Residential developers · Real estate and construction
Residential projects where collections, withdrawals and completion agree
A residential developer can sell well and still run a project short of cash, because buyers pay against milestones and the money is fenced into a project account. We keep collections, withdrawals, cost and completion in one ledger per project, so every withdrawal has a record behind it and the cost to finish is known before the next tower starts.
In one paragraph
Residential developers building apartments, villas and plotted layouts usually carry one to ten live projects registered under RERA, run by a promoter or managing director with a finance head. The buyer's money is partly ring-fenced. Revenue is often recognised only at possession. GST on most residential units comes without input tax credit. The profit and loss account therefore says very little about a project while it is being built.
Promoter or managing director, with the finance head
The economics
How the money moves in this trade
Buyers pay a booking amount and then instalments linked to construction stages. Under RERA, a prescribed share of what is collected from allottees goes into a separate account for that project. It can be withdrawn only in proportion to the completion of the project, supported by certificates from an engineer, an architect and a chartered accountant in practice. Cash therefore depends on documented progress, not on sales alone.
Cost runs on a different clock. Land, approvals and premiums are paid early, and construction cost follows contractor bills. Residential units under the current GST scheme carry no input tax credit, so tax paid on materials and services is usually a cost of the project. The scheme also requires a minimum share of inputs to be bought from registered suppliers, with tax payable on any shortfall. Unsold units, cancellations and the finance cost of construction loans all sit between collections and margin. A developer who sees only sales bookings sees none of them.
The problem
Where the numbers usually break down
Withdrawals are not tied to a cost record
Money is withdrawn from the designated account on the strength of a completion estimate, while the cost ledger behind it is two months behind and does not agree with the certificates.
Common cost is not split by project or tower
Land, approval fees, sales commissions and head-office cost are booked to one pool, so no tower or phase has a real cost, and the margin on later phases is guessed.
Customer ledgers drift from the agreements
Demands are raised on milestones not yet reached, interest on delayed payment is waived informally, and stamp duty, registration and other charges collected on behalf of buyers sit with project receipts.
Cancellations are settled outside the books
A cancelled booking is refunded and the unit resold, but the forfeiture, the brokerage already paid and the tax on the original instalments are not traced through, so the same unit carries two sets of numbers.
Tax on inputs is not treated as project cost
Because residential units carry no input tax credit, GST paid on contracts and materials belongs in project cost. The requirement to buy a minimum share of inputs from registered suppliers is checked only at year end, when the shortfall, and the tax on it, can no longer be avoided.
What we do
The work, and the result each part produces
Project ledger tied to the designated account
Collections, deposits into the project account, withdrawals and cost incurred reconciled every month for each registered project.
Every withdrawal is supported by a cost and completion record before it is certified.
Cost to complete by tower and phase
Budget, committed cost, cost incurred and cost to complete for each tower, with land, approvals and finance cost allocated on a stated basis.
The margin on unsold stock is known before pricing is set for the next release.
Customer ledger and demand control
Demand letters checked against the construction stage, interest on delayed payment applied as the agreement provides, and pass-through charges held apart from sale consideration.
Customer balances agree with the agreements and the site.
Cancellation and resale register
Each cancellation traced from refund to forfeiture, brokerage reversal and tax adjustment, and linked to the resale of the same unit.
Cancelled units stop distorting sales and margin.
GST cost and registered-supplier tracking
Tax paid on inputs captured as project cost, and purchases from registered and unregistered suppliers tracked project by project through the year rather than at the end.
A shortfall is seen while it can still be corrected.
Construction finance and cash phasing
Loan drawdowns, interest and the expected release from the project account mapped against the construction schedule for each project.
A funding gap between towers is visible a quarter ahead.
Where we start
The first steps of an engagement
Project files and account statements
We ask for the RERA registration and quarterly updates, the designated-account bank statements and withdrawal certificates issued so far, project cost sheets, contractor running bills and the customer booking register.
Designated account reconciliation
Collections, deposits into the designated account and each withdrawal are reconciled to the cost incurred and the completion stage certified at the time.
Project-wise cost centres
Cost centres are set up by project and tower, with a written basis for allocating land, approvals and common cost. GST paid on inputs is booked to project cost from then on.
First project position report
For each project, the first report shows collections, withdrawals, cost incurred and cost to complete, and purchases from registered suppliers against the required share.
How it is measured
The reports the work is judged on
Each is recorded as a baseline before the work starts, so later reports have an honest comparison.
- Designated-account balance reconciled to collections and withdrawals
- Cost incurred, committed and to complete, by tower
- Realisation per square foot against cost per square foot
- Customer receivables aged against construction stage
- Cancellations, refunds and resales by project
- Unsold inventory valued at cost to complete
Who it suits
Written for, and not the right fit for
- You need the chartered accountant's certificate for a withdrawal, or the annual audit of the project account, on its own; those are signed by an independently engaged CA.
- You need legal advice on title, a joint-development agreement or a buyer dispute; that sits with your lawyer.
- Residential developers with one or more projects registered under RERA and collections running through designated accounts.
- Family-run developers whose accounts are kept at company level rather than project level.
- Developers preparing for construction finance, a joint-development partner or a new project launch.
Services
Services this work draws on
Outsourced accounting
Your books kept current and reconciled, closed to a published calendar.
Explore service ↗Costing and profitability
What each product, line and customer really contributes.
Explore service ↗GST, TDS and tax compliance
GST, TDS and income-tax prepared from reconciled data, not a working file.
Explore service ↗MIS and financial planning
Reporting built around the questions you actually need answered.
Explore service ↗Banking, funding and due diligence
Information a lender or investor can verify without a reconstruction.
Explore service ↗Every other service, also available in this trade
Common questions
Questions owners in this trade ask
Do you issue the RERA withdrawal certificate?
No. That certificate is issued by a chartered accountant in practice who is independently engaged. We prepare the project-wise cost, collection and withdrawal records it relies on, so the certifying CA has a complete file rather than a set of estimates.
How do we keep accounts for several RERA projects in one company?
Each registered project needs its own position in any case. We set up project-wise cost centres, allocate common cost on a basis you approve, and reconcile each project account separately.
Why does our profit look low when sales are strong?
Often because revenue is recognised at possession while cost and finance charges are not deferred in the same way, or because tax on inputs isn't being treated as project cost. A project-level view separates timing from genuine margin loss.
5th Quadrant maintains project accounts and prepares the reconciliations and schedules that RERA reporting draws on. Certificates for withdrawal from the designated project account, the annual audit of project accounts, statutory audit and tax-audit reports are signed by an independently engaged chartered accountant, coordinated through 5th Quadrant. Full detail is on our Professional Scope page.
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