Section 18 of the RERA Act mandates that developers compensate allottees for delayed possession. The compensation is not arbitrary. It is calculated as simple interest at the rate of SBI's Marginal Cost of Lending Rate (MCLR) plus 2% per annum.
The formula is straightforward: Interest = (Principal Amount × Rate per Annum × Number of Days Delayed) / 365.
Here, Principal Amount is the amount paid by the allottee toward the property purchase. The rate per annum is the SBI MCLR applicable on the first day of each month, plus a flat 2% addition. The number of days delayed runs from the date of agreed possession (as stated in the agreement) until the date of actual possession or the date the builder submits a possession letter, whichever comes first.
This is not compound interest. MahaRERA consistently applies simple interest. The rate updates monthly based on SBI's published MCLR, which means your calculation must account for rate changes across the delay period.
Let's work through a practical example. Assume an allottee purchased a ₹50 lakh property with these details: agreed possession date 31 March 2023, actual possession date 30 September 2023 (182 days delay), and amount paid ₹25 lakh (50% of purchase price).
Break the delay period into monthly segments. For April 2023, assume SBI MCLR was 8.15%. Rate = 8.15% + 2% = 10.15%. Interest for April (30 days) = (25,00,000 × 10.15% × 30) / 365 = ₹20,959.
For May 2023, assume SBI MCLR was 8.35%. Rate = 10.35%. Interest for May (31 days) = (25,00,000 × 10.35% × 31) / 365 = ₹21,938.
Continue this for June through September, adding a proportionate calculation for the partial final month. Total all monthly interest amounts to get the final Section 18 compensation due.
The Section 18 interest calculator automates this process. Instead of manual month-by-month computation, you input the property price, amount paid, agreed date, actual date, and SBI MCLR rates—the tool calculates the exact interest owed.
Mistake 1: Using the agreed rate from the loan agreement. Agents sometimes confuse home loan interest with Section 18 interest. The Section 18 rate is tied to SBI MCLR + 2%, not your client's actual home loan rate.
Mistake 2: Calculating compound interest instead of simple interest. Section 18 mandates simple interest only. If you compound the interest, your claim will be rejected in a tribunal hearing.
Mistake 3: Including the delay period incorrectly. The delay starts the day after the agreed possession date and ends on the date of actual possession. Miscounting by even a week can shift the interest amount by thousands of rupees, particularly in long delays.
Mistake 4: Using an outdated or wrong SBI MCLR rate. SBI MCLR changes monthly. You must use the official rate published by SBI on the RBI website for each calendar month during the delay. Using an approximate rate will not hold in a tribunal.
Mistake 5: Including pre-agreed possession payments in the principal. Only actual payments made count. If the allottee signed the agreement but hasn't paid, that amount is not part of the Section 18 calculation.
Recent MahaRERA tribunal orders establish a clear pattern in Section 18 calculations. In the Paranjape Constructions case (Order 2026), the tribunal calculated interest from the agreed possession date until the date the builder issued the possession letter—not the date of physical handover. This distinction matters for properties where the possession letter precedes actual access by weeks.
In the Pinnacle case (Order 2026), the tribunal applied SBI MCLR rates published on the RBI website as of the first day of each calendar month. The tribunal rejected the builder's argument that the rate should apply for the entire quarter. Monthly updates are mandatory.
The Marvel Landmarks order (2026) clarified that allottees can claim interest on all amounts paid until possession, including registration fees, parking charges, and society memberships—if these were stipulated in the agreement and paid before possession.
Riverdale Grove (April 2026) reinforced that the 2% addition is non-negotiable. No builder can claim a lower rate, and no agreement clause can override this statutory rate. These orders form the foundation for how tribunals will evaluate your client's interest claim if it goes to dispute.
Most properties involve staged payments. The allottee pays 10% at booking, 25% at agreement, 30% at construction stages, and the balance at possession. Section 18 interest applies to each tranche separately from the date it was paid.
For example, if the allottee paid ₹10 lakh at booking (1 Jan 2023) and another ₹15 lakh at agreement (1 April 2023), and possession was delayed until 30 Sept 2023, you calculate interest on ₹10 lakh for the full delay period (273 days) and interest on ₹15 lakh for the shorter period (183 days). This stagewise approach is more favorable to the allottee and is the method MahaRERA expects.
SBI MCLR rates change monthly. During a delay of 12+ months, you might see 4 to 6 rate changes. Manually tracking each rate and recalculating can lead to errors. Use the interest calculator to log each payment date, amount, and the SBI MCLR rate applicable for each period. The tool then computes the blended interest automatically.
Agents who can show clients an exact, auditable Section 18 interest calculation build trust and reduce disputes. When presenting a delay compensation claim, provide the allottee with a month-by-month breakdown showing the principal, the SBI MCLR rate used, the number of days in that month, and the interest earned.
Include a reference note stating that the calculation follows Section 18 of the RERA Act and cites recent tribunal orders (Pinnacle, Paranjape, Marvel Landmarks) to confirm the methodology. Allottees often feel shortchanged when given a single figure. Transparency neutralizes this concern.
Share the downloadable interest calculator template with clients so they can verify the calculation themselves or take it to their legal counsel. This shifts the perception from the agent making a subjective judgment to the agent applying a statutory formula transparently.
If a builder questions your calculation, you have a documented, tribunal-aligned methodology to defend. This protects both the allottee and your professional reputation.
The MahaRERA exam tests your ability to apply RERA sections in real-world scenarios. Section 18 calculations appear in multiple question formats: definition-based MCQs asking what triggers compensation, scenario-based questions requiring you to identify the correct interest rate, and case-study questions where you must calculate interest from a fact pattern.
Understanding the SBI MCLR + 2% formula, recognizing common mistakes, and knowing how tribunals interpret the rule ensures you answer these questions confidently. The topic-wise practice tests include several Section 18 scenarios you should drill. The full-length mock exams test your ability to apply this knowledge under time pressure, just as you would in the actual exam.
Beyond the exam, this knowledge is directly applicable in your work as an agent. You will field questions about delay compensation almost every week. Master the calculation now, and you transform a regulatory requirement into a competitive advantage.
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