Contours of “Carpet Area” and the Treatment of Balconies in Indian Real Estate Law

Contours of “Carpet Area” and the Treatment of Balconies in Indian Real Estate Law

Introduction

Precise measurement standards are the backbone of transparency in real-estate transactions. Among these standards, the concepts of “carpet area” and “balcony area” assume special significance because they directly influence pricing, taxation, regulatory approvals, and the enforceability of buyer-builder agreements. Divergences between contractual representations and statutory definitions have been the root of much litigation, whether before Consumer Forums, Real Estate Regulatory Authorities (RERAs) or fiscal tribunals. This article critically analyses the legal status of balconies vis-à-vis carpet area in India, drawing on statutory texts, planning regulations, and case-law across multiple domains.

Statutory Framework

1. Real Estate (Regulation and Development) Act, 2016 (“RERA”)

Section 2(k) defines carpet area as “the net usable floor area of an apartment, excluding the area covered by external walls, areas under service shafts, exclusive balcony or verandah area and exclusive open terrace area, but including the area covered by internal partition walls.” The accompanying explanation clarifies that “exclusive balcony or verandah area” is appurtenant to the apartment and meant for the allottees’ exclusive use.[1] Hence, under RERA the balcony is explicitly carved out of carpet area, which must now be separately disclosed in the promoter’s registration documents (see s. 4(2)(h)).[2]

2. Maharashtra Ownership of Flats Act, 1963 (“MOFA”)

MOFA does not furnish a quantitative definition of carpet area, but Section 2(a-1) describes a “flat” as a self-contained premises that may include a “(with a garage)”. The Supreme Court in Nahalchand Laloochand Pvt. Ltd. v. Panchali Co-op. Housing Society Ltd. held that the promoter must charge proportionately to carpet area for common areas and cannot separately sell them.[3] Although the dispute there concerned stilt parking, the judgment’s interpretive method—tight textualism to protect purchasers—has guided later controversies about balcony disclosures under MOFA-governed projects.

3. Development Control / Municipal Regulations

Municipal bye-laws and Development Control Regulations (DCR) often integrate balconies into minimum habitability computations. For instance, DCR 33(10) (Mumbai) mandates that slum-rehabilitation tenements of 225 sq ft carpet include balcony, bathroom and water-closet.[4] Conversely, in Avinash Gaikwad v. State of Maharashtra the Supreme Court refused to infer a separate 10 % balcony entitlement where the governing agreement was silent, underscoring that balcony obligations flow from the applicable DCR and contractual matrix, not from general equity.[5]

4. Income-tax Incentives for Affordable Housing

Section 80-IB(10) of the Income-tax Act, 1961 places a 1,500 sq ft ceiling on the “built-up area” of eligible residential units. Section 80-IB(14)(a) defines built-up area to include the thickness of walls and balconies, but exclude common areas. Tribunal decisions such as Raghavendra Constructions (Kar. HC) and Nagarjuna Construction Co. (ITAT) treat balcony inclusion as mandatory while explicitly excluding open terrace.[6]

Judicial Elaboration of Balcony–Carpet Distinction

1. Consumer-Protection Jurisprudence

In Pioneer Urban Land & Infrastructure Ltd. v. Govindan Raghavan the Supreme Court invalidated one-sided clauses capping a purchaser’s remedies for delayed possession, declaring that unequal bargaining power warrants judicial correction.[7] Although the dispute was not about measurements, the Court relied on the principle that statutory consumer rights (now amplified by RERA) cannot be contracted away. Post-RERA, buyers routinely invoke measurement deviations as “deficiency of service”. Consumer Commissions have ordered refunds where actual carpet area—excluding balconies—fell short of promises, e.g. Sat Parkash Gautam v. Omaxe Ltd.[8]

2. RERA Adjudications

Recent RERA orders, e.g. Sunita Mudliar v. Prithvi Developers and Nidhi Sao v. Prithvi Developers, reiterate that promoters must disclose both carpet and exclusive balcony areas; any “loading” of common areas into the declared carpet figure is impermissible.[9] Authorities have directed recalculation of consideration and refund of excess charges where balcony space was subsumed in carpet computations.

3. Planning-Law Disputes

The Delhi High Court in R.L. Bhardwaj v. Shivalik Co-op. Group Housing Society treated balcony of a first-floor flat as part of its carpet area because the allottee paid full consideration for that portion, whereas the rooftop was held common.[10] This differential treatment shows that balcony status depends on the twin tests of (a) exclusive appurtenance, and (b) payment/allotment structure.

Analytical Issues

A. Harmonising Divergent Definitions

RERA’s exclusion of balconies from carpet area appears to conflict with Section 80-IB’s inclusion of balconies in built-up area. The contradiction is superficial: carpet area under RERA serves consumer-protection objectives, while built-up area under the Income-tax Act serves fiscal incentivisation. The former emphasises “net usable” space; the latter seeks to prevent undue tax benefits by counting all internal projections. Courts have respected this contextual distinction, applying the specific statute according to its purpose.

B. Treatment of Dry / Service Balconies

Municipal regulations, e.g. the Mumbai DCR and the 2022 Supreme Court decision in M.C.G.M. v. Property Owners Association, recognise “dry balconies” as countable in carpet area calculations for assessment of property tax and FSI utilisation.[11] Nonetheless, for sale-consideration disclosures under RERA, even a dry balcony requires separate mention. Hence, a space can be included for development-control purposes yet excluded for consumer-sale and marketing purposes.

C. Balconies as Common Areas

Balconies generally attach exclusively to the apartment to which they are appurtenant and therefore do not constitute “common areas”, unlike stilt parking which Nahalchand classified as common.[3] However, if a balcony or chhajja is cantilevered and accessible to all (for example, in certain hostel designs), it could be recharacterised as common, reverting benefit to the association. Developers therefore bear the burden of architectural clarity and transparent conveyancing.

D. Price Discrimination & Anti-Profiteering

Anti-profiteering investigations, e.g. Arjun Kumar Parwani v. Signature Builders and Jotbir Singh Bhalla v. Suncity Projects, scrutinise whether balcony charges were mis-configured after GST rate changes. Because balconies are non-carpet, they are often priced at a lower rate (₹ X per sq ft) than carpet (₹ Y per sq ft), but failure to proportionately pass on GST credits across both categories may amount to profiteering.[12]

Policy Considerations

  • Consumer Clarity: Requiring separate disclosure of balcony area under RERA aligns with global best practices and reduces scope for hidden “loading.”
  • Architectural Flexibility: Development regulations that allow exclusion of balconies from FSI computations incentivise breathable design, yet simultaneous sale-price transparency must be guarded.
  • Inter-statutory Consistency: A uniform glossary issued by the Ministry of Housing & Urban Affairs, cross-referenced in RERA, Income-tax, and State DCRs, would mitigate definitional confusion.

Conclusion

Indian law now presents a relatively coherent hierarchy: (i) Carpets are “net usable” and exclude balconies for RERA disclosures; (ii) Balconies are included in built-up computations for income-tax incentives; (iii) Municipal regulations may variably include or exclude balconies for FSI or property-tax purposes; and (iv) Whether a balcony is a common or exclusive area depends on architectural design, consideration paid, and documentary intent. Developers must therefore calibrate their marketing materials, agreements for sale, and regulatory filings to these layered requirements. Purchasers, regulators and courts have acquired robust doctrinal tools—rooted in the consumer-centric reasoning of Pioneer Urban and the textual discipline of Nahalchand—to police non-transparent practices. As jurisprudence matures, the balcony will remain a small but pivotal ledge on which larger questions of fairness, taxation and urban form are negotiated.

Footnotes

  1. RERA 2016, s. 2(k) & Explanation; see also RERA orders in Sunita Mudliar (2022) and Nidhi Sao (2022).
  2. RERA 2016, s. 4(2)(h) (mandatory disclosure of balcony and terrace areas).
  3. Nahalchand Laloochand Pvt. Ltd. v. Panchali Co-op. Housing Society Ltd., (2010) 9 SCC 536.
  4. Bombay DCR 33(10) & Appendix IV cl. 1(i); see Awdesh Vasistha Tiwari v. SRA, 2006 SCC OnLine Bom 481.
  5. Avinash Gaikwad v. State of Maharashtra, (2010) SC (unreported).
  6. CIT v. Raghavendra Constructions, (2012) Karn HC; Nagarjuna Construction Co. v. DCIT, (2013) ITAT Hyd.; see also Commonwealth Developers v. CIT, (2014) Bom HC.
  7. Pioneer Urban Land & Infrastructure Ltd. v. Govindan Raghavan, (2019) 5 SCC 725.
  8. Sat Parkash Gautam v. Omaxe Ltd., DCDRC (2016).
  9. Sunita Mudliar v. Prithvi Developers, MP RERA (2022); Nidhi Sao v. Prithvi Developers, MP RERA (2022).
  10. R.L. Bhardwaj v. Shivalik Co-operative Group Housing Society, 1994 DLT 600.
  11. M.C.G.M. v. Property Owners Association, (2022) SC.
  12. Arjun Kumar Parwani v. Signature Builders, 2019 SCC OnLine NAA 26; Jotbir Singh Bhalla v. Suncity Projects, 2020 SCC OnLine NAA 90.