Sinking fund and repairs fund: how much to collect and how to use it

Every building needs big repairs one day. The sinking fund and the repairs and maintenance fund are how a society saves for them, a little every month, instead of asking members for a large sum at short notice.

By the myNest team · Updated 2026-10-23

Sinking fund

The sinking fund is the society's long-term reserve for major work: structural repairs, or rebuilding when the building reaches the end of its life. Maharashtra's model bye-laws ask members to contribute at least 0.25% of the construction cost of their flat every year (construction cost, not including land).

It should be invested separately, for example in fixed deposits, as the Maharashtra Co-operative Societies Act allows, and used only with the approval of the general body.

Repairs and maintenance fund

The repairs and maintenance fund pays for regular upkeep: painting, plumbing, waterproofing, lift overhauls. The usual contribution is about 0.75% of the construction cost of the flat a year, as decided by the general body.

Example

For a flat whose construction cost is ₹15,00,000:

• Sinking fund: 0.25% = ₹3,750 a year, about ₹313 a month.
• Repairs fund: 0.75% = ₹11,250 a year, about ₹938 a month.

Keeping the funds safe

• Show both funds separately in the accounts, with their own bank account or deposits.
• Don't use the sinking fund for routine bills; the auditor will ask about it.
• Plan structural audits on time: the model bye-laws ask for one every five years for buildings 15–30 years old, and every three years after 30 years.
• Report the balance of each fund at every AGM.

How myNest helps

Add the sinking and repairs funds as charge heads (by area or fixed) and they appear on every bill. The year-at-a-glance dashboard shows the balance of each fund and month-by-month inflows, so the committee always knows what is set aside.

This guide is general information, not legal or tax advice. Your society's registered bye-laws and your chartered accountant have the final word.