Token money in a property deal is the first money that moves and the money most often fought over. In South Delhi it is a bank transfer of a few lakh against a bayana receipt, followed by 10% at the agreement to sell, then the balance at registry. Here is how much is normal, what the receipt must say, when it is refunded and when it is forfeited, what the “double bayana” custom is worth in law, and how the tax department treats a token that is kept.
Token money — bayana in Delhi usage, earnest money in the contract — is the sum a buyer pays to take a property off the market and bind both sides while the agreement is drafted and the title is checked. On a South Delhi floor it is typically 1–2% of the price, paid by bank transfer within a day or two of the handshake, against a signed receipt that names the property, the price, the time to complete and what happens if either side walks. It is followed by an agreement to sell with about 10% paid, and by the balance at registry, usually within 30 to 90 days. Three rules decide what it is worth. A buyer who backs out forfeits a reasonable token; a seller who backs out refunds it and, by Delhi custom and often by contract, pays the same again as compensation, failing which the buyer can sue for the floor itself. It cannot be paid in cash once it reaches ₹20,000. And a token the seller keeps is taxable income in the seller’s hands the year it is forfeited.
We take a token on almost every transaction we close, and we have refunded, forfeited and litigated enough of them to know that the receipt is where deals are won or lost. This guide is the version of the conversation we have with both sides before the transfer is made: how much to pay, what the paper must say, the four ways a token comes back or does not, and the tax and cash rules that changed the mechanics in the last decade. The document that follows the token — the agreement to sell — is covered in our guide to sale deeds, agreements and GPAs; this one is about the money that comes before it.
There is no statutory amount. The token is negotiated, and the right figure is the one that makes walking away expensive for the buyer without making forfeiture a windfall for the seller. In our experience that is 1–2% on a large South Delhi floor and rarely more than 5% on anything. The larger number — the 10% at the agreement to sell — is the market’s convention for earnest money proper, and it is the figure a court is most comfortable treating as a genuine pre-estimate rather than a penalty.
| Stage | Typical amount | Paper | Discipline |
|---|---|---|---|
| Day 0–2: token | 1–2% — ₹10–20 lakh | Bayana / token receipt signed by seller and buyer, two witnesses | Bank transfer only; TDS of 1% deducted and deposited if the deal crosses ₹50 lakh |
| Day 7–15: agreement to sell | 10% cumulative — ₹1 crore less the token | Agreement to sell on nominal Delhi stamp, price, schedule, completion date, default clauses | Seller hands over the document file; diligence window opens |
| Day 15–75: diligence and finance | — | Title chain, sanctioned plan, dues, collaboration agreement, loan sanction | The 21 checks in our buying checklist; any defect surfaces here, not at the registry |
| Day 30–90: registry | Balance 90% | Sale deed stamped at 8% (man) / 5% (woman) / 6% (joint) plus 1% registration, registered | RTGS or banker’s cheque before the sub-registrar; possession and keys against the balance |
Two mechanics changed the token in the last decade. First, cash: under Section 269SS (now Section 185 of the Income-tax Act, 2025) no one may accept an advance of ₹20,000 or more in cash in relation to immovable property, and under Section 269T a cash token cannot be refunded in cash either — both breaches carry a penalty equal to the amount, as our guide to cash in property deals sets out. The bayana in an envelope is a museum piece. Second, TDS: the buyer’s 1% under Section 194-IA is deductible at the time of each payment, including the advance, whenever the total price is ₹50 lakh or more — the mechanics are in our TDS guide. If a deal collapses after TDS has been deposited on the token, the seller claims the credit in their return; it is not lost, only delayed.
The receipt for token money in a property deal is a contract, and in a dispute it is usually the only one. A one-line “received ₹10 lakh as token for E-block floor” leaves every consequence to argument. A good receipt runs to a page and settles seven things:
Full names and PANs of seller and buyer, the property by address and floor, and the seller’s confirmation of ownership and authority to sell — including that all co-owners consent, which matters on inherited floors.
The total consideration, the token received and how, the amount and date of the next payment, and the outside date for the sale deed. Vague timelines are how tokens end up in court.
State that it is earnest money adjustable against the price. Without that recital a buyer can argue it was a mere advance and recover it on default, and a seller can argue it was a non-refundable fee.
If the buyer fails to complete by the outside date, the token stands forfeited. Keep the sum reasonable: courts uphold forfeiture of genuine earnest money, but cut down amounts that operate as a penalty under Section 74 of the Contract Act.
If the seller fails or refuses to complete, the token is refunded with the agreed compensation. Delhi custom is dugna bayana — return double — and it is enforceable as liquidated damages when written down and reasonable, and worth little when it is only assumed.
A title defect, a missing sanction, an undisclosed encumbrance, or — if negotiated — a loan refusal: each should trigger a full refund within a stated number of days, with no forfeiture and no compensation. This clause is the buyer’s most valuable sentence.
Both parties sign, two witnesses attest, and the receipt records the UTR of the transfer. The bank narration should say what the money is; a token described as a “loan” on a statement invites a different set of tax questions.
A token is a promise with a price on it. Write the price of breaking it on the receipt, for both sides, and most of the disputes I have seen never happen.
| What happens | The token | The law behind it |
|---|---|---|
| The deal completes | Adjusted against the price at the agreement or the registry | The receipt’s recital that it is earnest money adjustable against consideration |
| The buyer withdraws or fails to pay on time | Forfeited, if the receipt says so and the amount is reasonable | Section 74, Contract Act: genuine earnest money may be forfeited; a penalty-sized sum is scaled down to actual loss |
| The seller withdraws, or sells to someone else | Refunded in full plus the agreed compensation — customarily an equal amount | Liquidated damages if written; otherwise damages on proof. The buyer may instead sue for specific performance, which the Specific Relief Act, as amended in 2018, now makes the rule rather than the exception |
| A title or sanction defect surfaces | Refunded in full, no forfeiture | The receipt’s conditions clause; a seller who cannot give clean title cannot keep earnest money |
| The buyer’s loan is refused | Refunded only if a financing condition was negotiated into the receipt; otherwise forfeitable | Contract terms — there is no implied loan condition, which is why our home loan guide says get the sanction-in-principle before the token |
The second and third rows are where Delhi custom and the Contract Act meet. Custom says the buyer loses the token and the seller pays double; the Act says forfeiture and compensation must be reasonable, and courts have enforced both when the sums were genuine estimates of loss and trimmed both when they were not. A 10% earnest is routinely upheld; a 30% “token” forfeited on a week’s delay is routinely cut down. The practical rule is to keep the token proportionate and the consequences symmetrical — and to remember that the buyer’s strongest remedy against a seller who reneges is no longer the refund but the suit for the floor itself, brought within three years.
Paying a broker instead of the seller — the token belongs in the owner’s account, never an intermediary’s, and the receipt is signed by the owner. Paying one co-owner — on inherited and jointly held floors every owner signs, or the token binds nobody. A bounced cheque — a token cheque that bounces is a criminal complaint under Section 138 of the Negotiable Instruments Act, which is why the market has moved to transfers against a UTR.
Until 2014 a forfeited advance was not income; it simply reduced the seller’s cost of acquisition under Section 51, so the tax arrived years later as a larger capital gain. That changed with Section 56(2)(ix), carried into the Income-tax Act, 2025 as part of Section 92: any advance received in the course of negotiations for the transfer of a capital asset that is forfeited because the transfer does not go through is taxable as income from other sources, at the seller’s slab, in the year it is forfeited. The cost of the floor is no longer reduced. A seller who keeps a ₹20 lakh token therefore declares ₹20 lakh of income that year; at the 30% slab plus cess, about ₹6.24 lakh of the windfall goes to the exchequer.
The buyer’s side is the mirror image. A forfeited token is not a capital loss for the buyer, because no capital asset was transferred; it is simply money gone. Where the seller pays the buyer compensation for reneging — the “double bayana” — the compensation is a capital gain in the buyer’s hands, being the price of giving up the right to enforce the agreement. And the TDS deducted on a token is neither party’s loss: it sits against the seller’s PAN and is claimed in the seller’s return whether the deal completes or not. Sellers who want the arithmetic of the sale itself, from the token to the final 12.5%, will find it in our guide to selling a builder floor.
Token money in a property deal should never become the dispute. We draft the bayana receipt both sides can live with, run the diligence inside the window, and get the deal from token to registry without the token becoming the dispute. Tell us the floor.
Practice figures (token size, timelines, the 10% convention) are SouthDelhiFloors desk observations for the South Delhi market as of September 2026 and vary by deal. Legal positions summarised: Section 74 of the Indian Contract Act on forfeiture and liquidated damages; the Specific Relief (Amendment) Act, 2018 on specific performance; Section 138 of the Negotiable Instruments Act; Sections 269SS and 269T of the Income-tax Act (new Sections 185 and 188) on cash advances; Section 194-IA on TDS; Section 56(2)(ix) (new Section 92) on forfeited advances. Verify current provisions at incometaxindia.gov.in and take legal advice before paying or receiving a token.
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