K-RERA To Levy Penalties On Builders For Non-Submission Of Annual Audit Reports For FY 2024–25

The Karnataka Real Estate Regulatory Authority (K-RERA) has issued a circular mandating the imposition of annual penalties on promoters who have failed to submit their annual audit reports for their housing projects for the Financial Year 2024–2025.

Despite the regulatory mandate, the authority noted that several projects had bypassed the final deadline of December 31, 2025, even though the initial statutory due date for the FY 2024–25 reports had been extended through earlier circulars on September 12, November 15, and December 12, 2025.

K-RERA reiterated that under Section 4(2)(l)(D) of the Act, promoters must have their project accounts audited by a practising chartered accountant within six months of the end of the financial year and submit the certified report in Form 7 through the K-RERA portal. The audit must confirm that the money collected for a project was used only for that project and that withdrawals were made in line with the project's stage of completion.

Referring to its powers under Sections 38(1) and 60 of the Act, the Authority said that promoters who failed to meet the December 31, 2025 deadline would be liable to penalties. The penalty will apply for every financial year of default and will depend on the project's total estimated cost.

Under the penalty schedule set out in the circular, projects with an estimated cost of less than Rs. 25 crore will attract a penalty of Rs. 20,000. Projects with an estimated cost above Rs. 25 crore and up to Rs. 50 crore will be fined Rs. 25,000. For projects above Rs. 50 crore and up to Rs. 100 crore, the penalty is Rs. 50,000. Projects with an estimated cost exceeding Rs. 100 crore will be liable to pay a penalty of Rs. 1,00,000.

For the purpose of calculating the penalty, K-RERA clarified that the first year of default will be treated as ending on March 31, 2026, irrespective of how long the delay has been. Any continued non-compliance after that will be treated as a fresh year of default beginning on April 1 of the following financial year.

The Authority stated that promoters must submit the pending audit report for FY 2024–25 and pay the applicable penalty through the RERA e-payment system, which has been enabled on the K-RERA portal under the annual audit report submission option.

K-RERA has also granted promoters a final opportunity to submit the FY 2024–25 audit report without penalty up to January 20, 2026. The circular warns that if promoters fail to submit the report and pay the penalty between January 21 and March 31, 2026, the Authority will initiate recovery proceedings from April 1, 2026 in accordance with the RERA Act and the Karnataka RERA Rules, 2017. The circular takes effect from January 9, 2026.