Levy of Charges in the society

By Ramesh S.Prabhu (Chartered Accountant)
Posted on 23 December 2004

The contribution to be collected from the members of the society towards outgoing and establishment of its funds may be in the relation to the following : –

Basis for collection of charges
Normally above charges are collected / billed according to the following basis.

Service Charges (Regular maintainance Charges)
Bye Law No.70 of the model Bye law has clearly specified that the following expenses / outgoing constitute service charges which should be equally divided by the number of flats/ shops/ galas irrespective of the are of such units.
The salaries of the office staff, liftmen, watchmen, mallis, and any other employees of the society.
Where the society has independent office, the property taxes, electricity charges, water charges etc., for the same.
Printing and stationery and postage.
Travelling allowance and conveyance charges to the staff members of the society for attending an any particular meeting.
Sitting fees paid to the members of the committee of the of the society for attending an any particular meeting.
Subscription to the education fund of the Maharashtra Rajya Sahakari Sangh Ltd.
Annual subscription of the housing federation and any other co-operative institutions to which the society is affiliated.
Entrance fees paid for affiliation of the Housing Federation and any other co-operative institutions.
Audit fees for internal, statutory and re-audit if any.
Expenses incurred at the meeting of the general body, the committee and the sub-committee, if any.
Retainer fees, legal charges, statutory enquiry fees and
Any other charges approved by the general body at its meeting like cables charges, celebration expenses etc.,
Every Society / Managing Committee should prepare budget for each year in the annual General body meeting for common expenses stated above and the approval in the General body meeting should be taken to divided equally among all the Flats / shops etc. Some societies divide the above service charges on the basis of Square feet which is bad in law as they are not within the preview of the bye-law. The Bye law No.111 states that General Body is the Supreme Authority within the provisions of Act, Rules and Bye-law of the society. Accordingly, the general body cannot take the decision beyond the provisions of the bye-law.

Property Tax
Normally such charges are fixed by the local authority on the basis of rateable value of the flat / shop per sq.ft. and accordingly it should be collected. Where the authorities individually in respect of each flat/shop no charges should be collected by the society to collect the property tax.

Water Charges
All the societies are free to operate in independent manner in the interest of the members within the provisions of Act, rules and the bye-laws of the society.
In respect of levy of water charges, model bye law no 71 (A) (2) Provides that water charges should be recovered based on the number of taps, push cock, turn cocks, mixing taps, flash taps and shower taps of the individual flat / shop.
The above produce seems to be not justified as more taps does not lead to more consumption of water if defective or not installed, the general body may decide the levy of water charges on the number of persons occupying the flat/shop. Some instances have come to the notice that some societies charges on equal basis irrespective of persons staying the flat.
To have a fair deal and to please all the members the society may adopt the following produce by passing appropriate resolution in the general body meeting.
Levy minimum charges on each flat/shop for wastage of water, utilisation of water for garden or cleaning of staircase etc., as the facilities are used for common purpose including closed flat / shops.
Balance water charges to be recovered may be charged on the basis of meter if meter installed or in other cases on the basis of number of persons occupied.
If water meter is defective, charges may be collected on the basis of average consumption in the earlier months or on per head basis.
Some societies charges water charges for defective meters in the progressive manner say in the first month Rs. 100/- per head, if meter not repaired in the next month Rs. 200/- per head, third Rs. 300/-. This system is wrong and should never be adopted to create legal problems in the society.
Some Societies charges water for commerial units above the normal charges as more water is consumed by such commercial units like hotel, hospital, etc. and there will be in the general body for such differential charges, the same will be binding on the members.

Common Electric Charges
Equally for all flat / shops

Expenses on repairs and maintainance of the building
At the rate per square feet of the carpet area of each flat fixed by the general body meeting of the society at its meeting. However under bye-law no.13 (a) which states that the same shall be ¾% of the value of the flat per annum to incur normal recurring repair expenses.

Expenses on repairs and maintainance of the lift, including charges for runnign the lift
Equally by all the members, irrespective of the fact whether they use the lift or not.

Contribution towards sinking fund
As per bye-law no 13(a) sinking fund should be collected according the area of the flat/shop depending upon opts valuation in the general body meeting.

Property Tax
Normally such charges are fixed by the local authority on the basis of rateable value of the flat/shop per sq.ft and accordingly it should be collected. Where the authorities individually in respect of each flat/shop no charges should be collected by the society collect the property tax.

Parking charges
As per bye law no. 84 every member who has been allotted the stilt or the parking space of parks any vehicle within at such rates as may be decided by the general body meeting or his motor vehicle or not. Where a member has parking charges in respect of every such stilt or parking space.
The members should not that by pauying the parking charges to the socity, the risk of the vehicle would not be taken over by the society the vehicles have to be parked at the owner risk only.
Every member having a scooter, a motor cycle or an auto rickshaw or any other vehicle should obtain prior permission of the committee for parking his vehicle in the compound of the society on payment of charges, fixed by the general body of the society at its meeting.

Interest on the defaulted charges
A defaulted member shall be required to pay simple interest at such rate as is fixed by the general body of the society at its meeting, subject to the maximum of 21% p.a. on the charges of the society defaulted by a member, from the date the amount was defaulted till its payment (bye law no.74 of model bye law).
The managing committee / general body has to fix the last date of the payment of outgoing of the society in its meeting. A member shall be deemed to have committed default in payment of the charges of the society, if the payment mentioned in the demand notice is not made within the period fixed by the society.

Non-occupancy charges
Non-occupancy charges can be recovered from the members of the Co.op. Hsq.Society who has sublet his flat or any part thereof.
As per the Bye-law no. 45 (3) (c) the general body is authorised to fix the Non Occupancy charges. Whereas some of the societies, started collection non-occupancy charges at (10) the exorbitant rate. Under the circumstances, vide circular No.1094/15165/IP.no. 317114-C1, dated 9th March 1995, Co-operative and Textile department, Mantralaya has clarified as under about the charges the charge of non-occupancy charges by the society.
“Non Occupancy charges shall not exceed one time of the service charges and non-occupancy charges shall not be recovered from the member who have given his flat to any of his relative mentioned hereunder :”

Insurance Charges
Insurance charges has to be collected from the members as per the carpet area of each flat, provided that if there is increase in the insurance premium due to storing any specific goods in any flat, used for commercial purposes, the extra burden of insurance premium due shall be shared by those who were responsible for such increased premium shall be those who were responsible for such increased premium shall be those who were responsible for such increased premium in proportion of the carpet areas to their flats.

Lease Rent
The lease rent depends on the carpet area of each flat.

Non-Agricultural Tax
It depends upon the rent carpet areas of the flat and also as per the N.A. order issued by the collector.

Any other charges
The other charges may be levied as may be decided by the general body of the society at its meeting.