Karnataka RERA Annual Audit Reports: Filing Requirements and Non-Compliance

1. Annual Audit Report in Form 7

K-RERA prescribes submission of the project’s Annual Audit Report online in Form 7. The prescribed form is made available through the Authority’s website, and promoters should use the applicable format and filing facility for the relevant financial year.

2. Portal filing and communications from K-RERA

Following the end of the financial year, the Authority enables the online filing facility and communicates the filing requirement to promoters of registered projects. It may also issue notices to promoters of projects not reported as completed in the previous financial year.

K-RERA generally communicates filing instructions and any extension of the submission period through notices or circulars published on its portal. Promoters should check the applicable communication for the relevant financial year rather than relying on an earlier year’s filing window.

3. Audit completion and report submission are distinct

The statutory audit deadline and the portal submission deadline should be tracked separately. An extension of time for uploading Form 7 does not, by itself, alter the six-month statutory period for getting the project’s accounts audited under Section 4(2)(l)(D).

4. Non-filing and potential penalties

Failure to submit an Annual Audit Report within the prescribed or extended period may result in regulatory action. The source article notes that K-RERA has previously treated non-filing as a contravention of Section 4 and imposed penalties under Section 60 of the Act, which provides for a penalty that may extend up to five per cent of the estimated cost of the real estate project.

The source article specifically refers to instances of penalties of up to one per cent of the estimated project cost. That historical observation should not be read as a fixed statutory penalty for every case.

5. Show-cause notices and outstanding reports

The original article highlights show-cause notices issued in relation to non-filing of Annual Audit Reports for FY 2022–23. A promoter receiving such a notice should examine the financial year and alleged default, respond within the specified period, and take steps to submit the outstanding report.

A response to a notice and subsequent filing should be handled promptly. Whether a penalty is imposed or avoided depends on the applicable law, the notice, the facts of the case and the Authority’s decision.

Annual audit compliance requires coordination between the promoter’s finance team, project records and the Chartered Accountant. Promoters should maintain a clear record of the audit’s completion, Form 7 preparation, online submission and acknowledgements.

Maintain an audit and filing calendar

Track the six-month statutory audit period from the close of each financial year, and separately track the Form 7 filing deadline or any extension formally communicated by K-RERA.

Keep project-wise accounts and audit records ready

Ensure that project-wise accounts, records of amounts collected, expenditure and withdrawals are available for the Chartered Accountant’s verification. The certified statement of accounts should support the project-specific checks contemplated under Section 4(2)(l)(D).

Monitor K-RERA circulars and preserve acknowledgements

Review notices, circulars and portal updates issued by K-RERA for the relevant financial year. Retain the completed Form 7, supporting documents and online filing acknowledgement as part of the project’s compliance records.

Respond promptly to notices

If a show-cause notice is received for non-filing, respond within the stipulated time and address any outstanding report. Do not assume that a late submission automatically disposes of proceedings or eliminates potential penalties.

For promoters of projects registered under Karnataka RERA, the annual audit is both a statutory verification of project finances and a recurring compliance responsibility. Completing the audit within the prescribed period and submitting the required report through the K-RERA portal are related but distinct steps.

Maintaining reliable project accounts, monitoring official filing communications and responding promptly to notices can reduce the risk of avoidable non-compliance and regulatory proceedings.