This is illegal — full stop. Here is what you need to know:
Why it's illegal: Under RERA Section 13, no promoter can accept more than 10% of the sale price before executing a registered sale agreement. The registered agreement must state the FULL sale consideration. Any "under-the-table" payment not in the registered document violates RERA and the Registration Act.
The risks to you:
- The unregistered payment has zero legal protection. If the builder defaults, you lose that ₹5L with no recourse.
- Income tax scrutiny: paying cash creates a trail mismatch — you'll have to explain the source.
- You can't claim home loan tax benefits on unregistered amounts.
- The property is valued at the registered price only — so for resale or inheritance, the ₹5L vanishes.
What you should do:
- Refuse firmly. If the builder insists, walk away from this project.
- Report to Maharashtra RERA (maharera.mahaonline.gov.in) — cash demands are a complaint-worthy offense.
- Document the demand if you can (WhatsApp/email proof is valuable).
Market reality: In Pune's current market, cash-over-circle-rate demands are negotiable down to zero if you're firm. Many builders use this as a soft opener. Push back — most will drop it.