Interest on Overdue Maintenance Now Capped at 12%: What Changed for Maharashtra Housing Societies

Before 30 June 2026, the interest rate on defaulted maintenance was effectively whatever the society's own bye-laws or general body fixed, up to a ceiling of 21% per annum simple interest. Many societies charged the full 21%, since it was the figure printed in the model bye-laws and copied forward without much scrutiny.

• Old ceiling: up to 21% per annum, simple interest, fixed by the society's bye-laws or general body resolution.
• New ceiling: up to 12% per annum, simple interest, fixed by Chapter XI-B of the Maharashtra Co-operative Societies Rules, 1961.
• Effective date: 30 June 2026, for every housing society registered under the MCS Act in Maharashtra.
• Nature of interest: simple interest only in both the old and new position — this was never meant to be compounded.

Yes. A statutory rule made under the MCS Act sits above a society's own bye-laws in the legal hierarchy. When a Rule caps something, a bye-law figure that predates the Rule does not survive by default, the statutory cap governs from the effective date regardless of what the society's bye-law document still says on paper.

In practice, this means your society should not wait for a General Body Meeting to 'approve' the change before applying it, the 12% cap already applies to interest accruing from 30 June 2026 onward. What the society does need to do is formally amend its bye-law text at the next GBM so the written document matches the law, and to avoid confusion the next time an auditor or a member checks it against the rule.

The formula does not change, only the rate does: Outstanding balance × interest rate ÷ 365 days × number of days overdue = interest for the period.

Worked example: a member has ₹10,000 outstanding, overdue for 60 days. Under the old 21% rate, the interest would have been ₹10,000 × 21% ÷ 365 × 60 = ₹345.21. Under the new 12% cap, the same overdue amount for the same 60 days works out to ₹10,000 × 12% ÷ 365 × 60 = ₹197.26, a difference of roughly ₹148 on this one bill alone. Across a society with dozens of long-standing defaulters, this adds up to a meaningful drop in interest income for the year.

The rate change applies prospectively. Interest that had already accrued and been billed at the earlier rate for the period before 30 June 2026 stands as charged; the 12% cap governs interest accruing on outstanding balances from the effective date onward. For dues that straddle the transition — overdue both before and after 30 June 2026 — the cleanest approach is to apply the old rate up to 29 June 2026 and the new 12% rate from 30 June 2026 onward, splitting the calculation at that date.

This is an area where the exact transitional mechanics have not been separately spelled out in the sources available, so if your society has a large book of long-overdue defaulters, it is worth getting your CA or the Registrar's office to confirm the treatment in writing before you finalise interest on straddling bills.

A handful of concrete steps bring a society into line with the new cap:

• Update the interest rate configured in your billing register or software from 21% (or whatever your society was using) to 12%, effective for interest accruing from 30 June 2026.
• Pass a resolution at the next General Body Meeting formally amending the bye-law text to reflect the 12% statutory cap, so the written bye-law matches the law in force.
• Communicate the change to members, especially existing defaulters, so their next statement reflects interest calculated at the new rate and does not trigger disputes.
• Do not retroactively revise interest correctly charged at the old rate for periods before 30 June 2026, unless your CA specifically advises a correction.