A Member shall be required to pay simple interest at 21% per annum, or, at such lower rate as may be fixed by the General Body, on the outstanding dues to the Society, from the date the amount was due as prescribed under Bye-law no. 69, till full and final payment by the Member.
We have noticed that various housing society follows different methods when it comes to calculation of the interest specially when there is a partial payment / part payment. The accounting / billing of housing societies are pre-dominantly managed by various CA firms / accountants and hence invariably they follow the best accounting principal;
In such case, most of the people first adjust the interest due and then balance is adjusted against the other charges. While such practice is best accounting method but is completely in violation of the society bye-laws. While adopting such method, you are actually imposing / charging "Compounding Interest" i.e. Interest on interest, while the bye-laws says that the members are required to pay "Simple interest".
Therefore, it is suggested to first adjust the society charges and if there is any balance left out then adjust the interest. If no balance then carry forward the principal (remaining, if any) and interest for subsequent month for calculation.