At a glance
A construction-linked payment plan (CLP) is a way of paying for an under-construction home in which the buyer pays the price in instalments, each one falling due only when the building reaches a defined stage — foundation, each slab, brickwork, plastering, flooring and possession. In India it is one of the most common plans for new residential projects because it ties the buyer’s money to visible progress and the builder’s cash flow to the pace of construction. A CLP works only if every demand is backed by evidence that the stage was actually reached, is dated from that evidence, and is receipted with the correct GST and TDS. Under the RERA Act, no more than 10% of the cost can be taken before a registered agreement for sale.
Updated . Rules as of October 2026 — check your state RERA rules and your CA.
CLP compared with other payment plans
A construction-linked plan is one of four plan types an Indian builder will usually offer. They differ in when the money moves, and so in who carries the risk of a delay.
| Plan | When the buyer pays | Who carries delay risk | Typical fit |
|---|---|---|---|
| Construction-linked (CLP) | In instalments, each due when a construction stage is reached | Shared: if the site stops, demands stop | Most under-construction residential projects |
| Down-payment | Most of the price up front, the balance at possession; often with a discount | Mostly the buyer, who has paid before the building exists | Buyers with cash who want the lowest price |
| Time-linked | In instalments on fixed calendar dates, whatever the site has reached | Mostly the buyer: dates arrive even if work slips | Fast-moving projects with a reliable construction schedule |
| Subvention / flexi | A small share now; a lender or the builder covers interest or defers the rest until possession | Mostly the buyer: the loan is in the buyer’s name, so if the builder stops paying the interest, the lender recovers from the buyer | Slow markets, launches that need early bookings |
Names vary from builder to builder, and many plans are hybrids — for example, a time-linked booking stage followed by construction-linked instalments. What matters is what the agreement for sale says: under the RERA Act it must state the dates and manner of payment.
A typical CLP milestone schedule
The table below is an example, not a rule. Every project sets its own stages and percentages in the agreement for sale; a high-rise will have more slab stages than a ground-plus-two villa project, and some builders split possession into “on completion” and “on handover”.
| Stage | Due on | Example share | Cumulative |
|---|---|---|---|
| Booking | Application / allotment | 10% | 10% |
| Agreement | Registration of the agreement for sale | 10% | 20% |
| Foundation | Foundation complete, certified | 10% | 30% |
| Slabs | Each floor slab cast (e.g. five slabs at 6% each) | 30% | 60% |
| Brickwork | Brickwork of the unit complete | 10% | 70% |
| Plastering | Internal and external plastering complete | 10% | 80% |
| Flooring and fittings | Flooring, doors, windows and fittings complete | 10% | 90% |
| Possession | Occupancy certificate received, unit handed over | 10% | 100% |
The booking row is capped by law: a promoter cannot accept more than 10% of the cost as an advance or application fee before entering into a written agreement for sale and registering it.
How a builder raises a construction-linked demand
A construction-linked demand is a request for the instalment tied to one stage. It should follow the same six steps every time, so that each demand can be defended if a buyer or a RERA authority asks why it was raised.
The site reaches the stage
The site engineer reports the stage complete — the slab is cast, the brickwork is done. Nothing goes to the buyer yet.
The stage is evidenced
Good practice is for the architect or engineer to certify completion, and for the site team to take dated photographs. The certificate and photographs are filed against the stage, with the date it was actually reached.
The demand letter goes out
The demand names the stage, the amount and its share of the agreement value, the GST on it, the TDS the buyer must deduct if it applies, and the bank and UPI details. Attaching the evidence answers the buyer’s first question before it is asked.
The due date is set
The due date is the date the stage was reached plus the grace days in the agreement — say, reached on 14 September with 7 days’ grace gives 21 September.
Reminders run before and after the due date
A reminder a few days before the due date and another a day before catches most delays. After the due date, interest for delay applies at the rate in the agreement and your state’s RERA rules.
The payment is receipted
Each payment gets a numbered receipt that records the amount, the GST and any TDS the buyer deducted, and the statement of account is updated with paid, due and balance.
Date the demand from the evidence, not the plan
Most builders keep a planned construction schedule in a spreadsheet, and it is tempting to raise demands on the planned dates. Do not. A CLP promises the buyer that money falls due when the stage is reached; a demand dated from a plan that the site has not met is, in substance, a time-linked demand the buyer never agreed to. It also breaks the link between collections and progress that RERA relies on: 70% of the money realised from buyers must sit in a separate project account, and withdrawals from it must be in proportion to the percentage of completion, certified by an engineer, an architect and a chartered accountant.
Never re-date money that has already been paid
Stages slip and plans get revised, and the schedule will need to move. Move only the instalments that are still unpaid. A milestone that has been paid, or part-paid, keeps the due date the buyer was given. Re-dating it rewrites history: the buyer’s receipts, the TDS they deposited and any delay interest were all calculated against the original date, and a statement of account that no longer matches them is the start of a dispute.
The rules in India: RERA, GST and TDS
Rules as of October 2026 — check your state RERA rules and your CA.
These are the central rules that touch a construction-linked plan. States add their own RERA rules on top — interest rates and the agreement format in particular — so treat this as a checklist for your CA and legal team, not as advice.
RERA: no more than 10% before a registered agreement
Under section 13(1) of the Real Estate (Regulation and Development) Act, 2016, a promoter cannot accept more than 10% of the cost of the apartment, plot or building as an advance payment or application fee without first entering into a written agreement for sale and registering it. Section 13(2) requires that agreement to state the dates and manner of payment and the interest rates payable by either side on default.
Sources: RERA Act, 2016 (PRS India)
RERA: delay interest is the same rate both ways
The RERA Act defines “interest” so that the rate a promoter charges a buyer for late payment must equal the rate the promoter pays the buyer when the promoter defaults (section 2(za)). A buyer must pay instalments as the agreement specifies and is liable to interest for delay (section 19(6) and 19(7)); a promoter who fails to hand over possession on time pays the buyer interest for every month of delay if the buyer stays in the project, or refunds the money with interest if the buyer withdraws (section 18(1)). The rate itself is prescribed by your state’s RERA rules.
Sources: RERA Act, 2016 (PRS India)
GST: 1% or 5% on under-construction homes, without input tax credit
Since 1 April 2019, GST on the construction of residential apartments sold before completion is charged at an effective 1% for affordable apartments and 5% for other apartments, both without input tax credit. An affordable apartment has a carpet area of up to 60 sq m in the metropolitan cities (Bengaluru, Chennai, Delhi NCR, Hyderabad, Kolkata and Mumbai) or 90 sq m elsewhere, and a gross amount charged of not more than ₹45 lakh. Projects already under way on 1 April 2019 could opt to stay on the older rates with credit. The GST rate changes that took effect on 22 September 2025 left these rates unchanged.
Sources: CBIC FAQs on real estate (GST Council) · EY alert, September 2025
GST: none on a completed home paid for after the completion certificate
GST is not charged on the sale of a completed building where the entire consideration is received after the completion certificate is issued by the competent authority, or after first occupation, whichever is earlier. If even part of the price was received before that date, the sale is treated as construction and GST applies.
TDS: 1% deducted by the buyer when the price or stamp duty value is ₹50 lakh or more
A buyer paying for immovable property (other than agricultural land), where the consideration or the stamp duty value is ₹50 lakh or more, must deduct TDS at 1% of the consideration or the stamp duty value, whichever is higher, on each instalment as it is paid — including each construction-linked instalment. The ₹50 lakh test applies to the whole property, even when there are several buyers or sellers. This was section 194-IA of the Income-tax Act, 1961, deposited through Form 26QB; from 1 April 2026 it is section 393(1) of the Income-tax Act, 2025, and Form 141 replaces Form 26QB. A higher rate applies if the seller has no valid PAN.
Sources: Income Tax Department: section 393 · Income Tax Department: Form 141 FAQs · TaxGuru: Form 26QB to Form 141
Common mistakes with construction-linked plans
Raising the demand before the stage is certified
A demand that goes out on the site engineer’s word, before the certificate and photographs exist, is the easiest one for a buyer to refuse — and the hardest to defend at RERA.
Getting GST or TDS wrong on the receipt
Charging 5% on an apartment that qualifies as affordable, forgetting that the buyer deducted 1% TDS, or receipting the gross amount as if no TDS was deducted all leave the statement of account out of step with the buyer’s own records and tax filings.
Re-dating milestones that are already paid
When the schedule is revised, the whole plan gets shifted — including instalments the buyer has already paid. Their receipts, TDS and any interest no longer match the new dates.
No evidence trail for disputes
Certificates in one inbox, photographs on a site engineer’s phone and demand letters in a shared drive cannot be put together quickly when a buyer files a complaint. File the evidence against the stage and the demand when it is created.
Buyers who cannot see the progress they are paying for
A CLP asks the buyer to trust that each stage is real. If the first they hear of a stage is a demand letter, the next call is to ask whether it is true. Showing progress as it happens turns demands into confirmations.
How ZevroCRM handles construction-linked payments
- Each booking carries a payment schedule seeded from your workspace template, editable per booking.
- Each booking carries construction stages — % complete, the date the site actually reached it, and photographs.
- Marking a stage complete moves the linked demand’s due date to “date reached plus grace days”, so a demand is raised against evidence rather than a spreadsheet date.
- Overdue detection sends 3-day and 1-day reminders.
- Every payment gets a numbered receipt with GST and TDS recorded, and the statement of account shows paid, due and balance per booking.
- Buyers sign in to a customer portal to see dues, bank and UPI details, receipts, documents and the same construction timeline your staff see — and raise a ticket when something is wrong.
- Money already paid is never re-dated: a partial or paid milestone keeps the date the customer was given.