AI004🏠 Housing & PropertyReply draft

Builder Demanding Cash-Only Payment — Your Rights

What you need to know

If a builder is insisting on cash-only payments for a property purchase, this is a serious legal red flag in India. Under RERA (Real Estate Regulation and Development Act, 2016), all transactions must be transparent and traceable, and builders are required to maintain proper accounts. The Income Tax Act restricts cash transactions above ₹20,000 for immovable property, and any payment above ₹2 lakh in cash is prohibited under Section 269ST. Insisting on cash helps builders evade taxes, circumvent RERA escrow rules, and leaves you with no legal proof of payment — putting your entire investment at risk.

Your rights

You have the right to pay via cheque, NEFT, RTGS, or UPI — no builder can legally force cash-only payments

Payments above ₹2 lakh in cash for property are prohibited under Section 269ST of the Income Tax Act

You can demand a proper registered agreement and receipts for all amounts paid

You can report the builder to RERA if they refuse transparent, documented transactions

What you should do now

Action first

Refuse cash payment and document everything

Politely decline in writing (email/WhatsApp) stating you will only pay via banking channels
Save all builder communications where cash is demanded — these are evidence

Verify builder's RERA registration

Check your state's RERA portal for the project registration number
Confirm the builder is legally obligated to accept traceable payments

Send a formal written notice to the builder

Use the draft below to notify the builder in writing of your legal position
Send via email and registered post so there is a timestamped record

File a complaint if builder continues to insist

File a RERA complaint in your state against the builder for non-transparent practices
Report the cash demand to the Income Tax Department's local office or online portal

Acts applicable

Income Tax Act, 1961

central

Section 269ST — prohibits cash receipts above ₹2 lakh

Real Estate (Regulation and Development) Act, 2016

central

Section 4 & 11 — builder transparency and account obligations

Prevention of Money Laundering Act, 2002

central

Section 3 — cash-based property deals may constitute money laundering

Where to complain

RERA Grievance Portal (MahaRERA example)Income Tax Complaint Portal (Report Cash Transactions)

Consumer complaint portal: e-jagriti.gov.in (replaced edaakhil.nic.in as of Jan 2025). Labour complaints: col.gujarat.gov.in. All links verified June 2026 via web search against official government sources.