FAR tells you how much floor area the plot can carry. It does not tell you how much you can sell. In India, buyers pay for carpet area, and a large share of counted floor area never becomes carpet area.
That gap decides whether a project works. This article shows where it opens and why one point of efficiency is worth chasing.
Three different areas
- Counted floor area (the FAR or FSI area). It answers how much floor area counts against the plot's allowance. The local development rules set it, and what counts differs by state and city.
- Built-up area. It answers how much floor area is built. The design sets it, and it can include areas the rules do not count.
- Carpet area (the sale basis in India). It answers what net usable area the buyer gets inside the flat. The RERA definition in section 2(k) sets it.
Do not mix them in one model. A model that multiplies plot area by FAR and then by a sale rate is mixing the first with the third.
What does RERA say carpet area is?
Section 2(k) of the Real Estate (Regulation and Development) Act, 2016 says carpet area is:
"the net usable floor area of an apartment, excluding the area covered by external walls, areas under services shafts, exclusive balcony or verandah area and exclusive open terrace area, but includes the area covered by the internal partition walls of the apartment."
The Explanation defines an exclusive balcony, verandah or terrace as one appurtenant to the apartment's net usable floor area and meant for the exclusive use of the allottee.
Read that carefully. It removes external walls and service shafts. It removes balconies and terraces. It keeps internal partition walls. It does not mention lobbies, corridors, stairs or lifts because those are not inside an apartment.
Individual state RERA rules and regulations can add detail. Check the state where you build.
Where does the area go?
Between counted floor area and carpet area, floor area can be taken by:
- Common areas: lobbies, corridors, stairs, lift cores, refuge areas.
- Structure and envelope: external walls and columns.
- Service shafts: plumbing, electrical and fire shafts.
- Balconies, verandahs and terraces that are exclusive to a flat.
- Plant and amenity spaces, depending on how your state counts them.
- Layout loss: awkward flat shapes, stepped floors and floor plates that do not divide neatly.
Which of these count against FAR depends on the state and city rules. Some items may be exempt from counted area. They still use floor area and cost money to build. Read the rule for your site. Do not assume it from another city.
A worked example (assumed numbers, not a benchmark)
Take a 10,000 m² plot with FAR 2.0.
- Counted floor area: 10,000 × 2.0 = 20,000 m².
- Assume 70% of counted floor area ends up as carpet area: 14,000 m².
- Assume 72%: 14,400 m².
One extra point of efficiency is worth 200 m² of saleable area here. At any sale rate, that is extra revenue from the same land, FAR and structure. At the cost side, it needs no extra land premium.
The 70% and 72% are chosen to show the arithmetic. They are not from a survey or a code. Use your own design numbers.
What should you do with this?
- Model the chain in steps: plot area, counted floor area, built-up area, carpet area, sold area. Show each conversion.
- Write the sale basis next to every revenue line. In India, it is carpet area under RERA.
- Test efficiency as a range, for example 66% to 74% of counted area, and see where profit turns.
- Check the state rules for what counts against FAR and what the RERA rules say for your state.
- Check designs against the same chain. A layout that gains 1,000 m² of counted area but loses efficiency in the core can sell less.
What about the USA?
The idea is the same, but the terms differ. Zoning rules set the floor area that counts. Sales and leases use their own measurement methods. Keep the same discipline: name which area every number uses. We cover the US zoning side in our articles on buildable area and zoning sources.
What this does not tell you
- It does not give an efficiency figure for your project. Only a design does.
- It does not state which items count against FAR in your city.
- It is not legal advice. Read the Act and your state's rules, or ask a lawyer.
Sources
- Real Estate (Regulation and Development) Act, 2016, section 2(k), as quoted by TaxGuru. Read 21 October 2026. Check against the official gazette text or your state RERA rules.
Keystone AEC (keystoneaec.com) is an AI platform for land feasibility and master planning in India and the USA. A site boundary and a brief are enough to see this chain for one scenario, with each conversion shown.