A payment plan is a second negotiation, separate from the price. Two buyers can pay the same ₹1 Cr for flats in the same block and still be taking very different risks, because of when their money leaves their account and who is holding it while the building goes up.
This guide compares the plans a Bengaluru builder is likely to offer: paying as each stage is built, paying on fixed dates, paying most of it up front for a discount, a subvention or “no pre-EMI” scheme in which someone else services your loan for a while, and a possession-linked or 80:20 plan that backs the bulk of the price into the final instalment. It works the arithmetic behind a down-payment discount, and sets out the RERA and RBI rules that apply whichever one you choose.
For how a bank actually pays a loan out stage by stage, and what pre-EMI costs while you wait, see our guide to home loans on a flat being built; for what a slipping possession date does to a construction-linked schedule, see what a possession date means. This guide’s job is comparing the plans themselves – what each promises, what each risks, and the arithmetic to tell a real discount from a marketing line.
Five ways to pay for a flat
Every plan sold in Bengaluru is a variation on five shapes. Construction-linked ties each instalment to a stage the building has actually reached. Time-linked ties instalments to dates in the agreement instead, so they fall due whether or not the building has kept pace. A down payment collapses most of the schedule into one payment soon after the agreement, against a discount. A subvention or “no pre-EMI” scheme still disburses your loan stage by stage, but the builder, not you, services the interest for a while. And a possession-linked or 80:20 plan keeps most of the price back for the final instalment, at handover.
| Plan | When you pay | Pre-EMI | Risk | What to check |
|---|---|---|---|---|
| Construction-linked | As each stage is reached, over the build | On what the bank has released, rising as it pays more | Tracks progress: if work stalls, so do your payments | The filed progress, before you honour a demand |
| Time-linked | On dates fixed in the agreement | Same as construction-linked, but can outrun the build | You keep paying even if the site goes quiet | Whether dates or milestones actually govern |
| Down payment | Most of it, soon after the registered agreement | None once paid; one release if financed | Most of your money is committed before most is built | The rebate rate, in writing, against what it saves you |
| Subvention / no pre-EMI | The bank pays the builder on its own schedule | The builder pays it, until possession or an agreed date | You still owe the bank if the builder stops | The tripartite agreement, and who is liable on default |
| Possession-linked (80:20) | A small share through the build, the rest at handover | Usually small, since little is released early | One large payment falls due exactly at handover | Whether the final tranche needs a fresh loan release |
Every plan is still subject to RERA’s 10% cap before a registered agreement, and to GST on each instalment. “80:20” describes the split; whether it is also a subvention scheme depends on how the 80% is financed.
The cap before the agreement
Whatever a plan is called, one rule bounds all of them at the start. A promoter cannot take more than 10% of the cost of the flat as an advance or application fee “without first entering into a written agreement for sale … and register[ing] the said agreement for sale”. Not signing an agreement is not enough; Karnataka requires it registered. A builder asking for 30% as a “booking amount” before any agreement exists is asking for something the law does not allow, whatever the payment plan is branded.
The agreement itself, once registered, is what actually fixes the schedule: the Act requires it to state “the dates and the manner by which payments … are to be made”. That is why both a date-based and a stage-based plan are lawful forms – the Act does not prefer one over the other – and why a “down-payment” plan cannot really mean paying everything on day one. In practice it means 10% at booking, then the balance once the agreement is registered, typically within a few weeks.
What the discount is worth
Karnataka’s model agreement for sale gives a promoter room to reward early payment, on its own terms: a rebate “for early payments of installments … by discounting such early payments @ ____% per annum for the period by which the respective installment has been preponed”. The rate is left blank for the promoter to fill in, but once it grants one, the agreement does not let it revise or withdraw the rate.
Suppose your agreement for a ₹1 Cr flat sets six stages: 10% at booking, then 15%, 20%, 20%, 20% and 15% at the plinth, mid-structure, structure complete, finishing and possession – roughly every six months, with the full price reached only at the keys. A down-payment plan collapses that into two payments: the same 10% at booking, then the rest once the agreement is registered, say a month in. Every instalment beyond booking has been preponed by between five and twenty-nine months.
Say the promoter offers 8% a year on however early each instalment lands. Work it instalment by instalment – amount × rate × months preponed ÷ 12 – and the last one, ₹15 lakh due at possession and now paid twenty-nine months early, earns a rebate of ₹15,00,000 × 0.08 × 29 ÷ 12 = ₹2,90,000. Add up all five and the total rebate comes to ₹10.2 lakh: a 10.2% discount for paying ₹89.8 lakh a month in, instead of ₹1 crore spread over thirty.
Whether that is a good trade turns on what your money would otherwise do. Run the identical sum at 7% a year – an assumed rate for a fixed deposit, after tax, not a rate any bank is promising – and the same schedule is worth ₹8.93 lakh, 8.93% of the price: the promoter’s 8% rebate beats it by about ₹1.27 lakh. Run it at 8.5% instead – our loan guide’s illustrative rate, what you would pay to borrow rather than pay early – and the schedule is worth ₹10.84 lakh, 10.84%: the same 8% rebate now falls about ₹64,000 short.
The rate is what decides it, not the rupees. The rebate and the alternative are both a rate applied to the same amounts over the same months, so whichever rate is higher wins, whatever the schedule looks like underneath. Compare the promoter’s quoted rate with your own – your fixed deposit’s rate if the cash would otherwise sit idle, or your loan rate if you would otherwise borrow to make the same payments on schedule – before you compare the discount in rupees. And get the number typed into the agreement: once granted, it cannot be revised, so a figure in clause 1.5 is worth more than a verbal “a good discount”.
What the discount risks
None of that arithmetic prices in the building itself. Suppose the same project stalls at month twelve – not a worst case, just a project a third of the way through its schedule that has run into trouble, which some sites do. On the construction-linked plan, ₹45 lakh has gone out and nothing more will, until work resumes. On the down-payment plan, ₹89.8 lakh went out two and a half years earlier than the stages it was meant to track.
Cash out, by plan
Cumulative payments on the same ₹1 Cr flat, worked example above. Hover or tab to a bar for the amount.
Show as a table
| Point | Down payment | Construction-linked |
|---|---|---|
| Booking | ₹10 lakh | ₹10 lakh |
| Month 1 | ₹89.8 lakh | ₹10 lakh |
| Month 6 | ₹89.8 lakh | ₹25 lakh |
| Month 12 | ₹89.8 lakh | ₹45 lakh |
| Month 18 | ₹89.8 lakh | ₹65 lakh |
| Month 24 | ₹89.8 lakh | ₹85 lakh |
| Month 30 | ₹89.8 lakh | ₹1 Cr |
The gap at month twelve – ₹44.8 lakh – is money paid ahead of the construction it is meant to pay for. Getting it back means a claim against the builder for a refund with interest under RERA section 18, if the builder can pay it, or standing in a queue with every other creditor if it cannot. None of that is priced into an 8% rebate. A rate that beats your fixed deposit still says nothing about whether the building gets finished.
GST follows the instalment
The rate itself does not change with the plan: 5% of most flats’ price, 1% for a qualifying affordable home, nothing once the whole price is paid after the completion certificate. Our guide to the full cost of a flat has the table. What a payment plan changes is when the tax falls due: GST is charged on what the promoter actually bills for each instalment, at the rate in force when that instalment is raised, not as one sum on booking or at the end. A down-payment plan brings that forward with the price – pay around 90% of the flat in the first month and you owe GST on around 90% of it then too, instead of a few lakh at a time as the building goes up.
Subvention: who pays your EMI
A subvention or “no pre-EMI” scheme is a loan, sanctioned and disbursed like any other on an under-construction flat, with a private promise stacked on top: the builder pays your interest, sometimes your whole EMI, until possession or a fixed date. It is marketed as free money. It is really the builder borrowing your credit line on your behalf.
RBI does not let a bank disburse the loan up front to make that promise easier to keep. Disbursal “shall be closely linked to the stages of construction … and upfront disbursal shall not be made in cases of incomplete … housing projects”, with a narrow exception for projects run by a government or statutory authority with no history of stalling. So the “no pre-EMI” part of the deal does not change how the bank pays the builder – only who is paying the interest on what has already gone out, and for how long they keep doing it. RBI requires the bank to weigh “customer suitability and appropriateness” before selling the product, and flags a real consequence if the builder is late: a missed payment is reported to credit bureaus like any other, which can mark down your score for a payment you never controlled.
Housing finance companies are told to go further. Where a bank must simply assess and disclose the risk, an HFC “shall desist from offering loan products involving servicing of the loan dues by builders/developers … on behalf of the borrowers” – full stop, not only when the disbursal itself is upfront. If a subvention offer is financed through a housing finance company rather than a bank, that is worth asking about directly.
The tripartite agreement
A subvention scheme is sometimes formalised with a tripartite agreement among you, the bank and the builder. It typically authorises the bank to disburse to the builder as construction proceeds, and records the builder’s promise to service the account for the agreed period. What it does not do is substitute the builder for you as the bank’s borrower. Your name stays on the loan, and on your credit report, whatever the builder has promised on the side.
Pre-EMI on the ₹75 lakh loan in our home-loan guide’s worked example, over 29 months to possession. You pay it yourself, and you always know exactly where the debt stands.
The same loan, but the builder pays the interest instead of you – for as long as it keeps its word. The ₹75 lakh and the interest on it are still yours: if the builder misses a payment, the bank comes to you for it.
A tripartite agreement routes the payments; it does not make the builder your bank’s borrower. In the stalled Amrapali projects near Delhi, buyers were sold a “Free EMI Period” with the bank paid directly by the builder. When the builder stopped paying, the banks pursued the flat buyers for the debt, not the builder. The Supreme Court stepped in for those buyers alone, in April 2022: it kept their loan accounts off the non-performing list, kept their credit score off zero, and barred any penalty for the missed EMIs – but it did not cancel what they owed. The principal and interest stayed payable, only deferred until possession was offered. That order was specific to Amrapali’s buyers. If a different builder’s subvention scheme fails, nothing guarantees the same relief.
Possession-linked and 80:20
RBI’s own rules describe 80:20 and 75:25 schemes in the very same breath as subvention and tripartite agreements, so treat the label as a schedule, not a promise on its own. Ask directly whether the 80% is disbursed early with the builder servicing the interest – in which case it is also a subvention scheme, and everything above applies – or the 20% is simply what you pay through construction, with the 80% a plain payment, from your own funds or a fresh loan, due at handover.
The risk distinct to this shape is timing. One large payment falls due exactly when you most need everything else to be in order. If it is financed, your bank has to release a bigger final tranche right at possession – get that sanctioned ahead of time, not after the builder calls for it. And a lender will not release money against a finished building without its occupancy certificate; our guide to documents to check before you buy covers what the OC proves and how to see it for yourself.
Before you choose a plan
- Check the 10% cap: no more than that before a registered agreement for sale, whatever the plan is called.
- Get any early-payment rate written in, filled in rather than left blank – once granted it cannot be revised.
- Compare that rate with your own: your fixed deposit’s rate if the cash would otherwise sit idle, or your loan rate if you would otherwise borrow, not just the rupee discount.
- Ask what a stall would cost you: how much you would have paid ahead of the construction, at the point construction is most likely to slow.
- Read each instalment’s trigger: a stage reached, or a date on the calendar.
- On a subvention or “no pre-EMI” deal, get the tripartite agreement and read who is liable if the builder misses a payment. It is you.
- On an 80:20 or possession-linked plan, sanction the final tranche early, and check the occupancy certificate before you rely on the handover date.
- Match every demand to the RERA-filed progress before you pay it.
Sources, checked 10 Sep 2026. The 10% cap and the agreement’s required contents: Real Estate (Regulation and Development) Act, 2016, section 13 (text); refund with interest for delay: section 18. The early-payment rebate: Karnataka RERA Rules, 2017, rule 8A and Annexure-A, clause 1.5, notified 15 June 2020 (Karnataka RERA). Stage-linked disbursal, upfront disbursal and builder-serviced EMI schemes: RBI (Commercial Banks – Credit Facilities) Directions, 2025, paragraphs 114–118 (RBI). Housing finance companies: RBI (Housing Finance Companies) Directions, 2025, paragraphs 183 and 186–187 (RBI). GST charged instalment by instalment: Tax Research Unit, “FAQs on real estate”, 7 May 2019, Q18 (GST Council); rates: Notification 11/2017-Central Tax (Rate), as amended. The Amrapali subvention buyers: Bikram Chatterji & Ors. v Union of India & Ors., Writ Petition (Civil) No. 940 of 2017, Supreme Court of India, order of 18 April 2022 (Supreme Court). The worked example is our own arithmetic, on a ₹1 Cr flat at the rates stated in the text.
The 8% rebate rate, the 7% fixed-deposit rate and the payment schedule in the worked example are assumptions for the arithmetic, not rates any promoter, bank or deposit is offering; your own agreement and lender set the figures that actually apply to you. This is a general guide, not legal or financial advice.