvention arrangement with a bank.

Subvention Schemes: Why Banks and Regulators Grew Cautious

Under a subvention scheme, the builder agrees to pay the interest (pre-EMI) on your home loan until possession, so you pay 'nothing till keys'. It's usually set up through a tripartite agreement between you, the builder and the bank.

The catch: the loan is in your name. If the builder stops paying the pre-EMI, the bank comes to you, and your credit score takes the hit. Many of these schemes also had banks releasing large sums to builders upfront instead of in line with construction.

In 2013, the RBI told banks that housing loan disbursals for under-construction projects should be closely linked to construction stages, not paid upfront, specifically flagging 80:20-style schemes. In 2025, the Supreme Court directed the CBI to look into what it described as a nexus between builders and lenders in stalled projects, mainly in the Delhi-NCR region, and reports say cases were later registered outside NCR as well. The matter is still being heard, so details may change.

Subvention isn't illegal, and some reputed builders still run versions of it. But if a plan relies on the builder paying your interest, ask what happens if they stop, and get the answer in the tripartite agreement.

The 10% Rule Under RERA Section 13

Section 13 of the Real Estate (Regulation and Development) Act, 2016 says a builder cannot take more than 10% of the flat's cost as an advance or application fee without first signing a registered agreement for sale with you. This applies to projects registered with RERA Karnataka.

In practice: pay your booking amount, then insist the agreement for sale is executed and registered before you pay anything more. If a sales team asks for 20 or 25% 'to block the unit' before the agreement, that's a breach of the Act. Our guide on how to check a project on RERA Karnataka walks you through verifying the registration first.

RERA also requires builders to deposit 70% of the money collected from buyers into a separate project account, to be used only for that project's land and construction. That safeguard works best when your payments are linked to actual construction.

GST on Each Instalment

GST applies only to under-construction property. A flat that has received its occupancy certificate before you buy it doesn't attract GST.

• Non-affordable homes: 5% GST, without input tax credit, on each instalment.
• Affordable homes: 1% GST, for flats with carpet area up to 60 sq m in metro cities like Bengaluru and a price up to ₹45 lakh. Both conditions must be met.

The builder adds GST to every demand letter, so a ₹10 lakh slab instalment on a regular flat becomes ₹10.5 lakh. Stamp duty, registration and maintenance deposits are separate and don't attract this GST. As of 2026, these rates survived the 2025 GST rate overhaul, but check the latest before you buy.

If your flat costs ₹50 lakh or more, you also need to deduct 1% TDS from each payment to the builder and deposit it with the tax department. The section number changed under the Income-tax Act, 2025, but the obligation is the same.

How to Read a Payment Schedule

The payment schedule is usually an annexure in the agreement for sale. Go through it line by line:

1. Add up the percentages. They should total 100% of the agreed price. Extra items such as car parking, club membership, BESCOM and BWSSB deposits and legal fees are often listed separately, so total those too.
2. Check how early the money goes in. If 50% or more is due before the superstructure is complete, the schedule is front-loaded.
3. Look at the last instalment. A healthy plan keeps at least 5 to 10% for possession, which gives you some bargaining power for snags.
4. See what triggers each payment. 'Completion of 5th slab' is clear. 'As per progress' or a date is not.
5. Find the delay clauses. Compare the interest the builder charges you for late payment with what it pays you for late possession. Under RERA, both should be at the same rate.
6. Match the stages to the RERA website. Builders upload quarterly progress on the RERA Karnataka portal. A demand for the 12th slab when the last update shows the 6th is worth questioning.

Red Flags in Builder Payment Plans

• A demand for more than 10% before the agreement for sale is registered
• Payment requested in cash, or into an account that isn't in the builder or project's name
• Large instalments tied to vague milestones such as 'commencement of work'
• Time linked schedules on a project that is still at excavation stage
• Subvention offers where the tripartite agreement doesn't spell out what happens if the builder stops paying
• A tiny or zero possession instalment, which leaves you nothing to hold back at handover
• Very steep discounts for full upfront payment, which can signal the builder is short of funds

For a broader view on choosing between project stages, see our guide on ready-to-move vs under-construction flats.

A fair payment plan won't make a weak project safe, but a bad one can turn a delay into a financial problem. If you're comparing new launches in Bangalore, Skyros Estates can help you shortlist projects, review payment schedules and check RERA details before you book.