Interest in deposits raised for repairs

 Generally, a society can charge interest on outstanding deposits, but it depends on the specific circumstances and the governing laws/regulations. In India, the Societies Registration Act, 1860, and the Maharashtra Cooperative Societies Act, 1960, govern the functioning of societies. - If the deposits are for a specific purpose like repairs, the society can charge interest, but it should be authorized by the society's bye-laws or the general body resolution. - If the deposits are not related to any specific purpose, the society may not be able to charge interest. It's essential to review the society's bye-laws, the resolution passed in the AGM, and relevant laws to determine the validity of charging interest !)

What do you mean by such deposits (which are not invoices)?

Thank you sir. We had an AGM in March 2024, in which there was no resolution passed on charging interest on the deposits for repairs. A new resolution was passed on charging interest for outstanding deposit contributions in the recently held AGM (1st Sept 2024). However, as per new resolution, interest will be charged for all outstanding as of 30 Sept, from 1 April 2024 till the amount is paid. 

Is this something the society can do - that is charge interest in retrospective?

The society cannot arbitrarily charge the interest with retrospective effect.

Since the matter of collecting the deposit was intorduced only at this later stage, charging interests for the default in deposits can be with prospective effect only, this can be taken up with the registrar of cooperative societies if the society is taking an arbitral decision affecting the intersts of the members.

What are the meanings of the words deposits and invoices.  If the society demands additional contributions from members for special repairs they are not deposits. They are not refundable. An invoice is a demand notice for payment for goods supplied or services rendered. In some societies there is the practice of periodic billing of the members for expenditure incurred till date. If one wants such a bill can be termed an invoice. If  special repairs have to carried out and the society wants to collect the estimated expenditure, or already incurred expenditure from the members they will calculate the amount payable by each member and give the members facility to pay the amount in monthly instalments over a period of time. Some members pay the amounts regularly. But some members will make default in payments. Why should such defaulting members allowed to go scot-free? In Maharashtra the model byelaws allow societies to collect penal interest from defaulting members as approved by the General Body. Only an upper limit is prescribed. The society has to incurr expenditure from its own existing funds if the contributions are not received from members. On such payments society loses bank interest if funds are not received from members on time. The General Body can decide to levy interest on such defaults at a reasonable rate related to prevailing bank rate. Such interests can be collected retrospectively also if the general meeting so decides. Defaulting members need not be allowed to be benefitted by their defaults. I have been secretary of our society for several years.

So, the society has calculated the charges to be above 7,500 per month, per member/ household. However, the demand is being collected in advance towards the repairs. Thus, it's not an invoice for an existing service and hence not an invoice - else there may be a GST applied. The society is collecting the deposit and wil pay the GST from the collected funds when the service is provided in the future - otherwise we will end up paying double the GST. 

Hence these are being collected as a deposit or a fund right now - and now being invoiced (with GST) like a service. 

No please. These are not deposits. The General Meeting is competent to decide to collect any amount from the members based on estimated anticipated or incurred expenditure including GST, if any. If the funds so collected was not sufficient to meet the expenditure the Society may meet the expenditures from the existing funds or call another General Meeting to collect more from the members. If the amounts collected are  in excess the Society can retain it to meet future expenditures. If the Society wants they can pass a resolution to reduce the rate of collection to the repair and maintenence fund. But that never happens. What is General Body? General Body is the Society made up of all its members including you. When the General Body decides the members decide to collect from among themselves. If you and some others do not agree vote against the resolution. But if those who vote for the resolution are more in number the resolution gets passed. Sorry. As for members who do not care to attend the meeting, it is their fault. Subscripttions paid to the Society are not refundable. Do not think of the Society in I vs They terms. It is We only and no one else.