Centre moves to replace jail term with penalty for homebuyers under RERA amendment

The Centre has proposed a significant amendment to the Real Estate (Regulation and Development) Act, 2016, bringing major relief to homebuyers across India. Under the proposed change, the existing provision that allows for a maximum imprisonment of one year for an allottee who fails to comply with orders issued by the Real Estate Appellate Tribunal is set to be removed.

Instead of imprisonment, the amended provision seeks to impose a monetary penalty that may extend up to 10 per cent of the cost of the plot, apartment, or building concerned. This proposed revision forms part of the Jan Vishwas (Amendment of Provisions) Bill, 2026, which was introduced in the Lok Sabha by Minister of State for Commerce and Industry ****.

At present, Section 68 of the RERA Act provides for imprisonment of up to one year and may also include a daily fine that can cumulatively go up to 10 per cent of the project cost if an allottee fails to comply with the orders of the Appellate Tribunal. The latest amendment aims to replace the criminal liability with a civil financial penalty, signalling a more balanced and consumer-friendly regulatory approach.

The move is being seen as a major relief for homebuyers, especially in cases involving disputes between developers and property allottees. Industry experts believe that removing the jail clause will reduce fear among genuine buyers while retaining accountability through a substantial monetary penalty.

The RERA Act was originally enacted to bring greater transparency, accountability, and consumer protection to India’s real estate sector. It mandates registration of all real estate projects with the respective state regulatory authorities and provides a legal framework for resolving disputes between developers and buyers.

This amendment is expected to further strengthen buyer confidence and improve ease of compliance in the sector, while maintaining the core objective of protecting homebuyers’ interests and ensuring transparent real estate transactions.