Form 7 and the K-RERA Annual Audit: Is Your Instalment Going Into the Building?

Paying instalments on a flat that is still being built means trusting the developer to spend the money on that building. Karnataka's regulator tests this trust yearly through Form 7, an audit of each registered project's accounts. What follows answers the questions a buyer in Bangalore usually has: what the form proves, what it leaves out, the timetable followed for 2024-25 and practical ways to use it.

Why Does the Law Require an Audit?

The RERA Act, in section 4(2)(l)(D), says that seventy per cent of what buyers pay must be kept in a bank account set apart for the project. Only land and construction costs may be paid from it. Money comes out in step with the work completed, backed by certificates from the project's engineer, architect and chartered accountant.

A yearly audit is added to those certificates. Half a year after each financial year closes is the limit for auditing the project's accounts. The auditor confirms that collections were spent on the project and that withdrawals matched the stage of completion.

What Is Form 7?

The audit reaches K-RERA in this format. The promoter signs in on the regulator's portal, opens its Annual Audit section, picks the project and attaches the audited accounts to the form. A phase that has its own registration and its own account needs a separate filing.

Because a chartered accountant signs it and answers to the profession for the contents, it carries more weight than the updates a promoter files for itself. It still examines money only. Questions of build quality and handover dates fall outside it.

How Did 2024-25 Go?

K-RERA pushed the deadline for 2024-25 back three times, through circulars in September, November and December 2025, and fixed 31 December 2025 as the last date. A fair number of promoters still failed to file. A circular of January 2026 spelled out the consequences.

Filing stayed penalty-free through 20 January 2026. From then until the end of March 2026, filing was still allowed, but together with a penalty. After that, recovery proceedings were slated to start on 1 April 2026 against promoters still in default.

The penalty is imposed by invoking sections 38(1) and 60, and it depends on the estimated cost of the project, for each year of default:

• Rs. 20,000 for a project costing under Rs. 25 Crore
• Rs. 25,000 for one in the Rs. 25-50 Crore band
• Rs. 50,000 for one in the Rs. 50-100 Crore band
• Rs. 1 Lakh for any project above Rs. 100 Crore

Measured against what a development costs, these are modest figures. For a buyer their worth is in what they signal: someone who ignores a deadline extended thrice may lack staff or funds, or may simply not respect the regulator.

How Can a Buyer See the Report?

Since the promoter files through a private login, the easiest step is a request. Once a booking amount is paid, a buyer has fair grounds to request from the builder the newest Form 7 and its portal acknowledgement. Well-organised builders hand both over quickly, and foot-dragging on something so routine is worth remembering.

The portal's public page for the project gives a second angle. A search by project name or number opens separate tabs for complaints, documents, bank details and quarterly updates. In the updates, construction cost is reported alongside progress on amenities, finishing and the structure.

What Should I Check Inside It?

The form is short, so accounting training is not needed. Make sure the project's name, number and promoter entity agree with your agreement for sale. Confirm that the year covered is the most recent due and that the filing was made in time.

Then read the auditor's two statements, one on collections and one on withdrawals. Any comment or qualification the auditor makes should come with a written explanation from the builder. If the auditor notes withdrawals running ahead of construction, money left faster than the building rose. If the auditor notes that records were not made available, that is equally serious.

How Does It Fit With Quarterly Updates?

Progress updates are also filed every quarter, falling due on the 15th of July, October, January and April. A January 2026 circular lets the regulator fine late or missing updates, invoking sections 38(1) and 61.

Put the two side by side. Spending in the year audited should square with the physical progress reported for those months. If heavy spending goes with slow construction, ask why, and visit the site with a camera to see which account better reflects reality.

What If There Is No Audit?

That does not prove money was misused. It does mean the only independent annual check on the project account is absent. Existing buyers should write to the builder asking when the report was filed, and keep the answer.

Anyone still choosing a project can wait, holding back any payment above the booking amount until the filing is produced. Being current on both audit and updates clears only a basic test, and title, approvals and the builder's track record of delivery need separate checks.