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Housing society maintenance charges and interest on arrears: the rules

How a Maharashtra housing society fixes and shares maintenance charges, what goes into sinking and repair funds, and the 12% cap on interest on arrears.

Updated 2026-09-23

Most arguments in a housing society start with the monthly bill. Members ask why a bigger flat pays more, why the sinking fund keeps rising, and how much interest the society may add when a bill is paid late. The answers are in the Maharashtra Co-operative Societies Rules, which were amended in June 2026, and in the model bye-laws. They are not left to the committee’s discretion.

Who fixes maintenance charges in a housing society?

The general body sets the rates: the fund contributions, the parking charge and the interest rate. The managing committee then works out each flat’s share on the basis the Rules lay down (Rule 106C-12(4); 2014 BL 66). The committee cannot choose its own formula. A general body resolution that goes against the Rules can be challenged.

Rule 106C-12(1) lists the heads a society may bill:

  • service charges
  • property tax
  • water charges
  • lift repairs and running costs
  • parking charges
  • interest on defaulted charges
  • loan instalments
  • non-occupancy charges
  • insurance
  • lease rent
  • N.A. tax
  • contributions to funds
  • any other charge the general body approves, provided it does not contradict the Act and the Rules

Is maintenance charged per sq ft or per flat?

It depends on the head.

  • Service charges are equal for every flat. They cover staff salaries, office costs, printing and postage, committee travel and sitting fees, federation subscriptions, audit fees, meeting costs, legal and retainer fees, and common electricity (Rule 106C-12(2), (4) item 1). A 2 BHK and a 4 BHK pay the same.
  • Carpet area applies, from 22 June 2026, to the property tax on common areas, insurance, lease rent and the Major Repair Fund. Under the 2014 bye-laws, insurance, lease rent and N.A. tax were shared by built-up area.
  • Water charges go by the number and size of inlets in each flat.
  • Lift charges are shared equally among the flats of the building that has the lift, whether or not a member uses it.
  • Sinking and repair funds are a percentage of each flat’s construction cost, so a larger flat pays more.

Sinking fund and repair fund: how much?

The general body fixes the rates, subject to minimums in Rule 106C-11 and item 11 of Rule 106C-12(4):

  • Sinking Fund: at least 0.25% a year of the flat’s construction cost, as certified by the architect. It is used for heavy repairs or reconstruction approved by the general body.
  • Repair and Maintenance Fund: at least 0.75% a year of the construction cost. It pays for routine, recurring repairs.
  • Major Repair Fund: collected by carpet area when the general body decides a large job is needed.

The 2014 bye-laws had the same percentages (BL 13). Spending the sinking fund on day-to-day expenses is an irregularity that the auditor can report.

What is the maximum interest on late maintenance?

Before 22 June 2026. The 2014 model bye-laws allowed simple interest at 21% a year, or a lower rate fixed by the general body. The rate is in BL 70 of the printed text and is cross-referred as BL 72. In Aspandiar Rashid Irani v Pasayadan CHS (January 2026) the Bombay High Court refused to call a 21% bye-law rate illegal for the period before the 2026 Rules.

From 22 June 2026. Rule 106C-12(4) item 6 allows interest “at the rate fixed by the general body not exceeding simple interest 12% per annum”. This binds every society, whatever its bye-laws say.

In practice:

  • Interest must be simple, not compounded. A separate “late fee” that works as extra interest is open to challenge.
  • Arrears for periods up to 21 June 2026 can, in our reading, carry the rate that was lawful then. Interest for later periods cannot exceed 12%. The Rules have no transitional clause, so check with your auditor.
  • The draft 2026 bye-laws (dBL 64–66) add three points. No interest runs during the payment period the general body fixes, or 15 days after the bill if it has fixed none. Interest starts the day after that period ends. If the general body has fixed no rate, 12% applies. These are draft provisions.

Can I stop paying until my complaint is fixed?

No. A member who does not pay within three months of the bill becomes a defaulter. A defaulter owes interest, faces recovery through the Registrar under section 154B-29, and cannot stand for the committee. If part of a bill is wrong, pay the undisputed part and dispute the rest in writing.

Checklist for the treasurer

  • Split service charges equally per flat. Do not split them by area.
  • Record each flat’s carpet area and the architect’s construction-cost figure.
  • Minute the general body’s rates for the sinking fund, the repair fund and interest, and keep certified copies.
  • Set interest at 12% simple or less for periods from 22 June 2026.
  • Show each head separately on the bill.
  • Keep the sinking fund in a separate account or deposit and record it in the Sinking Fund Register.
  • Send written demands every month. A Form Y-6 recovery application needs the ledger, the levy resolution and the interest resolution (Rule 106C-14(2)).

What the law says

  • Rule 106C-11: funds, with the sinking fund at 0.25% minimum and the repair fund at 0.75% minimum.
  • Rule 106C-12(1), (2), (4): heads of charges, what counts as service charges, and how each is shared. Item 6 is the 12% simple-interest cap.
  • Rule 106C-14: recovery application in Form Y-6 and certificate in Form Y-7.
  • 2014 model bye-laws: BL 13 and 14 (funds), BL 65 and 66 (service charges and sharing), BL 69 (default) and BL 70 (21% interest, before 22 June 2026).
  • Draft 2026 bye-laws: dBL 61–66. These are not yet final.
  • Section 154B-29 of the MCS Act: recovery of dues through the Registrar.

Your society’s registered bye-laws may add detail, such as the billing cycle or the payment period. They cannot raise the interest cap or change how the Rules share a head.

More answers on bills, funds and interest: Maintenance charges FAQ.

Sources

General information, not legal advice. Your society's registered bye-laws may differ; for a dispute or a decision with legal or financial consequences, consult the Registrar's office, an advocate or a chartered accountant.

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