Sinking Fund: What it is & how it is calculated

▤ Summary

Ever wondered what that sinking fund entry is on your housing society maintenance invoice? Generally speaking, a sinking fund is an account where you set aside money to pay off a debt or for a planned expense. A sinking fund for a gated community has a similar purpose as in the case of personal finances. 13 (C), “The General Body can decide the Sinking Fund contribution, subject to the minimum of 0.25% per annum of the construction cost of each flat incurred during the construction of the building of the Society and certified by the Architect, excluding the proportionate cost of the land”. Hence, housing societies often have to explore alternative means to calculate sinking funds.

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