Every flat comes with a share of the building around it: the lifts, the pumps, the generator, the sewage treatment plant, the guards at the gate. All of it has to be run from the day the first family moves in, and all of it has to be paid for. For the first stretch that is the builder’s job. After that it belongs to an association of the owners, and every owner is a member of it.
The money shows up on a cost sheet in three forms: advance maintenance collected at possession, a one-time corpus or sinking fund, and the monthly bill that follows. The law says a good deal about who pays in the early years, less than you might expect about the corpus, and something very precise about GST. This guide takes each in turn, and works a monthly bill through on either side of the GST line.
The rules are those in force on 10 Sep 2026: the Real Estate (Regulation and Development) Act, 2016, Karnataka’s RERA rules and the model agreement for sale they prescribe, the Karnataka Apartment Ownership Act, 1972, and the central tax board’s circular on residents’ associations. The builder’s other charges are covered in our full-cost guide.
Who pays before the association
RERA puts the builder in charge of the building until the owners are ready to run it. Section 11(4)(d) makes the promoter responsible “for providing and maintaining the essential services, on reasonable charges, till the taking over of the maintenance of the project by the association of the allottees”. Read on its own, “on reasonable charges” lets a builder bill you for that work.
Karnataka goes further. Since June 2020 its RERA rules have required every agreement for sale to follow a model form, Annexure-A to the rules, and that form settles who pays.
“The Promoter shall be responsible to provide and maintain essential services in the Project till the taking over of the maintenance of the project by the association of the allottees upon the issuance of the completion certificate of the project. The cost of such maintenance has been included in the Total Price of the [Apartment/Plot].”
The price break-up in paragraph 1.2 lists “maintenance charges as per para 11” among the things the total price covers.
Two things follow. The builder’s duty runs until the association takes over, and the agreement ties that to the completion certificate for the whole project, not to the day you collect your keys. If your tower has a partial occupancy certificate while the rest is still being built, the builder is still running the site. And until the association takes over, the cost of running it is already inside the price you agreed.
Paragraph 7.2 covers what comes next. Once you have taken possession, you agree to pay “the maintenance charges as determined by the Promoter/association of allottees, as the case may be after the issuance of the completion certificate for the project”. You have two months from the occupancy certificate to take possession, and paragraph 7.3 says that if you do not, you are liable for those charges anyway.
Advance maintenance at possession
A cost sheet may ask for a year or two of maintenance in advance, collected with the last instalment. Set it against paragraph 11 and the question is simple: which months does the advance cover? Any month before the association takes over, on the project’s completion certificate, is a month the model agreement says you have already paid for in the price. An advance for the months after that is a different matter. Paragraph 7.2 lets the builder or the association set the charge from then on, and nothing in the model form forbids collecting some of it early.
Either way, it belongs in the agreement’s price break-up, not in a separate letter. Karnataka’s rule 8A adds that no application, allotment letter or other document you sign before the registered agreement can limit your rights under it. Ask the builder which months the advance pays for, whether GST is added and why, and when the unspent balance will be handed to the association with an account.
The corpus fund
What the fund is for
A corpus fund, sometimes called a sinking fund, is a one-time sum a builder collects from each buyer to start a reserve for the large repairs and replacements a monthly bill cannot absorb: a lift, a pump set, the generator, repainting the outside, waterproofing the terrace. Once the association runs the building, it may add a monthly contribution to the same reserve.
No Act or rule defines it. RERA, Karnataka’s RERA rules, the model agreement for sale and the 1972 Act do not mention a corpus or sinking fund at all. What the 1972 Act does say is that the “expenses of administration, maintenance, repair or replacement of the common areas and facilities” are common expenses, shared among the owners, and that the association’s bye-laws must provide for “maintenance, repairs and replacement of the common areas and facilities and payments therefor”. A reserve for replacement is the owners’ business, and the money in it is theirs.
Who holds it, and when it moves
Until the association exists there is no one to hold the fund except the builder. Because no law says how it must be kept or when it must be passed on, your agreement is the only thing that does. That makes the corpus the line on the cost sheet worth reading most closely: it can be a large sum, and you will not see it again unless it reaches the association intact.
The natural moment for it to move is when the association takes over maintenance and the common areas, which the model agreement ties to the project’s completion certificate. RERA sets a clock for the common-area papers at the same stage: where no local law sets another time, the builder must hand the documents and plans for the common areas to the association within 30 days of the completion certificate. Ask for the corpus, with its interest and an account, on the same timetable.
What the agreement should say
- The amount and how it was set, as a sum or a rate per square foot, and on which area.
- That it is held for the association, in a separate bank account, not mixed with the builder’s own money.
- That interest earned stays in the fund.
- When it is transferred: the event or the date, with the interest and an account of anything spent, and that it cannot be set off against anything the builder says you owe.
- What it will not pay for: defects the builder has to fix anyway. Under section 14(3) of RERA and paragraph 12 of the model agreement, a structural defect or a defect in workmanship that you report within five years of possession is the builder’s to put right within 30 days, without further charge.
Forming the association
RERA requires the builder to “enable the formation of an association or society or co-operative society, as the case may be, of the allottees”, and requires every buyer to take part in forming it. The deadline in the Act is narrower than it looks. It applies only “in the absence of local laws”, and asks for the association to be formed “within a period of three months of the majority of allottees having booked”.
Karnataka uses the 1972 Act
Karnataka has a local law. In June 2024 a Division Bench of the Karnataka High Court held that for a project of residential flats only, the association is formed under the Karnataka Apartment Ownership Act, 1972, not as a co-operative society. RERA’s provisions, it said, “only mandate formation of association of the allottees under the applicable laws. The law applicable in the present case is the Karnataka Apartment Ownership Act, 1972.” In March 2026 the court set out how the two laws divide the work: “the provisions under RERA are applicable to the pre-ownership stage, whereas the provisions under KAOA are applicable to the post-ownership.” Both cases concerned buildings of flats only. If yours also has shops or offices, ask your lawyer which law applies.
A new law, the Karnataka Apartment (Ownership and Management) Bill, 2026, passed both Houses of the legislature in August 2026 but is not yet in force. Until it is, the 1972 Act governs.
How the declaration works
The 1972 Act applies to a building only once its owner submits it to the Act by executing and registering a deed of declaration. The declaration describes the land and the building, each flat, the common areas, and each flat’s percentage of undivided interest in them, which counts “for all purposes, including voting”. The declaration, each flat’s deed of apartment and the floor plans are registered at the sub-registrar’s office, and copies of the declaration and bye-laws are filed with the Registrar of Co-operative Societies, which the Act names as its competent authority for a privately built building.
The association is not a separate body you apply to join. The Act defines it as “all of the apartment owners acting as a group in accordance with the bye-laws and Declaration”, so you become a member when you become an owner. The bye-laws, annexed to the declaration, must provide for a board of managers elected from among the owners, a president, a secretary who keeps the minutes, a treasurer who keeps the accounts, and the way each owner’s share of the common expenses is collected. Read them before you register your sale deed: they are the rules your maintenance will be run by. Our guide to documents to check before you buy shows where the deed of declaration fits among the rest.
From possession to handover
Section 17 of RERA requires the builder to register a conveyance deed for your flat “along with the undivided proportionate title in the common areas to the association of the allottees”, and to hand the common areas to the association. Under the 1972 Act your share of the common areas travels with the flat: it “shall be deemed to be conveyed or encumbered with the apartment even though such interest is not expressly mentioned in the conveyance”. Where no local law sets a time, RERA wants the conveyance done within three months of the occupancy certificate, and the model agreement says the same.
Put in order, the handover from builder to owners runs like this.
Booking and agreement
The builder has to enable an association to be formed. Your registered agreement fixes who pays for maintenance until the association takes over: under the model form, the price already does.
Occupancy certificate
The builder offers possession in writing, and you take it within two months. The deed of declaration is registered, and your sale deed and deed of apartment follow, within three months under the model agreement.
Before the completion certificate
The builder runs the essential services, at a cost the model agreement puts inside your price. Defects you report are its to fix, and stay so for five years from possession.
Completion certificate
The association takes over maintenance and the common areas. The documents and plans for the common areas follow within 30 days, where no local law sets another time. The corpus and any unspent advance should move now too.
After the takeover
The association sets a budget and bills each flat its share. GST applies only if your bill is over ₹7,500 a month and the association’s turnover is over ₹20 lakh a year.
Between steps 03 and 04 there can be months or even years, especially in a project built in phases. In that stretch the builder is running the building on money already built into your price, and you should be watching for the corpus and the association as closely as for your own keys. Our guide to what a possession date means explains how to read the dates a builder has filed.
GST on maintenance
Once the association runs the building, what it collects from you can attract GST. The exemption sits in entry 77 of the central government’s GST exemption notification, and the Central Board of Indirect Taxes and Customs (CBIC) explained it in a circular in 2019.
“Supply of service by RWA (unincorporated body or a non-profit entity registered under any law) to its own members by way of reimbursement of charges or share of contribution up to an amount of Rs. 7500 per month per member for providing services and goods for the common use of its members in a housing society or a residential complex are exempt from GST.”
“In case the charges exceed Rs. 7500/- per month per member, the entire amount is taxable.”
The circular settles three details. The limit was ₹5,000 until 25 January 2018, when it rose to ₹7,500. It applies flat by flat: if you own two flats in the same complex, each is tested on its own. And once a bill is over the line, the tax is 18% on everything you pay that month, not just the part above ₹7,500.
There is a second test, on the association rather than on you. If its turnover in a financial year does not exceed ₹20 lakh, the circular says, “it shall not be required to take registration and pay GST even if the amount of maintenance charges exceeds Rs. 7500/- per month per member.” So GST applies only when both tests are failed: your contribution is over ₹7,500 a month, and the association’s turnover is over ₹20 lakh.
The second test protects only small buildings. At ₹7,800 a month a flat, 22 flats are enough to take an association past it: 22 × ₹7,800 × 12 months is ₹20.59 lakh. An association that does pay GST can claim credit for the GST it has itself paid on goods such as generators and pumps and on repair and maintenance services, and set that against what it owes.
The threshold is a cliff
The ₹7,500 cliff
The monthly bill on a 1,300 sq ft flat at five illustrative rates a square foot, in an association whose turnover is above ₹20 lakh. Past ₹7,500, GST falls on the whole amount. Hover or tab to a bar for the sum.
Because the tax falls on the whole amount, the step at ₹7,500 is a cliff, not a slope. A contribution of ₹7,500 costs ₹7,500. A contribution of ₹7,501 carries ₹1,350.18 of GST and costs ₹8,851.18. If your association’s bills sit just above the line, its budget is worth a second look.
The worked example
Take a flat of 1,300 sq ft super built-up, billed on that area, in a complex large enough that the association’s turnover is well over ₹20 lakh. The rates are assumptions, chosen to sit either side of the line.
| 1,300 sq ft at | ₹5.75 a sq ft | ₹6.00 a sq ft |
|---|---|---|
| Contribution | ₹7,475 | ₹7,800 |
| Over ₹7,500? | No | Yes |
| GST at 18% | ₹0 | ₹1,404 |
| Monthly bill | ₹7,475 | ₹9,204 |
| A year | ₹89,700 | ₹1,10,448 |
The rate went up by 25 paise a square foot and the contribution by ₹325, but the bill went up by ₹1,729 a month, or ₹20,748 a year. Had the tax fallen only on the ₹300 above the line, it would have been ₹54.
Reading a maintenance bill
Which area the rate is on
The 1972 Act says how the costs are shared. Common expenses are charged to the owners “according to the percentage of the undivided interest in the common areas and facilities”, and that percentage is fixed in the declaration, worked out from “the value of the apartment in relation to the value of the property”. A rate per square foot is a way of turning that share into a monthly figure.
So the rate matters less than the area it multiplies. The association’s budget is whatever it costs to run the building; the area only decides how that budget is split between the flats. Check which figure your bill uses, carpet, built-up or super built-up, and whether the result is in line with your flat’s percentage in the declaration. Two flats with the same carpet area can carry quite different super built-up figures, as our guide to carpet area and super built-up shows, and on a super built-up basis the one with more loading pays more.
What the bill pays for
A maintenance bill pays for running the common areas: the staff, the service contracts for the machines, the power and water they use, and the building’s insurance, whose premiums the 1972 Act makes a common expense. A bill may also carry a monthly sinking-fund contribution as a separate line, and separate lines for water or generator power charged by the unit. Your flat’s own electricity is billed to you by BESCOM, and your property tax by your city corporation, because the 1972 Act has each flat assessed as separate property.
| Cost | Paid from | Why |
|---|---|---|
| MaintenanceSecurity, housekeeping and a facility manager | The monthly bill | Administering the common areas is a common expense |
| MaintenanceService contracts for lifts, generator, pumps, STP and fire systems | The monthly bill | Maintaining shared installations is a common expense |
| MaintenanceCommon-area power, diesel and water bought in | The monthly bill, or lines on it charged by the unit | The running costs of the same installations |
| MaintenanceThe building’s insurance | The monthly bill | The 1972 Act makes premiums a common expense |
| CorpusA new lift, pump set or generator; repainting; waterproofing | The corpus or sinking fund | Replacement is a common expense too large for one month |
| BuilderRunning the building before the association takes over | Already in your price | Model agreement, paragraph 11 |
| BuilderDefects reported within five years of possession | The builder, at no charge | RERA, section 14(3) |
| YouYour flat’s electricity | You, to BESCOM | Your flat’s own connection |
| YouProperty tax on your flat | You, to your city corporation | Each flat is assessed as separate property |
Buying a resale flat
Unpaid maintenance follows the flat. Under the 1972 Act, what an owner owes the association is a charge on the flat that ranks ahead of every other claim except government and municipal taxes and a first mortgage, and a buyer is jointly liable with the seller for dues left unpaid at the time of sale. The same section gives you the remedy: you are entitled to a statement from the association’s secretary or board of what is unpaid, and you cannot be held liable for more than it shows. Get that statement before you pay the seller.
If you disagree with a bill
While the builder runs the building, its duties sit in section 11(4) of RERA, which also makes it answerable for what it promised in your agreement, and a failure in them can be taken to Karnataka RERA as a complaint under section 31. Once the association runs it, a dispute over the bill starts with the board and the general body, and the bye-laws should say how the accounts are audited and reported to members. You cannot opt out: the 1972 Act says no owner may escape their share of the common expenses by not using a facility or by leaving the flat empty. Where someone fails to follow the bye-laws or the declaration, the Act lets the board, or in a proper case an aggrieved owner, go to court.
Before you take possession
For the inspection itself, room by room, use our handover and snag list.
- Find maintenance in the price break-up of your agreement, and check it matches paragraph 11 of the model form.
- Ask which months any advance covers, and do not pay again for months before the association takes over.
- Get the corpus terms in writing: the amount, the account it sits in, the interest, the transfer date and an account on transfer.
- Read the deed of declaration and the bye-laws, and find your flat’s percentage of undivided interest.
- Check the area your bill will use, and that the share it gives you is in line with that percentage.
- Ask for the association’s budget and its last audited accounts once it exists, and see where your bill sits against ₹7,500.
- On a resale, get the statement of unpaid dues from the association before you pay the seller.
Sources, checked 10 Sep 2026. The builder’s duties, the association, conveyance, defects and complaints: Real Estate (Regulation and Development) Act, 2016, sections 11(4)(d)–(e), 14(3), 17, 19(9)–(10) and 31 (text). The model agreement: Karnataka Real Estate (Regulation and Development) Rules, 2017, rule 8A and Annexure-A, paragraphs 1.2, 1.8, 7.2–7.4, 10, 11 and 12, notified 15 June 2020 (Karnataka RERA); “association of allottees”: rule 2(1)(b). Declarations, bye-laws, common expenses and unpaid dues: Karnataka Apartment Ownership Act, 1972, sections 2, 3, 6, 7, 10, 11, 13 and 16–21 (text). Which law governs the association: Proposed Starnest Apartment Owners Co-operative Society Ltd v State of Karnataka, High Court of Karnataka, W.A. 564 of 2024, 18 June 2024, paragraph 18; Sobha Ltd v Deputy Registrar of Co-operative Societies, High Court of Karnataka, W.P. 5934 of 2024, 3 March 2026, paragraph 104. The new law: Karnataka Apartment (Ownership and Management) Bill, 2026, LA Bill 14 of 2026, passed by the Assembly on 21 August and by the Council on 24 August 2026, and in force only from a date the government notifies (Karnataka Legislative Council). GST: CBIC Circular 109/28/2019-GST of 22 July 2019 (GST Council); Notification 12/2017-Central Tax (Rate), serial number 77, as amended by Notification 2/2018; rate: Notification 11/2017-Central Tax (Rate), serial number 33.
The maintenance rates in the worked example are illustrative, because associations set their own and no official source publishes typical figures. This is a general guide, not legal or tax advice. Have a lawyer read your agreement and the deed of declaration before you sign, and ask a chartered accountant about GST on an association’s accounts.