Corpus Fund For Redevelopment

[Liisa Komara]

Ingeneral terms, Corpus Fund meaning can be referred to as a capital fund; an amount kept aside for an organization/entity to operate, exist and maintain itself. These funds are not meant to be utilized for the attainment of any objectives and are accrued through voluntary contributions.

The developer uses the interest or dividend generated from the Corpus Fund to pay a facility management and supervision agency which takes care of amenities, common areas, light bill, servicing, cleaning, etc. The builder cannot use the interest generated from the Corpus Fund for any other purposes.

A Corpus Fund must never be misused or embezzled by the builder or any third party for their own benefit. A detailed expense accrual with signatures and stamp has to be produced by the builder during the handover process so that the homeowners are aware of how the Corpus Fund was utilized. These expenses are registered in the annual balance sheet as well so that all residents have access to the records. Transparency regarding the corpus fund is crucial as it changes hands throughout the life cycle of the residence.

Before you sign the dotted line, make sure you have gained clarity from the builder about how much money he aims to collect as a corpus fund and be sure to understand every line item from the proposed utilization format of the fund amount. Better beware today than to be surprised tomorrow.

When my father purchased a flat I learnt the meaning of corpus fund. So, I will share the corpus amount meaning with you. Generally, the corpus fund in apartments meaning can be referred to as a capital fund, an amount kept aside for an organisation/ entity to operate, exist and maintain itself. These funds are collected for apartments purpose only and not for the attainment of any objectives and are accrued through voluntary contributions. In other words, it is the lump sum amount collected as pre-maintenance charges from the home buyer which is not included in the total sale of the property. Corpus Fund is collected by the builder however once the housing society the developer hands over the corpus fund to the managing committee. For further maintenance residents also pay a monthly/quarterly/annual maintenance charge. This is what is corpus fund in apartments means.

The corpus fund is used for facility management and supervision agencies which take care of amenities, common areas, light bill, servicing, cleaning, etc. The interest generated on corpus funds can only be used for these purposes.

The corpus fund is calculated on a per square feet basis. The amount can be over Rs 1 lakh. After the formation of the housing society, the corpus fund is transferred to the Sinking Fund for major repairs, reconstruction, structural addition or redevelopment. This is the corpus fund meaning in English. I hope what I have shared about the meaning of corpus fund is helpful.

I remember my first job was working as an intern for an NGO which had a serious financial crisis. Now no one could be blamed that time as due to Covid, every household was suffering so there was no question of getting donations from anywhere. I was all new in this field and seeing me in a bit of a tense mood, my father asked me what was the matter. I explained how nothing is going quite well but he said that the NGO might now start using the corpus fund. I had not heard the term before or know anything about it so asked him, what does

Later I got to know that there is a corpus fund for apartments as well which gets transferred by the builder to the Associate after the formation of the apartments. It can be of Rs 1.5 lakh for 2 years or more that gets collected from each apartment buyer as Building Corpus Fund. The interest that is gained from the money collected as

My builder told me about the corpus fund meaning when my friend was finalizing the deal to buy an apartment in a project. He told me that it is a large amount of money that the builder collects from the buyer at the time of booking the flat. With respect to housing societies, the developer is responsible to collect the corpus fund to maintain the facilities and amenities.

While selling the property, every buyer of the home/apartment contributes his share of a predetermined amount that collectively forms the Corpus Fund. The builder delivers the built property to the buyer generally within 2 years in case the property is under construction. This is why this amount is collected from the buyer for taking care of expenses over a long period of time.

When we purchase an apartment we come across several interrelated terms and concepts such as Corpus Fund, Sinking Fund, Hybrid Maintenance Calculation, etc. So, let me explain what is corpus fund in redevelopment so that you can understand all the aspects related to the corpus funds.

In simple words, Corpus Fund is a type of capital fund that is kept aside for organizations, entities to function, exist and maintain themselves. The amount used for these funds should not be used for any other objectives.

In real estate, the developer collects the corpus fund for the maintenance of amenities and facilities. When an amount is collected from home buyers as pre-maintenance charges and not included in the total sale amount of property it can be considered as a corpus fund. The corpus funds are kept in the bank and the interest generated from the amount is used by the developer for maintenance purposes.

When a housing society is formed it is the duty of the builder to transfer the corpus fund to the managing committee. To maintain the amenities residents pay a maintenance fee to the managing committee on a monthly, quarterly or annual basis and the calculation method is decided with everyone in the society. This is the corpus fund meaning in real estate.

If you have noticed the builder is utilizing corpus fund for other purposes you can file a complaint in the consumer court as well as RERA. You should always ask what is the amount of money the builder is charging as corpus fund and you should also understand how it will be utilized.

I remember when I was purchasing a remodelled property, there were many charges I had to pay. These charges were not the registration amount of stamp duty charge, it was corpus fund in case of redevelopment. In case, you don't know the meaning. This amount is collected by the buyers and saved for future use. All the additional repairs and replacements are done from the corpus fund. This is why it is also known as the sinking fund. You just need to pay the corpus fund.

It is the capital or fund that is collected for the expenditures needs of the housing association that maintains the building. It is money saved and collected for expenses related to major repair or renovation work. Residents welfare association collected the corpus fund from homeowners. The association is not liable to pay any GST.

For a property that has been remodelled and redeveloped, the buyer still has to pay a corpus fund. Rules about corpus funds have been mentioned in the model bye-laws of each state. In Mumbai, it has been fixed that the seller can only charge a minimum of Rs 10,000. The maximum amount that can be charged is a Rs 25,000 premium on the transfer of property.

For the most part, it is calculated on sq feet basis rights. The bigger the property, the area will be higher in sq ft. This means that if the property is huge, the corpus amount fund can be as high as Rs 1 lakh. The calculation is done by the general body of the society.

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Redevelopment is a method of urban renewal that seeks to provide additional and better quality housing, make land available in the center of the city, eliminate urban decay and improve infrastructure. In the recent past there are two major reasons observed for the rapid surge in the number of redevelopment projects across India.

Under redevelopment schemes, societies plan to undertake redevelopment of existing building owned by them and for that purpose they enter into Development Agreements with Builders. Under Development Agreement, Builder will undertake construction on the plot of land, after demolishing existing building, and will give flats to existing members of the Society free of cost in proportion to the area of flats occupied by such members in the existing building along with some additional area in the new flat. Remaining Flats in the new building will be sold by the Builder to independent buyers at market price. So, what is the tax (GST & Income Tax) impact on existing Flat Owner?

Existing society members think that they must get flats free and they shall not be required to pay any money out of their pockets whether by way of GST, stamp duty or any other taxes. They expect Builder to pay all the taxes out of his share of sale to outsiders. Under these circumstances when existing members are told about additional GST on value of Development Rights, entire calculations about redevelopment start appearing unviable to those members, and also for developers.

While many people are of the opinion that transfer of Development Rights (DR) is akin to transfer of land and no GST should be applicable on it, the tax authorities have a different view on taxation of transfer of DR. The transfer of DR by the flat-owners to the developers prior to 1 April 2019 attracted liability to GST in the hands of the flat-owners. The tax on transfer of DR after 1 April 2019 by flat-owners to a developer is now required to be paid by the developer (who is registered under the Real Estate (Regulation and Development) Act, 2016). The responsibility to discharge GST on DR thus rests with the developer and the liability for residential projects that will arise will depend on the number of unsold flats at the time of issuance of OCs.

Under GST law, taxability of alternative accommodation charges or compensation for hardship or displacement has also been debatable. In one matter, the Maharashtra Advance Ruling Authority upheld levy of GST on such charges in the hands of the land-owner, since such amounts represent the consideration for agreeing to do an act of vacating the property, which is a taxable supply. Now, with the introduction of the underlying exemption of GST on DR, effective 1 April 2019, there is a prevailing view that compensation for displacement or hardship should not attract GST.

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