How Society Maintenance Charges Are Calculated

Every society committee eventually faces the same argument at an AGM: is maintenance being calculated fairly? Most disputes trace back to one root cause — the society never wrote down how the number is calculated, only what the number is. Fixing that is a half-hour job, and it ends the argument for good.

The two calculation methods

Indian housing societies use one of two methods, and state co-operative society model bye-laws generally permit either — check your own society's bye-laws before switching.

Per square foot. Total budgeted expense divided by the building's total saleable area, multiplied by each flat's own area. A 1,200 sq ft flat pays exactly double what a 600 sq ft flat pays. This is the fairer method when flat sizes vary widely in the same society, since larger flats generally place more load on lifts, water supply, and common-area upkeep.

Per flat (equal split). Total budgeted expense divided equally across every flat, regardless of size. Simpler to compute and defend, and common in societies where units are similar in size or where the model bye-laws for that state mandate equal contribution regardless of area — several state co-operative acts lean this way for services like security and common electricity, splitting only sinking fund and parking on an area basis.

Many societies actually run a hybrid: fixed services (security, common electricity, staff salaries) split equally per flat, and area-dependent costs (sinking fund contribution, façade repairs) split per square foot. Whichever you choose, the formula belongs in the society's bye-laws or a standing committee resolution — not just in a spreadsheet one treasurer remembers.

What actually goes into the budget

A defensible maintenance number starts from a real annual budget, not last year's figure plus 10%. The usual heads:

• Salaries — security staff, housekeeping, plumber/electrician on retainer
• Utilities — common-area electricity, water charges, generator diesel
• Repairs and upkeep — lift AMC, pump maintenance, painting cycles
• Insurance — building insurance premium
• Statutory and admin — society registration renewal, auditor's fee, stationery
• Sinking fund contribution — a separate, ring-fenced line, never merged into running expenses
• Contingency — 5–10% of the total, for the year nobody budgeted for a monsoon leak

Add these up, divide by 12 for the monthly figure, then split by whichever method the bye-laws specify.

A worked example

Take a society with 40 flats, mixed 1BHK (650 sq ft) and 2BHK (950 sq ft) units, total saleable area 32,000 sq ft, and an annual budget of ₹28,80,000.

Monthly budget: ₹28,80,000 ÷ 12 = ₹2,40,000

Per sq ft method: ₹2,40,000 ÷ 32,000 sq ft = ₹7.50 per sq ft per month - 1BHK (650 sq ft): ₹4,875/month - 2BHK (950 sq ft): ₹7,125/month

Per flat method: ₹2,40,000 ÷ 40 flats = ₹6,000/month flat, regardless of size.

Neither number is "wrong" — they're answering different fairness questions. What matters for an audit is that the method is written down, applied consistently, and the underlying ₹28,80,000 budget is itemized enough that any member can trace their bill back to an actual expense line.

When GST applies

This is where most committees get nervous, and the rule is narrower than people assume. GST on society maintenance applies only when both conditions are true in a financial year:

1. The society's aggregate turnover (total maintenance collected, plus any other income) exceeds ₹20 lakh, and
2. The maintenance charged to an individual member exceeds ₹7,500 per month.

If either condition isn't met, no GST applies — full stop. If both are met, GST at 18% applies only on the amount above ₹7,500 for that member, not the entire bill (per CBIC's clarification circular). A society charging ₹6,000/month to every flat owes no GST regardless of its total turnover. A society charging ₹9,000/month with turnover over ₹20 lakh owes 18% GST on the ₹1,500 above the threshold, per member, per month.

Get this wrong in either direction — charging GST when you shouldn't, or missing it when you should — and it surfaces at audit time as a correction nobody enjoys making retroactively.

Common mistakes committees make

• Sinking fund merged into maintenance. The sinking fund is for major repairs decades out — a new lift, terracing, structural work. Spending it on this month's electricity bill because "maintenance was short" defers a problem it can't afford to defer.
• No written formula. If the calculation only exists as a formula in last year's treasurer's head, every handover risks it changing silently.
• Late fee schedules with no bye-law backing. Interest on late payment has to be sanctioned by a general body resolution, not set unilaterally.
• Recalculating mid-year without notice. Any change to the formula — even a fair one — needs advance notice and, in most states, a resolution, or it becomes the year's biggest AGM fight.

Keeping this auditable without more manual work

The pattern above works on a spreadsheet. Where it breaks down is scale and turnover: a new treasurer inherits a formula they didn't build, in a tool that doesn't show why each flat's number is what it is. That's the specific problem double-entry accounting solves — every maintenance invoice traces back to the same budget line, on both sides of the ledger, so an incoming committee (or an auditor) can verify the method in minutes instead of reconstructing it from old bills.

If your society is still doing this by hand each month, book a demo to see how AlfaGate handles per-sq-ft and per-flat billing, GST calculation, and the audit trail behind it automatically. For the compliance side of running a society — AGMs, resolutions, the annual calendar — see our Compliance & Committee posts.