Project & Payment
Token vs Booking Amount vs Earnest Money
Three names for money you hand over early. One has a legal cap. One is meant to be forfeited. One has no legal standing at all. Builders use the words interchangeably.
The short answer
Token: a small sum to hold the flat. No legal definition. Often not refundable.
Booking amount: the formal advance. RERA caps it at 10% before a registered agreement.
Earnest money: a good-faith deposit, designed to be forfeited if you walk away.
Indian builders use all three terms loosely and often interchangeably. Do not rely on the label. Rely on the receipt.
The comparison
| Token amount | Booking amount | Earnest money | |
|---|---|---|---|
| What it is | A small sum to hold the unit while paperwork is prepared | The formal advance against the purchase price | A deposit that demonstrates you are serious |
| Typical size | ₹50,000 – ₹2,00,000 | Up to 10% of the price | 10–15% (often the same money as the booking amount) |
| Legal cap | None | RERA: max 10% before a written agreement | None |
| Refundable? | Depends entirely on what's in writing. Often not. | Depends on the agreement. Read the cancellation clause. | Designed to be forfeited if you walk away |
| Counts toward the price? | Usually | Yes | Yes |
| The thing to get | A written receipt naming the unit, the price and the refund terms | A signed agreement — RERA requires one before more than 10% is taken | Written cancellation terms, before you pay |
In practice, Indian builders use these three terms loosely and often interchangeably. Do not rely on the label. Rely on what the receipt says.
The 10% cap — the one hard rule
A promoter may not accept more than 10% of the cost of the apartment as advance, without first entering into a written agreement for sale, and registering it.
This is the single most useful sentence in the Act for a buyer at this stage — and almost nobody quotes it.
It means you get to read the agreement — the possession date, the carpet area, the delay penalty, the cancellation clause — while your exposure is still only 10%. You can still walk away.
A builder asking for 25% "to confirm the booking, agreement to follow" is in breach. You can say so, calmly, and watch what happens. Their reaction is itself useful information.
What comes back, and when
| What happened | Token | Booking | Earnest money |
|---|---|---|---|
| You walk away, no reason | Usually lost | Often forfeited per the agreement | Forfeited — that's its purpose |
| Your loan is rejected | Only if written in | Only if written in | Only if written in |
| The seller withdraws | Should be refunded | Refunded | Refunded, often with a penalty on top |
| Title is defective | Refundable | Refundable | Refundable |
| Builder fails to deliver | RERA: refund + interest | RERA: refund + interest | RERA: refund + interest |
Look at the second row. 'Only if written in' — three times. A home loan rejection is the commonest way Indian buyers lose a deposit, and it is almost entirely preventable with one sentence in a receipt.
The receipt is the whole game
None of these three terms has a definition that protects you. The document does.
1. The exact unit — tower, floor, flat number.
2. The agreed total price, and what it includes.
3. The amount paid, and that it is adjustable against the price.
4. A deadline by which the agreement will be executed.
5. Refundable in full if the home loan is not sanctioned.
6. Refundable in full if the seller withdraws or the title is defective.
Line 5 is the one people skip, and it is the one that costs them.
The right sequence
Do it in this order and almost nothing can go badly wrong:
- Check RERA. Registration, possession date, progress filings, complaints. Ten minutes, free.
- Get your home loan sanctioned — a real sanction letter, not an in-principle nod. This removes the commonest cause of deposit loss entirely.
- Ask for the draft agreement. Read the cancellation clause, the delay penalty, the carpet area.
- Pay the token — with the six-line receipt.
- Sign the registered agreement before paying more than 10%.
- Then pay the balance, on a construction-linked schedule, keeping 5–10% for possession.
Most buyers do steps 4 and 6 and skip the rest. That is why most of the problems on this page happen.
Frequently asked questions
What is the difference between token amount and booking amount?
A token is a small, informal sum to hold the unit while paperwork is prepared — no legal definition, often not refundable. A booking amount is the formal advance against the price, and RERA caps it at 10% before a written, registered agreement for sale. In practice builders use the terms loosely, so rely on the receipt, not the label.
Which of these is refundable?
It depends less on the label and more on what you wrote down. Earnest money is specifically designed to be forfeited if you withdraw. Tokens and booking amounts are refundable only on the terms you agreed. In all three cases, a home loan rejection only gets your money back if you explicitly wrote that condition in.
How much can a builder take before signing an agreement?
10% of the cost of the apartment, and no more. Section 13 of the RERA Act prohibits a promoter from accepting more than that as an advance without first entering into a written agreement for sale and registering it.
What happens if my home loan is rejected after paying the booking amount?
Unless you wrote a loan-approval condition into the booking terms, the amount is usually forfeited. This is the single most common way Indian buyers lose a deposit, and it's almost entirely preventable — get your loan sanctioned before you pay, and write the condition in anyway.
Should I pay a token amount in cash?
Never. Cheque or bank transfer only, for any of these three payments. You want an unarguable paper trail, and cash raises tax questions you don't need.