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ARTICLE · 07 JANUARY 2026

Classification Of Extra Development Charges In Real Estate Projects As Deposits Under The Companies Act, 2013

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In India's real estate regime, developers commonly collect various charges from buyers to fund the provision of essential facilities.

IndiaReal Estate and Construction
Sourav Bhagat
Sourav Bhagat
Prajata Kishore Chakrabutty
Prajata Kishore Chakrabutty
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In India's real estate regime, developers commonly collect various charges from buyers to fund the provision of essential facilities. One such levy is Extra Development Charges (EDC), which typically cover costs pertaining to electricity connections, power back-up, formation of residents' associations, legal documentation, maintenance, and sinking fund contributions. While EDCs are integral to the effective functioning and long-term sustainability of real estate projects, they often attract scrutiny from auditors and regulators, particularly on the question of whether such collections should be classified as 'deposits' under the Companies Act, 2013 (Act), thereby triggering stringent compliance requirements.

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