How to Calculate Non-Occupancy Charges in Your Housing Society (And What the Law Allows)

This is not something each society can decide freely. Acting under Section 79A of the Maharashtra Co-operative Societies Act, 1960, the state government issued a Government Order dated 1 August 2001 that limits the charge to 10 percent of service charges, excluding municipal taxes. Before that, an older circular had allowed up to 25 percent.

A society challenged the order, and in Mont Blanc Co-operative Housing Society Ltd. v. State of Maharashtra the Bombay High Court (judgment dated 2 March 2007) upheld it. The cap has been the accepted position since. The 2026 amendment rules for housing societies state the same 10 percent cap, which we explain in our post on the new cap. Any amount above the cap is not enforceable, even if the General Body passed a resolution for it.

The cap is 10 percent of service charges, not 10 percent of the total bill. A normal monthly bill bundles several things: property tax, water charges, sinking fund, repair fund, insurance, parking and the service charges that cover day-to-day running, such as staff salaries, security, housekeeping, common area electricity and office expenses.

Non-occupancy charge is worked out only on that last part. A society that applies 10 percent to the whole bill, including sinking fund and property tax, overcharges the member, often by two or three times. Most committees doing this do not mean to cheat. They have simply never separated out the service charges line. If an item is unclear, such as insurance or water, confirm with your auditor how your bye-laws treat it.

Take a flat whose monthly bill is: property tax ₹1,200, water charges ₹600, sinking fund ₹800, repair fund ₹500 and service charges ₹3,000. The total bill is ₹6,100.

The non-occupancy charge is calculated only on the ₹3,000 service charges. At 10 percent, that is ₹300 a month. If the society applied 10 percent to the full ₹6,100, it would charge ₹610, which is more than double what is allowed.

A quick audit any committee can do today: open last month's bill, find the service charges line, and check that the non-occupancy charge is exactly 10 percent of that number and nothing more.

The charge applies when the flat is let out or used by someone outside the owner's immediate family. It generally does not apply in these cases:

• The owner lives in the flat.
• The owner's immediate family lives in the flat, generally understood to mean spouse, parents and children, even when the registered owner lives elsewhere.
• The flat is locked and vacant, with no tenant and no rent earned.

For a sibling or an in-law staying in the flat, check your registered bye-laws first. If the bye-laws are silent, take the narrower and more defensible reading rather than charging first and arguing later. Get the committee's decision recorded in the minutes so the same case is treated the same way next time.

Start by writing to the managing committee or secretary and asking for a breakdown: what is the service charges amount, and how was the 10 percent applied. Many disputes end here when the treasurer sees the mistake and corrects it from the next bill.

If the committee does not reply or refuses, send a written complaint to the Deputy Registrar of Co-operative Societies for your area. Cite Section 79A and the 10 percent cap, and the Mont Blanc judgment if needed. Keep copies of your bills and all correspondence, because the Registrar's office will want proof of what was charged.

Separate the service charges line in your bill format so the base for the 10 percent is visible to every member. Check every tenanted flat's charge against that base and correct any excess in the next bill. Update the bye-law text at the next General Body Meeting so it matches the cap.

If your billing is done in a system that keeps service charges as its own head, the non-occupancy charge can be set as a percentage of that head, so the calculation is the same every month and easy to show to a member who asks.