How the return is actually structured

Assured means contractual — and that is the whole of it

Assured means contractual. It means a covenant in a registered lease deed by which a named company promises to pay you a stated amount on stated dates, enforceable like any other contractual obligation through the dispute resolution mechanism written into that deed. That is the entire content of the word. It carries no other meaning, statutory or otherwise.

It does not mean guaranteed, which is why we do not use that word and why you should treat anyone who does with more caution rather than less. Under Section 126 of the Indian Contract Act a guarantee is a specific thing: a third party undertaking in a contract to discharge the liability of the principal debtor on default. If no third party has signed a deed of guarantee, then nothing has been guaranteed, however many times the word appears in a brochure.

It does not mean government-backed. No regulator stands behind the rent. There is no deposit insurance — the DICGC cover that protects bank deposits up to Rs 5 lakh per depositor per bank applies to banks, not to lease rentals from a hospitality company. The RBI does not supervise the covenant. The hotel brand does not underwrite it. Where an identified registered unit is genuinely transferred to you, this is a property transaction rather than a regulated financial product, and that cuts both ways: it keeps the structure clean and it means nobody is watching it on your behalf.

The strength of an assured return therefore rests on four things, in this order: how tightly the covenant is drafted, whose balance sheet stands behind it, what security sits underneath it, and how practically you could enforce it. In India, enforcement against a solvent but unwilling counterparty means arbitration or a civil suit measured in years. Against an insolvent one, it means a claim in a queue under the Insolvency and Bankruptcy Code, with the Section 14 moratorium blocking individual recovery the moment the process is admitted.

Ask what security exists. An escrow arrangement into which hotel collections flow before rent is disbursed. A bank guarantee sized to a year or two of rent. A charge over an identifiable asset. Post-dated instruments. Most projects offer none of these, and the honest way to say that is not that the deal is bad but that your rent ranks behind the operator's fees, the staff payroll, the utilities, the statutory dues and the secured lender, and ahead of very little.

Is any of this regulated? SEBI, RBI, RERA and the BUDS Act

This deserves a full answer rather than the one-line assertion that usually appears in a brochure, because the regulatory question is genuinely more interesting than 'it is not a regulated financial product'.

Start with what governs the rent covenant itself. It is a private contract. It is governed by the Indian Contract Act and the Transfer of Property Act, given effect through a lease registered under the Registration Act, 1908, and enforced through the arbitration clause or the civil courts. There is no financial-sector regulator in that chain at all. If the developer stops paying, your counterparty is a company and your forum is a tribunal or a court, not an ombudsman.

Next, RERA. Where the project is registrable under the Real Estate (Regulation and Development) Act, 2016 — the thresholds are broadly land over 500 square metres or more than eight units, and the statutory definition of an apartment extends well beyond residential use — registration brings real obligations on the developer: disclosure of the project on the authority's website, the 70% escrow discipline for construction receipts, timeline commitments, and a complaints forum. That is worth having and you should verify the registration number yourself on the state authority's portal rather than accepting a screenshot. But understand its limit. RERA regulates the sale of the real estate. It does not underwrite the rent. In practice the assured-rent covenant frequently sits in a separate lease or a side agreement outside the RERA-registered agreement for sale, and authorities have not been uniform about whether an assured-return claim falls within their jurisdiction when it sits outside that document. If the rent covenant matters to you — and it is the reason you are buying — insist that it is referenced in the RERA-registered agreement for sale, not parked in an unregistered document alongside it.

Now SEBI. Section 11AA of the SEBI Act defines a collective investment scheme by four cumulative limbs: contributions from investors are pooled and used for the purposes of the scheme; the contributions are made with a view to receiving profits or income; the property is managed on behalf of the investors; and the investors have no day-to-day control over the management and operation. SEBI has used that section against assured-return land and plotted-development schemes, and it carries serious consequences for a promoter — registration requirements, refunds, and prosecution. Whether it reaches a structure like this is fact-specific. The argument that it does not turns on the first limb: if you take a registered sale deed to an identified, physically demarcated unit in your own name, your money has bought a specific asset rather than a share of a pool, and what you have afterwards is a landlord-and-tenant relationship over your own property. The argument gets weaker the further a structure drifts from that: an allotment letter instead of a sale deed, an undivided or fractional interest, a share in an SPV, a payout computed on pooled performance across all units rather than on your own unit. Separately, since 2024 SEBI has brought fractional-ownership platforms in real estate within the small and medium REIT framework under the REIT Regulations. If what is being offered to you is a fraction, a co-ownership share or an SPV interest rather than a whole registered unit, ask directly whether the offeror is registered under that framework — and get the answer in writing.

Then the deposit question, which sellers almost never raise. The Banning of Unregulated Deposit Schemes Act, 2019 defines a deposit broadly as money received by way of advance, loan or in any other form with a promise to return it, with or without interest. It also carves out, among other things, amounts received in the ordinary course of business bearing a genuine connection to that business, including an advance received in connection with the consideration for immovable property under an agreement, provided that advance is adjusted against the property as the agreement specifies. A genuine sale of a unit, where your money is applied to the purchase price of a unit that is then conveyed to you, is intended to sit inside that carve-out. The area to watch is money taken from the public before any transfer, against a promised periodic payment — which is exactly what an assured return paid during construction looks like. The Companies (Acceptance of Deposits) Rules make a similar distinction: an advance for immovable property is excluded from deposits so long as it is adjusted against the property, and can become a deposit if it turns refundable and is not repaid. None of this makes a properly documented sale-and-leaseback unlawful. It does mean that the further a structure sits from 'you own a registered unit', the closer it moves to questions that are not just commercially uncomfortable but legally live.

And note the direction of the risk. If a scheme were characterised as a collective investment scheme or an unregulated deposit scheme, that is not a protection that pays you out. It is an enforcement problem for the promoter that arrives at precisely the moment your money is already inside it. The characterisation risk is a reason to insist on the registered-deed structure at the front end, not a safety net at the back end.

So the honest summary of your recourse: the lease covenant, the registered title, RERA where the project is registered and the covenant is captured within its documents, the consumer forums and civil courts, arbitration if the deed provides for it, and the IBC if the company fails. Not SEBI. Not the RBI. No deposit insurance. This is a description of how the law is framed, not legal advice on your transaction — have an Indian lawyer opine on the specific structure and documents before you pay a booking amount.

What exactly is a sale-leaseback?

A sale-leaseback is two transactions stapled together. First, a sale: the developer sells you a specific, identified, physically demarcated unit inside the resort — villa 14, suite 302 — and you take title by registered sale deed in your own name. You are the owner on the property register, with an undivided share in the land and common areas. Second, a leaseback: you immediately lease that same unit back to the operating company for a long term, and in exchange for giving up possession and use you receive a contractual annual rent, expressed as a percentage of what you paid. Note the asymmetry that most buyers miss: your title is held in perpetuity — it does not expire — while the lease is a separate instrument with its own term. Read the term off your own registered lease rather than off any brochure, because it varies between projects and it is the single number that decides how long the assured rent is actually committed for.

That second leg is where the 8-10% lives. It is rent. It is not interest, not a dividend, not a share of a fund. That framing matters because it determines the law that applies, the head of income the receipt falls under, the remedies available if payment stops, and your position in an insolvency.

This is also why the product is not a timeshare and not a chit fund. A timeshare sells you time. A chit fund or a pooled scheme takes your money into a common pot and promises a managed return. Here, you own a registered asset in your own name and separately lease it out. Strip away the registered sale deed on an identified unit and what remains is not a weaker version of this product — it is a different product with different regulatory questions attached, and you should not buy it under this name.

Who signs what, and why both deeds must be registered

You will sign at least two documents that matter and several that do not. The two that matter are the sale deed and the lease deed. Both should be registered, and the reason is statutory rather than procedural.

A transfer of immovable property worth more than Rs 100 can only be made by a registered instrument — Section 54 of the Transfer of Property Act read with Section 17 of the Registration Act, 1908. Nobody argues about this leg; the sale deed always gets registered because stamp duty is collected on it. Stamp duty is a state subject and varies; across Rajasthan, Karnataka and Goa it has typically fallen somewhere in the 5-8% band including registration fee and applicable surcharges, but confirm the current rate for the specific state, the specific use classification and your buyer category with your lawyer, because rebates, slabs and women-buyer concessions change.

The leg people get careless about is the lease. Section 107 of the Transfer of Property Act and Section 17(1)(d) of the Registration Act require that a lease of immovable property from year to year, for any term exceeding one year, or reserving a yearly rent, be made by a registered instrument. Section 49 of the Registration Act then provides that a document which required registration and did not get it cannot be received in evidence of any transaction affecting that property — subject to the proviso, which allows such a document to be received as evidence of a collateral transaction. Courts have also treated an unregistered long lease that has been acted upon as creating a month-to-month tenancy under Section 106 of the Transfer of Property Act. Put those together and the consequence is still blunt, even if it is not absolute: if your 8% sits in an unregistered lease agreement, a memorandum of understanding, a side letter or an email from the sales head, you are relying on a document you may not be able to put before a court to prove the rent covenant and the term. The promise does not vanish, but your ability to enforce it on the terms you thought you had can. Your lawyer should advise on this for the actual documents rather than on the general rule.

'We will register the lease after possession' is a common and sometimes genuine answer, because the lease often cannot commence before the occupancy certificate is issued. It is acceptable only if the obligation to register is itself written into a document you hold, with a date, a named party responsible, and a consequence for failure. An open-ended intention is not a covenant.

Two further checks at registration that buyers routinely skip. One: run a title search going back thirty years and pull the encumbrance certificate. If the developer took construction finance secured by a mortgage over the land, your unit can be sold subject to that bank charge unless a specific no-objection and partial release is obtained and recorded at the time of your registration. Two: confirm that the local authority actually permits separate registration of individual hotel units at that site, and that the land use and conversion order support commercial hospitality use. Some states and municipalities restrict the sub-division of hotel inventory, and a sale deed that cannot be cleanly registered is not a sale deed.

One buyer-side duty that is genuinely yours, not the developer's. Where you buy from a resident seller and the consideration is Rs 50 lakh or more, Section 194-IA requires you as buyer to deduct 1% — computed on the higher of the consideration and the stamp duty value — and to deposit it with a Form 26QB filing. On a construction-linked payment plan that duty applies instalment by instalment, not once on the base price, and you need the seller's PAN to do it. Deducting once, on the base amount, at the end, is how buyers create a default in their own name. If the seller is a non-resident, Section 194-IA does not apply and withholding runs under Section 195 with a TAN and a different return instead. Confirm the mechanics with your CA before you release the first instalment, not after.

Who actually pays the rent — and why this is the single most important thing to check

There are usually three parties in the room and only two of them are your counterparties. The developer, often a single-project special purpose vehicle, builds the resort and sells you the unit. The lessee, which may be the same SPV or an affiliated hospitality company, signs the lease with you and owes you the rent. And the brand — Wyndham, Trademark Collection by Wyndham, Dolce by Wyndham, Regenta from Royal Orchid, Clarks — contracts with the owner or lessee under either a hotel management agreement or a franchise and licensing arrangement.

The brand does not pay you. It has no contract with you, no privity, and no obligation to you. It earns its fees off the top of hotel revenue whether or not your rent is paid. If the developer stops paying you, the brand's own economics are untouched. If the developer stops paying the brand, the brand can terminate and take the flag off the building, which damages your rent through lost distribution and rate positioning — and gives you no claim against the brand whatsoever.

So establish, in writing, which entity is the lessee and what its balance sheet looks like. A recently incorporated SPV with a few lakhs of paid-up capital and one asset is not a covenant of comparable quality to an operating company with other cash flows, even if the letterhead looks identical. Ask whether the holding company or the promoters have given a written guarantee, and if the answer is yes, ask to read the deed of guarantee rather than the sentence describing it.

Then ask what the brand relationship actually is, because the two forms behave very differently under stress. A soft brand or conference brand — Trademark Collection and Dolce sit in that family — typically arrives through a franchise or licence: the brand supplies standards, the central reservation system and loyalty distribution, but does not run the profit and loss. A full management agreement means the operator runs the hotel day to day for fees. In neither case does the brand underwrite your return, but the difference tells you who controls costs, who hires the general manager, and how quickly the asset can be re-flagged.

Ask three specific questions about that agreement: the remaining term, the termination rights on both sides, and whether there is a performance test. A properly structured management agreement usually carries a two-limb test — a budget test and a RevPAR index test against a named competitive set — allowing the owner to terminate if the operator underperforms. Whether such a test exists is one of the fastest ways to gauge how seriously the asset was structured, and how much negotiating strength the owner had.

The line worth remembering: the brand's name sells the unit, the developer's balance sheet pays the rent. Diligence the second one at least as hard as the first.

Where does the money actually come from? The hotel P&L, line by line

Your rent is paid from what is left of the resort's cash after everyone senior to you has been paid. Understanding that sequence is the whole exercise, so here it is with real arithmetic. These figures are illustrative and deliberately generic — they describe how the maths behaves, not any specific property, and no projection here should be read as a forecast for any named resort.

Take a 60-key resort. Sixty keys times 365 nights is 21,900 available room-nights a year. At an average daily rate of Rs 14,000 and 58% occupancy, RevPAR is Rs 8,120, giving room revenue of about Rs 17.8 crore. Indian leisure resorts earn heavily from food, beverage, banqueting and weddings, so if rooms are 60% of the total, overall revenue is roughly Rs 29.6 crore.

Now work down. Gross operating profit — under the Uniform System of Accounts for the Lodging Industry, that is after departmental and undistributed costs but before management fees, rent, property taxes, insurance and the FF&E reserve — might be 33% of revenue at a well-run stabilised resort, so about Rs 9.8 crore. Deduct a base management fee of roughly 3% of total revenue, about Rs 0.9 crore. Deduct an incentive fee of roughly 8% of GOP, about Rs 0.8 crore. Deduct property tax, insurance and licences, say 2% of revenue or Rs 0.6 crore. Deduct a furniture, fixtures and equipment reserve of 3% of revenue, another Rs 0.9 crore. What is left is about Rs 6.6 crore of owner-level cash before any rent is paid to anybody.

Against that, suppose 45 of the 60 keys were sold to investors at an average Rs 90 lakh on a 9% payout. The annual rent bill is 45 x Rs 8.1 lakh, or about Rs 3.65 crore. Coverage is 1.8 times. That is a healthy structure: the hotel can pay every owner from operations and the developer still retains roughly Rs 3 crore for the unsold keys, the food and beverage business and the common areas.

Now stress it, which is the only test that matters. Drop occupancy to 45% and ADR to Rs 12,000. RevPAR falls to Rs 5,400 and room revenue to Rs 11.8 crore. Holding the same rooms-to-total ratio, total revenue drops to about Rs 19.7 crore — and that is generous, because in a genuine downturn banqueting and weddings usually fall harder than rooms. Because a hotel's cost base is substantially fixed, the GOP margin compresses far faster than revenue — say to 24%, or about Rs 4.7 crore. After base and incentive fees, property tax, insurance and the FF&E reserve of roughly Rs 1.95 crore in total, owner-level cash is about Rs 2.8 crore against the same Rs 3.65 crore rent bill. Coverage is 0.76 times and the developer is funding a shortfall of roughly Rs 85 lakh a year out of its own pocket. That is the year the restructuring conversation begins, and it begins with a letter, not a default.

One more structural fact that developers rarely volunteer. Your yield is calculated on the retail price you paid, which includes land, construction, marketing, sales commissions and the developer's profit. The hotel, however, has to service that yield from a physical asset that cost far less to build. If a key cost Rs 50 lakh to deliver and sold for Rs 90 lakh, the Rs 8.1 lakh rent represents 16.2% on the actual cost of construction. Very few hotels in India generate an unlevered cash yield of 16% on cost, and almost none do it in their first three years. The gap is bridged by the developer's one-time sale margin. That is not automatically dishonest — it is how the developer chose to finance the build — but it means the structure only becomes self-sustaining if the resort genuinely stabilises. Until then, part of your rent is being paid out of the money the project raised.

What economics make 8-10% sustainable, and what makes it a red flag?

Run the coverage test on any deal put in front of you. Estimate the resort's realistic stabilised owner-level cash using the sequence above, then divide it by the total annual rent bill across all sold units. Above roughly 1.5 times, the payout is being funded by the hotel. Between 1.0 and 1.5 times, it works only if nothing goes wrong. Below 1.0, the rent is coming from somewhere other than operations.

And that is the sentence worth carrying away from this page: a payout funded from new sales rather than from hotel operations is not a yield, it is a return of other people's capital, and it stops when sales stop.

Note also that within the same asset, a lower headline is usually the more credible one. An 8% payout on a fully priced property leaves more operating cushion than 10% on the same property. The higher the number, the more of the operating risk has been transferred from the developer to you — which can be a fair trade at a lower entry price, in a genuinely constrained market, but it is a trade, not a gift.

What is a step-up clause, and what must it specify?

A step-up clause escalates the rent over the life of the lease. Two forms are common: a small annual increase, often in the 3-5% range, or a lump escalation every three years, frequently around 15%, which is the convention borrowed from India's commercial office leasing market.

It matters more than it looks. A flat 8% with no escalation across a 20-year lease loses roughly half its real purchasing power at 5-6% inflation, while the hotel's own room rates rise with inflation throughout. Without a step-up you are handing the entire benefit of inflation to the lessee. A 5% annual escalation on the same rent roughly doubles the nominal payment over twenty years and keeps you broadly whole in real terms.

Watch where the escalation attaches. In some structures the assured rent is fixed for the first five years and the escalation only applies afterwards, or applies only to the portion above a stated minimum. In others it applies from year one. Get it stated arithmetically in the deed, with a worked example annexed if necessary.

What does a revenue share or profit share actually mean, and how does 'net profit' get defined against you?

Many structures convert from a fixed assured rent to a share of the hotel's earnings after an initial period. Clarks Pushkar, developed by Dreamline, is a live example of the pattern: 8% for the first five years, then a 50% revenue share. That headline sounds like an upgrade. Whether it is depends entirely on one word — what exactly the 50% is a share of.

There is a ladder here, and every rung down it hands more control to the person calculating your cheque. A share of gross room revenue is the cleanest, because room revenue is a number you can cross-check against occupancy and rate data. A share of total operating revenue adds food, beverage and banqueting, which is larger but harder to attribute to your specific unit. A share of gross operating profit is defensible provided GOP is defined by reference to the Uniform System of Accounts for the Lodging Industry, a long-established published standard that constrains what can be dumped into the calculation. A share of 'net profit' is the weakest of all, and it is the one most often offered.

Net profit sits at the bottom of the profit and loss, after depreciation, after interest on the developer's own borrowings, after management and marketing fees that may be payable to a related company, after corporate overhead allocations, after capital expenditure written off, and after any related-party charges for services rendered to the hotel by another entity in the same group. Each of those is a legitimate accounting line in isolation. Collectively, they mean an asset can be busy, full and cash-generative while reporting no net profit at all — and 50% of nothing is nothing.

There is a tax dimension to the switch that almost never gets raised at the sales table. A bare letting of your unit at a fixed rent is the strongest case for the income being assessed as Income from House Property, which is what carries the 30% standard deduction under Section 24(a). A variable share of a hotel's revenue or profit looks considerably less like rent and more like a share of a business, and an assessing officer may treat it as business income or income from other sources — in which case the 30% deduction is not available and your net changes materially. Every net-yield figure on this page assumes house-property treatment survives. In the revenue-share years, that assumption is weaker. Put the specific draft lease in front of a CA in India and get a view on characterisation before you accept the conversion, and confirm the position with a qualified adviser in your country of residence as well.

So negotiate the definition, not the percentage. Fifty per cent of a well-defined gross room revenue line is worth far more than eighty per cent of a net profit the lessee defines.

What must a buy-back clause specify to be real?

A buy-back or exit option is often the emotional clincher: the developer undertakes to repurchase your unit after a set number of years, usually at the original price or better. It can be genuinely valuable. It is also the clause most often drafted so loosely that it would not survive contact with a dispute.

A buy-back with no price, no date, no bound entity and no remedy is a marketing sentence. Treat it as worth zero in your own underwriting and be pleasantly surprised if it pays.

Note also that a repurchase is a fresh transfer of immovable property, with its own costs and tax consequences on your side. Fresh stamp duty arises on the reconveyance. On the gains, immovable property held for more than 24 months is a long-term capital asset, and following the change effective 23 July 2024 long-term capital gains on property are taxed at 12.5% without indexation, with a transitional option for resident individuals and HUFs on property acquired before that date to compute tax the older way where it is more favourable. That transitional option is not available to non-residents. If you are a non-resident seller, withholding under Section 195 applies to the gross consideration rather than to the gain, which with surcharge and cess commonly lands in the region of 13-15% of the sale price, recoverable through your return or reduced in advance by a Section 197 certificate. These are mechanisms, not a computation of your position — have a CA in India and a qualified adviser in your country of residence compute the actual numbers before you rely on a net exit figure.

What happens if the operator or the developer fails?

There are four distinct failure modes and they need to be thought about separately, because the remedies differ.

First, the operator exits. The management agreement or franchise terminates, the flag comes off the building, and the hotel loses the brand's reservation system, loyalty distribution and rate positioning. Rates and occupancy typically fall. Your rent obligation is unaffected as a matter of law, because it is owed by the developer, not the brand — but the developer's capacity to pay it just weakened. Check whether your lease obliges the developer to procure a replacement operator of comparable standard within a defined period, and who gets to approve that replacement.

Second, the developer defaults on rent while remaining solvent. Your remedy is contractual: notice, a cure period, interest on arrears, and ultimately termination and re-entry. Here is the uncomfortable part, and it is the reason this product needs an honest explainer at all. If you terminate the lease, you get back an empty room inside a running hotel. You cannot operate it. You cannot let it to anyone else, because no one wants room 214 in a hotel they do not run. You usually cannot occupy it as a residence, because the sale deed and the project's land-use permissions restrict it. It has almost no standalone use value. That asymmetry is precisely why the lease should oblige the developer to procure a replacement lessee, and why your practical leverage is weaker than an ordinary landlord's.

Your real leverage is collective. Forty-five owners acting together can enforce, negotiate or replace an operator; forty-five owners acting separately cannot. Check whether the documents contemplate an owners' association, a common representative or a nominee arrangement, and whether termination and enforcement rights are exercisable collectively. Fragmented owners are weak creditors.

Third, the developer enters insolvency. Once a corporate insolvency resolution process is admitted, the Section 14 moratorium under the Insolvency and Bankruptcy Code blocks individual recovery actions and your rent claim becomes a claim in the process. Tribunals have in a number of assured-return matters treated such investors as financial creditors, on the reasoning that the money was raised with the commercial effect of a borrowing, but outcomes are fact-specific and depend heavily on how the documents were drafted. What is far more robust is your ownership: a registered sale deed for an identified unit is a property right, legally distinct from your money claim. Someone holding only an allotment letter is a claimant. Someone holding a registered deed is an owner. This is the single strongest argument for insisting on registration at every stage. Take specific legal advice on your position rather than relying on any general statement here.

Fourth, and by far the most common in practice, nobody fails outright — the hotel simply underperforms. Payments arrive late, then partially, then the developer proposes converting the fixed rent into a revenue share 'to align interests'. There is no fraud and no default event you can point to cleanly, just a slow renegotiation from a position of weakness. Assume this is the scenario you are underwriting against, because statistically it is.

What you actually deploy: the cost stack, with and without GST

The headline yield is quoted on the sticker price. The money that leaves your account is larger, and the difference between the two is the difference between an honest number and a brochure number. There are two quite different cases and they must be stated separately, because a single blended figure is misleading.

Case one, a completed unit with an occupancy certificate. There is no GST on the sale of a completed property once the OC has been issued. Your add-on is stamp duty and registration, typically in the 5-8% band across Rajasthan, Karnataka and Goa including registration fee and surcharges, plus legal, documentation, title search and incidental costs of perhaps another half to one per cent. Call it roughly 6-9% above the quoted price.

Case two, an under-construction unit. Sale of under-construction non-residential inventory attracts GST at 18% on two-thirds of the value after the one-third statutory land abatement — roughly 12% effective on the consideration. Stamp duty and registration sit on top of that, plus legal and incidental costs. All in, the add-on is roughly 18-22% above the quoted price. Whether you can recover any of that GST as input credit depends on your own registration and eligibility and is very often nil for an individual buyer, so plan on the assumption that it is a sunk cost unless your CA tells you otherwise.

This matters because it changes the yield on deployed capital rather than on the sticker price. Take the Wyndham Grand Jaipur Amer illustration at 8% on roughly Rs 1.10 crore. On the after-tax net computed in the next section, the yield on the sticker price is about 6.25%. On a completed unit with stamp duty and registration of about 7%, the yield on deployed capital is about 5.85%. On an under-construction unit where roughly 12% effective GST also applies, it is about 5.25%. Same asset, same covenant, a swing of sixty basis points on what you actually earn on what you actually paid.

So the single question to put in writing before you pay anything: is this unit being sold with an occupancy certificate already issued, and is GST applicable to my purchase — and if so, at what effective rate on what base? Get the answer from the developer in writing and have your CA confirm it against the current notifications. These figures are illustrative and stated on rules in force for FY 2025-26; rates, abatements and notifications change.

What does the headline number actually put in your bank account?

Every percentage on this page is a gross, pre-tax rent measured against the sticker price. Your realised yield is lower, and you should do this arithmetic before you decide, not after. What follows is illustrative on FY 2025-26 rates and is not a tax computation for your circumstances — have a CA in India compute your position, and confirm it with a qualified adviser in your country of residence.

Start with the caveat that governs everything below. The head of income is not automatic. A bare lease of the unit at a fixed rent generally attracts Income from House Property treatment, which is what carries the 30% standard deduction under Section 24(a). Where letting is bundled with substantial services, or where the payment converts to a revenue or profit share, the income may instead be assessed as business income or as income from other sources — and in that case the 30% deduction is not available and the net figures below fall. Note also that the 30% is computed on Net Annual Value, that is gross rent less municipal taxes actually paid by the owner, not on gross rent. In these structures the lease usually puts municipal taxes on the lessee, so NAV and gross rent are often the same figure — but confirm that in your own lease rather than assuming it.

Now the arithmetic. Take the Wyndham Grand Jaipur Amer example: 8% on roughly Rs 1.10 crore is Rs 8.80 lakh of gross annual rent. Assuming house-property treatment and municipal taxes borne by the lessee, the 30% standard deduction leaves about Rs 6.16 lakh taxable. At a 30% slab plus 4% cess — commonly around 31.2%, and higher once surcharge applies to larger total incomes — that is roughly Rs 1.92 lakh of tax, leaving about Rs 6.88 lakh in hand, or approximately 6.25% on the purchase price. The general method is straightforward: net yield equals the headline rate multiplied by one minus 0.7 times your effective tax rate. At 31.2%, an 8% property nets about 6.25% and a 10% property nets about 7.8%. Measured against money actually deployed, as set out in the cost stack above, the 8% example lands nearer 5.85% on a completed unit and nearer 5.25% on an under-construction one.

Three technical points that materially change the number, none of which are usually raised at the sales table.

One: TDS on the rent. A corporate lessee paying rent to a resident owner deducts tax at source under Section 194-I, commonly 10% on building rent, with the annual threshold raised to Rs 6 lakh from FY 2025-26 — so 8% arrives as roughly 7.2% in cash and you reconcile at filing. For a non-resident owner, Section 195 applies instead, at the rate in force with surcharge and cess, commonly around 31.2% where no surcharge applies. That can be reduced with a Section 197 lower-deduction certificate, and it is worth applying for one — but be realistic about it. The certificate is at the assessing officer's discretion, applications take weeks and are routinely part-granted at a rate above the taxpayer's own estimate, and the certificate operates prospectively, so it does no work for rent already released. Apply early in the financial year and plan cash flow on the assumption that you may not get the rate you asked for. A PAN is effectively necessary here: Section 206AA applies to payments to a person without one, and Rule 37BC does not extend relief to rental income — it covers interest, royalty, fees for technical services, dividend and consideration on transfer of a capital asset, and nothing on this list. In practice 206AA rarely worsens the rate on rent because the rate in force already exceeds 20%; the real reason you need the PAN is to file a return and claim the refund at all. Excess TDS refunded on assessment carries interest under Section 244A at 0.5% per month, subject to the usual conditions — so it is not interest-free money, but the statutory rate does not compensate you for the delay, and non-resident refunds routinely stall on 26AS and AIS mismatches, so the wait can run from a few months to considerably longer depending on how cleanly your credits reconcile.

Two: GST on the rent you receive. Renting immovable property for commercial use is a taxable supply at 18%, and the first thing to establish in writing is whether the quoted rent is inclusive or exclusive of it. On Rs 8.80 lakh the difference is real money: exclusive, the tax of about Rs 1.58 lakh sits on top of your rent; inclusive, about Rs 1.34 lakh of what you were quoted is tax rather than rent. On who accounts for it, the position changed on 10 October 2024: renting of immovable property other than a residential dwelling by an unregistered person to a GST-registered person falls under reverse charge, so where you are unregistered and the hotel operator is registered — which it will be — the operator typically discharges the GST rather than you. Persons supplying only under reverse charge are generally not required to register for that reason alone. So do not accept a claim that you must obtain GST registration and bear 18% out of your rent simply because of this lease. Your own position depends on your other supplies and on the notifications in force, so have a CA confirm it for you.

Three: value the owner nights honestly. Twenty-five nights at a resort where you would genuinely have paid, say, Rs 12,000 net is about Rs 3 lakh of avoided spending — roughly 2.7% notionally on a Rs 1.10 crore ticket, which is real money. But it is only real if you would actually have taken that holiday at that price. Check the blackout calendar before you count it, because peak season is exactly when the operator needs the inventory and exactly when you want to travel. Check whether the nights are transferable, whether they expire annually, and whether food, beverage and taxes are excluded. Value them at net achievable rate, never at rack rate.

Who should not buy this

An honest page has to include the cases where the answer is no, and there are several.

If you will need this capital back inside five years, this is the wrong instrument. Resale is thin, negotiated and slow, and a buy-back clause is only as good as the entity bound by it. If liquidity matters more than yield to you, that is a legitimate reason to walk away from the category entirely.

If the rent is load-bearing in your household budget — school fees, a mortgage on another property, living costs — this is the wrong instrument. The most common real-world outcome is not fraud, it is late and then partial payment during a soft patch. Income you cannot afford to have arrive three months late should not come from a single hotel's cash flow.

If you cannot get comfortable with the counterparty after reading its audited accounts, walk away regardless of how attractive the property is. You are underwriting a company, not a view.

If you want a diversified, liquid, regulated exposure to real estate income, this is not that, and we will not pretend otherwise. Listed REITs, real estate mutual funds, NRE fixed deposits and other instruments exist and behave differently on liquidity, regulation, taxation and risk. We mention them only as neutral points of comparison, not as recommendations — we are property advisers and we are not registered investment advisers. If you are weighing this against a securities investment, take that comparison to a SEBI-registered investment adviser who can look at your whole portfolio. Note too that even the safest-sounding comparator has conditions: DICGC deposit insurance covers only Rs 5 lakh per depositor per bank, premature closure of a fixed deposit carries a penalty, and NRE deposits broken inside twelve months generally earn no interest at all.

And if the specific project cannot answer the questions in the next section from documents rather than from a deck, do not buy that project. That is a judgement about one deal, not about the category — but it is the judgement that saves the most money.

What should you ask before you sign?

A single page of questions separates a structure that works from one that merely reads well. If a seller cannot answer these from documents rather than from a deck, that itself is the answer.

How we are paid, and what this page is not

ResortWealth is an independent advisor. We are not owned by, and do not build for, any of the developers whose inventory we discuss. We are paid a channel-partner commission by the developer on a completed booking. You do not pay us a fee. You should read everything on this page with that disclosed conflict in mind, which is also why the page is built around tests you can run yourself on documents we do not control.

Nothing on this page is tax, legal or investment advice, and no part of it should be treated as a recommendation to buy any security or financial product. All figures are illustrative; those that depend on tax slabs, thresholds or notifications are stated on rules in force for FY 2025-26 and will change. Confirm every tax point with a CA in India and with a qualified adviser in your country of residence, take legal advice from an Indian property lawyer on the specific documents, and speak to a SEBI-registered investment adviser before comparing this to any securities investment.

And the sentence that should sit in your mind from the top of the page to the bottom of it: assured means contractual. The obligation is owed by the developer or its SPV, not by Wyndham, Clarks or any bank. There is no deposit insurance and no regulator standing behind it. Capital is at risk. Judge the specific deal, not the category.