FLOORS Rule 106C-11 & Rule 106C-12(3) Table Entry 11(i)

Sinking Fund Statutory Floor (Min 0.25% p.a. on Architect-Certified Cost)

Primary Statute: Maharashtra Co-operative Societies (Amendment) Rules, 2026 (Chapter XI-B) & Model Bye-Law No. 13(c)

Official Gazette: Government Notification No. Sanini 0321/ C.R. 41/ 13C dated 18 June 2026 (Gazette 22 June 2026)

Plain English Explanation

The Sinking Fund is a mandatory capital reserve saved for major structural rebuilding or heavy structural replacement in future decades. Maharashtra law establishes a statutory floor: societies must collect a minimum of 0.25% per annum of each flat's construction cost as certified by an Architect (standard RCC benchmark: ₹1,800 to ₹2,500/sq.ft). Arbitrary round sums without an architect's certificate violate cooperative audit standards.

Statutory Calculation Formula

Monthly Sinking Fund = Flat Carpet Area (sq.ft) × Architect Construction Cost (₹/sq.ft) × 0.25% ÷ 12 months

Calculated strictly on carpet area and certified construction cost (excluding the cost of land).

What is Legally Permitted

Collecting at least 0.25% p.a. of the architect-certified construction cost of the flat.

What is Prohibited by Law

Billing arbitrary round numbers without an Architect's valuation certificate, or diverting sinking funds to routine operational expenses.

Official Gazette Wording & Judicial Precedents

"Sinking fund: The Society shall establish Sinking Fund which shall consist of contributions collected from its members at a rate determined in the general body meeting, subject to a minimum of 0.25 per cent. per annum of the construction cost of each flat, incurred during the building's construction and certified by the Architect. This fund shall be used for heavy repairs, as approved by the general body."

Judicial Authority & Case Law:

Maharashtra Co-operative Court precedent establishes that Sinking Fund is a permanent capital reserve for structural replacement. Societies cannot levy arbitrary lump sums without obtaining an Architect's valuation certificate of flat construction cost.

What to Do if Your Bill Violates This Rule

Request the managing committee under Section 32 to furnish the Architect's valuation certificate substantiating the Sinking Fund calculation baseline.

Pre-Drafted Note for Society WhatsApp Group or Secretary:

Hi everyone, sharing a note on Sinking Fund calculations: Under 2026 MCS Rule 106C-11 and Model Bye-Law 13(c), sinking fund must be based on our flat's carpet area and an Architect's certified construction cost (minimum 0.25% p.a.). Arbitrary fixed amounts without valuation certificates violate audit rules.

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