RERA Form 3 is the chartered accountant certificate prescribed under Rule 5 of the State RERA Rules certifying that the withdrawals from the separate bank account of a real estate project have been made in proportion to the percentage of completion of the project and in accordance with Section 4(2)(l)(D) of the RERA Act, 2016. The certificate is issued quarterly (or at the time of every withdrawal in some states) and is uploaded to the State RERA portal.

What does Section 4(2)(l)(D) of the RERA Act require?

Section 4(2)(l)(D) of the Real Estate (Regulation and Development) Act, 2016 requires the promoter to deposit seventy percent of the amounts realised from the allottees into a separate bank account maintained in a scheduled bank, to be used only for covering the cost of construction and the land cost. Withdrawals from this account must be in proportion to the percentage of completion and must be certified by an engineer, an architect, and a chartered accountant in practice.

Who issues the three certificates required for withdrawal?

Three independent professionals certify a withdrawal from the RERA escrow account. The engineer certifies the percentage of physical construction completed. The architect certifies the project plans and the conformity of construction. The chartered accountant certifies that the proposed withdrawal is in proportion to the certified percentage of completion and that the funds have been or will be utilised for the project. All three certificates are uploaded to the State RERA portal with the Form 3 filing.

What is the periodicity of Form 3 filing?

The periodicity of Form 3 filing varies by State. Maharashtra requires Form 3 at the time of every withdrawal, with cumulative quarterly disclosures. Karnataka requires quarterly Form 3 filings. Other states have their own variations. The promoter and the chartered accountant should reference the relevant State RERA Rules for the exact periodicity and the upload protocol.

What are the consequences of non-compliance with Section 4 and Form 3?

Non-compliance with Section 4 attracts a penalty under Section 60 of the RERA Act of up to five percent of the estimated cost of the project. Section 61 also imposes a penalty for failure to maintain the separate bank account and the related records. Where the promoter has diverted funds from the project bank account, the consequences can extend to criminal liability under Section 13 read with Section 59 of the RERA Act. The State RERA can also suspend the project registration.

RERA Form 3 Quarterly Reporting and Section 4 of the RERA Act, 2016: The 70 Percent Escrow Discipline, the CA Certification Cycle, and the Promoter Compliance Workflow

Abstract

Section 4 of the Real Estate (Regulation and Development) Act, 2016 establishes the financial discipline that distinguishes RERA from the prior real estate regulatory regime. Every promoter must deposit seventy percent of the amounts realised from allottees into a separate bank account dedicated to the project, withdraw only in proportion to the certified percentage of completion, and obtain certification from a chartered accountant, an engineer, and an architect at every withdrawal. The chartered accountant's certificate, prescribed as Form 3 under most State RERA Rules, is the principal compliance artefact. This article walks through the legislative framework, the three-professional certification protocol, the State-level periodicity variations, and the promoter-side compliance workflow that prevents project registration suspension and Section 60 penalties.

Introduction

The Real Estate (Regulation and Development) Act, 2016 was the response to a decade of consumer grievances, project delays, fund diversions, and the absence of a single regulator for the real estate sector. The Act was operationalised through State RERA Rules between 2017 and 2019, and is now mature with a substantial body of regulatory orders, appellate decisions, and case law.

The 70 percent escrow mechanism under Section 4(2)(l)(D) is the most consequential operational provision in the Act. It changes the financial architecture of every real estate project from the pre-RERA model of free fund movement across projects and entities to a strict per-project ring-fence with proportionate withdrawals. The Form 3 chartered accountant certificate is the audit trail that makes the mechanism enforceable.

This article walks through the architecture and the compliance workflow.

The legislative framework

Section 4 of the RERA Act, 2016 governs the registration of a real estate project. Section 4(2)(l) requires the promoter to make a declaration on a series of matters, of which sub-clause (D) prescribes the 70 percent escrow obligation.

Section 4(2)(l)(D) reads, in substance, that the promoter shall declare that seventy percent of the amounts realised for the real estate project from the allottees, from time to time, shall be deposited in a separate account to be maintained in a scheduled bank to cover the cost of construction and the land cost and shall be used only for that purpose.

State RERA Rules operationalise the certification requirement. Most states prescribe Form 1 (architect certificate), Form 2 (engineer certificate), and Form 3 (chartered accountant certificate). The State Rules also prescribe the periodicity of Form 3 filing, which varies.

Section 60 prescribes a penalty for non-compliance with Section 4, up to five percent of the estimated cost of the project as determined by the State RERA.

Section 13 read with Section 59 prescribes the consequences of fund diversion or false disclosure, including project registration suspension and, in egregious cases, criminal proceedings.

The 70 percent escrow mechanics

The 70 percent escrow mechanic operates as follows.

Step 1: Collection account. The promoter opens a Collection Account in a scheduled bank for the project. All amounts received from allottees, booking amounts, instalments, escalation payments, are deposited into the Collection Account.

Step 2: Project bank account. The promoter opens a separate Project Bank Account, the designated RERA escrow account, in a scheduled bank. Seventy percent of every deposit into the Collection Account is swept to the Project Bank Account within a specified period, typically the same banking day.

Step 3: Free use account. The balance thirty percent is transferred to the Free Use Account, from which the promoter can pay marketing, sales commissions, brokerage, legal fees, and other non-construction non-land costs.

Step 4: Withdrawals from the Project Bank Account. Withdrawals from the Project Bank Account require the three-professional certification, the engineer's percentage of physical completion, the architect's conformity certificate, and the CA's Form 3 certification that the withdrawal is in proportion.

The proportion test is straightforward in concept and complex in execution. The promoter can withdraw up to (percentage of completion x total project cost) less amounts already withdrawn. The percentage of completion is a moving target through the project, and the cost is updated periodically as actual expenditure data accumulates.

The three-professional certification protocol

The three certificates are independent and complementary.

Form 1: Architect Certificate. Issued by the project architect, certifies the conformity of the construction to the approved plans, the percentage of progress against the approved scheme, and any deviation that has occurred. The architect signs on the basis of site visits and the architectural drawings.

Form 2: Engineer Certificate. Issued by the project structural engineer, certifies the percentage of physical construction completed. The engineer typically follows a head-by-head methodology, foundation, plinth, structure, masonry, plastering, flooring, electrical and plumbing, finishing, and arrives at a weighted percentage.

Form 3: Chartered Accountant Certificate. Issued by a chartered accountant in practice, certifies the financial proportion. The CA verifies the bank statements of the Collection Account and the Project Bank Account, the books of account of the promoter for the project, the percentage of completion certified by the engineer, and computes the maximum permissible withdrawal. The CA also certifies that the funds withdrawn have been or will be utilised for the project.

The three certificates are uploaded to the State RERA portal with every Form 3 filing.

State-level periodicity variations

The periodicity of Form 3 filing varies by State.

Maharashtra. Form 3 is filed at the time of every withdrawal from the Project Bank Account. Quarterly cumulative disclosures are also required.

Karnataka. Form 3 is filed quarterly with the State RERA portal, irrespective of withdrawal activity.

Tamil Nadu, Haryana, Uttar Pradesh. Quarterly Form 3 filing with project-specific variations.

Gujarat, Rajasthan, Madhya Pradesh. Quarterly or half-yearly variations.

The promoter and the chartered accountant should reference the specific State RERA Rules and the State RERA portal's current filing protocol.

The promoter-side compliance workflow

KAMRIT recommends the following workflow for every RERA-registered project.

Step 1: Three-account setup. Open Collection, Project Bank, and Free Use Accounts at the same scheduled bank for ease of sweep automation.

Step 2: Sweep automation. Set up an automated 70-30 sweep from the Collection Account to the Project Bank Account and Free Use Account on each deposit.

Step 3: Project cost master. Maintain a project cost master with the total estimated cost broken down by head, land, construction, statutory approvals, professional fees, contingency.

Step 4: Percentage of completion register. Maintain a register of monthly percentage of completion certified by the engineer.

Step 5: Quarterly Form 3 cycle. Run a quarterly Form 3 cycle with the CA. The CA reconciles the bank statements, verifies the engineer and architect certificates, computes the proportional withdrawal limit, and issues Form 3.

Step 6: State RERA portal upload. Upload Form 1, 2, and 3 to the State RERA portal with the digital signature of the promoter.

Step 7: Audit-trail retention. Retain the bank statements, the books of account, and the three certificates for a minimum of eight years.

Common compliance gaps

KAMRIT has flagged the following common compliance gaps across RERA reviews.

Single account architecture, the promoter operates a single project account instead of the three-account structure, making the 70-30 split unverifiable.
Retrospective certification, the architect and engineer certificates are issued only at the time of withdrawal rather than at monthly intervals, making the audit trail vulnerable.
Fund diversion to related parties, the promoter routes payments through related party contractors at inflated rates, defeating the purpose of the escrow.
Inadequate project cost documentation, the project cost master is not maintained at a granular head-by-head level, making the percentage-of-completion calculation imprecise.
Form 3 lag, the Form 3 filing is delayed beyond the State-prescribed periodicity, triggering Section 61 penalties.

Talk to KAMRIT

KAMRIT advises promoters on the full RERA Section 4 compliance architecture including the three-account setup, the percentage-of-completion methodology, the Form 1, 2, and 3 certification cycle, and the State RERA portal filings. Talk to KAMRIT to run a RERA compliance health check on your project, plug the gaps in the escrow workflow, and prevent the Section 60 penalty and project registration suspension.

References

Real Estate (Regulation and Development) Act, 2016, Sections 4, 13, 59, 60, and 61.
State RERA Rules, 2017-2019.
Maharashtra RERA Form 3 filing protocol.
Karnataka RERA quarterly compliance circular.
ICAI Guidance Note on Form 3 certification under RERA.