Project & Payment
What is a Token Amount?
The first money you part with, paid at the moment you are least protected and most excited. Slow down for ten minutes.
The short answer
A token amount is a small sum — typically ₹50,000 to ₹2 lakh — paid to hold a flat while the paperwork is prepared.
It has no statutory definition, and in many cases it is not refundable. Whether you get it back depends entirely on what is written on the receipt — which is why the ten minutes you spend on that receipt is the highest-value ten minutes of the whole transaction.
What a token amount is
You've seen the flat. You want it. The builder or seller wants to stop showing it to other people while the agreement is drawn up. So you pay a token — a small sum that says I'm serious, take it off the market.
Nothing wrong with any of that. The problem is what usually happens next, which is nothing: no receipt worth the name, no written terms, and no clarity about what happens if the deal falls through.
Is it refundable?
There is no law that makes a token amount refundable. There is no statutory definition of it at all.
Whether you get it back depends entirely on what was agreed in writing at the moment you paid it. If nothing was agreed in writing, you are relying on goodwill — and you are relying on it at exactly the moment when the other party has your money and you have nothing.
In practice:
- If you walk away for no good reason — you will usually lose it, and that is not unreasonable.
- If your loan is rejected — you may get it back, if you wrote that condition in. Most people don't.
- If the title turns out to be defective, or the project isn't RERA registered, or the seller misrepresented something — you should get it back, and you may need to fight for it.
- If the seller walks away — you should get it back. Whether you do is another matter.
The receipt — what it must say
This is the whole game. Ten minutes, and it changes everything.
Insist the receipt states:
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. Refund conditions — explicitly including if your home loan is rejected.
6. That the amount is refunded in full if the seller withdraws or the title is found defective.
A serious builder will sign this without blinking. One who resists is telling you something.
Mistakes people make
1. Paying in cash
Never. Cheque or bank transfer only. You want an unarguable trail. Cash also raises tax questions you do not need.
2. Paying before checking RERA
Ten minutes on the state RERA portal, before you part with a rupee. Registration, possession date, progress filings, complaints against the promoter. Do it first.
3. Accepting "it's just a formality"
It is not a formality. It is money leaving your account into someone else's, with no agreement in place. If it were a formality they would not need it.
4. Paying too much
A token is a token. If someone wants ₹5 lakh to "hold" a flat, that is not a token — that is a booking amount, and RERA requires a written agreement before more than 10% is taken.
5. No deadline
Without a date by which the agreement must be signed, your money can sit with them indefinitely while you wait for a document that never comes.
Token vs booking amount vs earnest money
| 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.
Frequently asked questions
Is the token amount refundable?
Often not. There's no statutory definition of a token amount and no law making it refundable. Whether you get it back depends entirely on what was written on the receipt when you paid. If nothing was written, you're relying on goodwill — at exactly the moment the other side has your money and you have nothing.
How much is a token amount in property?
Typically Rs 50,000 to Rs 2 lakh. If someone is asking for Rs 5 lakh to 'hold' a flat, that isn't a token — it's a booking amount, and RERA requires a written agreement before more than 10% of the price is taken.
What should the token receipt say?
Six things: the exact unit, the agreed total price, the amount paid and that it's adjustable against the price, a deadline for executing the agreement, refund conditions including if your home loan is rejected, and a full refund if the seller withdraws or the title is defective. A serious builder will sign this without hesitation.
Can I get my token back if my home loan is rejected?
Only if you wrote that condition into the receipt. Most people don't, and then find out it wasn't automatic. Add it explicitly, before you pay.
Should I pay the token amount in cash?
Never. Cheque or bank transfer only. You want an unarguable paper trail, and cash raises tax questions you don't need.