When you buy a house for investment purposes, one of the ways to make money from it by renting it. But did you know that if the property is located in a housing society, then a property on rent attracts the non-occupancy charges that has to be paid to the housing society. In this guide we detail about non-occupancy charges, who has to pay them and how to calculate the non-occupancy charges.
Maharashtra Cooperative Societies Act: What are non-occupancy charges 2025?
Non occupancy charges are levied by housing societies when a property has been transferred by the society or a builder to the owner and it is vacant. Such non-residence may be on account of the flat being vacant or rented out. However, as per bye-laws non-occupancy charges won’t be levied if the property is being occupied by the owner’s blood relatives like parents or siblings.
All cooperative housing society have the right to levy
- Non-occupancy charges for a vacant apartment
- Non-occupancy charges for a rented apartment
- Non-occupancy charges for a commercial space
Note that these charges vary from state to state. For instance, while some states like Maharashtra levy non-occupancy charges, states like Karnataka have abolished it with the state government issuing strict guidelines against it.
Maharashtra Cooperative Societies Act: Who pays non-occupancy charges in a housing society?
According to the bye-laws, non-occupancy charges are levied if the flat is left vacant after possession or if the landlord or their immediate family members do not use the flat.
Thus the house owner who is also a society member has to pay the non-occupancy charges. However, if there is a discussion between the owner and tenant on the tenant paying this charge and this is clearly mentioned in the rental agreement, then the tenant will pay the non-occupancy charges 2025.
When are non-occupancy charges not applicable?
- If a flat owner is himself residing in the flat, then, he need not pay non-occupancy charges.
- If the flat in a housing society is locked at all times and the landlord stays elsewhere and pays the entire society maintenance charges without any discount, then non-occupancy charges are not levied. While some people may dispute this, an easier way is to ask your parents to shift in the property until you are away.
- As per bye-laws non-occupancy charges won’t be levied if the property is being occupied by the owner’s blood relatives like parents or siblings.
Who are exempted from the non-occupancy charges?
If a flat owner is himself residing in the flat, then, he need not pay non-occupancy charges. In case the flat is occupied by members of his immediate family, namely, son, daughter (married or unmarried) or grandchildren, then, they will also be exempt from the payment of non-occupancy charges.
What is the Supreme Court ruling on non-occupancy charges?
How are non-occupancy charges 2025 calculated?
The non-occupancy charge is based on the service charge that is part of your maintenance bill. Note that the non-occupancy charge cannot be more than 10% of the service charge except municipal taxes. For eg. If a maintenance bill is Rs 11,000 of which the service charge is Rs 10,000 a month, the monthly non-occupancy charges will be 10% of Rs 10,000 resulting to Rs 1,000.
What are service charges?
Service charges are the salaries to employees of the society, stationary charges, overhead cost etc. that a society incurs. This along with utility charges like electricity charges form the non-occupancy charges.
Non-occupancy charges 2025: What is illegal?
Any amount charged under any additional head, apart from the fixed charges of 10%, is illegal. In such a case, the society can be prosecuted under the Consumer Protection Act, for deliberate negligence and deficiency in services and overcharging of the amount with abuse of power and harassment. The lessee is required to adhere to the due procedures and submit relevant documentary proofs, while initiating legal action.
Maharashtra Cooperative Societies Act: Penalty of non-payment of non-occupancy charges 2025
The housing society will send a reminder notice, in case the flat owner does not pay or refuses to pay the non-occupancy charges 2025. Finally, the housing society can withhold issue of the no-dues certificate (NOC) when the landlord asks for one unless arrears of non-occupancy charges with penalty is not paid.
What is the criteria for levy of non-occupancy charges?
If a flat owner is himself residing in the flat, then, he is not liable to pay non-occupancy charges. In case the flat is occupied by members of his immediate family, namely, son, daughter (married or unmarried) or grandchildren, then, they will also be exempt from the payment of non occupancy charges.
See also: Deemed conveyance meaning
Maharashtra Cooperative Societies Act: Non-occupancy charges for NRIs
While non-resident Indian (NRI) property owners are drawn to invest in India due to the attractiveness of the real estate market, many have faced steep non-occupancy charges in the past. As these owners were often abroad, housing societies charged substantial non-occupancy fees, sometimes amounting to several lakhs. This practice continued until the Maharashtra government intervened and placed a cap on these charges.
When investing in Indian properties, NRIs should be aware of their rights, understand how non-occupancy charges are calculated and maintain transparent communication with the housing society. NRIs owning a property in India have to necessarily pay non-occupancy charges if the property is on rent or locked. This can be avoided only if the NRI property owner’s blood relative stay in the house.
See also: What is an occupancy certificate?
Should non-occupancy charges be collected after society formation or wait until developer exits the project?
A common occurrence in new residential complexes is that owners are required to pay maintenance (typically for 18 months) to the developer before the society is formed. One question many people have is whether the society should wait for the developer to exit (after the 18-month period) or begin collecting non-occupancy charges once the society is formed and the handover is complete.
According to advocate Neelam Mayuresh Pawar, “Since the developer has already collected maintenance for 18 months, there is no immediate need for the society to impose non-occupancy charges during this period, unless the collected funds prove insufficient. It is advisable for the society to seek a proper handover of accounts from the developer, ensuring that any remaining maintenance funds are transferred to the society’s account. Non-occupancy charges, if applicable, should ideally be levied after the 18-month maintenance period ends, unless an urgent financial need arises. The society should pass a resolution in the upcoming general body meeting to ensure collective decision-making on this matter.”
Are the non-occupancy charges taxable?
No, the non-occupancy charges are not taxable according to the Income Tax rules.
Does the non-occupancy charges attract GST on housing societies?
According to the official government document -GST on housing societies, sinking fund, repairs and maintenance fund, car parking charges, non- occupancy charges or simple interest for late payment attract GST as these charges are collected by the RWA/Co-operative Society for supply of services meant for its members.
Non-occupancy charges: Judgements
As per the Maharashtra Cooperatives Societies Act 1960, Section 79A- Maharashtra state government can issue guidelines and monitor working of housing societies. The state government used this right to put a limit on charging of non-occupancy charges by issuing a legal guideline.
Opposing this, Mont Blanc Cooperative Housing Society through a petition filed under Article 226 challenged the Section 79A of the Maharashtra Cooperatives Societies Act. According to the housing society, the Maha government restricted their freedom by issuing such a guideline. The case became a landmark case. The final bylaws of the Maharashtra Cooperatives Societies Act 1960 were drafted and Non-Occupancy Charges guidelines, how they can be calculated and its collections were revised.
Housing.com POV
Today, non-occupancy charges levied by housing societies cannot exceed 10% of the service charge component of the monthly maintenance bill. These charges can be levied, the moment the flat is given on leave and license, or goes vacant. It is recommended for a resale flat purchaser to check for such arrears, if any, before he purchases the flat as the society may not give a NOC to the buyer or may ask the buyer to pay the non-occupancy charges for the deal to fall through.
FAQs
How is non-occupancy charges calculated?
Non-occupancy charges is 10% of the monthly maintenance calculation’s service costs component. For instance, if the monthly maintenance calculation’s service costs component is Rs 5,820 per month, the non-occupancy charge will be Rs 582 per month.
What is non-occupancy charges in India?
Non-occupancy charges in India is the money paid to the society when owner doesn’t stay in a property but rents it out to others.
What is the Supreme Court charge on non-occupancy charges?
According to the Supreme Court, a society can charge 10% of the service fee as non-occupancy charges.
What is the non-occupancy charges circular in Maharashtra?
Under section 79A of the Maharashtra Cooperative Societies Act, 1960, in no case the non-occupancy charges can exceed 10% of the maintenance charge of the society.
Are non-occupancy charges taxable?
Things such as non-occupancy charges and transfer charges are exempted from Income Tax.
Who are exempted from non-occupancy charges?
If landlord or his blood relations occupy the property, then they are exempted from paying the non-occupancy charges 2025.
Who pays non-occupancy charges?
The owner of the unit (a member of society) has to pay the non-occupancy charges.
What are service charges?
As per the bye-law number 68 of the new model bye-laws, service charges constitute salary and allowances to staff, sitting fees to committee members, common electricity and outgoings for society office.
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