IFMS Meaning and Importance in Real Estate

February 14, 2024
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The IFMS is a crucial financial component in real estate transactions that plays a major role in the long-term longevity and durability of residential properties. This special financial clause acts as a reserve for continuing upkeep and common area costs inside a development. It is often collected at the time of property possession. Examining the IFMS meaning in better detail reveals its significance and diverse influence on the real estate market. In this blog, we at L&T Realty explore the IFMS full form in real estate as well as its importance in real estate dealings.

Understanding IFMS

IFMS full form in real estate is Interest free Maintenance Security Charges. In essence, it is a security fee that developers levy on purchasers of real estate while they are in possession. Unlike conventional security deposits, this interest-free sum is designated expressly for the preservation of the property’s facilities, communal areas, and general condition. The objective is to create a financially viable system that will guarantee the ongoing improvement of the living conditions of the property in question.
It’s also worth remembering that the IFMS will be promptly transferred once the formation of a residents’ welfare association of the property has taken place. While the charges will be sent directly to the developer’s previously, it will be sent to the RWA after it is formed.

What is the Purpose of IFMS

The main objective of the IFMS is to establish a fair and clear-cut system that aids in facilitating the maintenance and upkeep of a residential property, while also not being too harsh of a financial stress on the residents. This provides a more sustainable and financially viable way of keeping properties attractive and avoiding their depreciation, while simultaneously also encouraging responsible and just custody of property.

Uses of IFMS

Repairs and Maintenance

As the name suggests, one of the main purposes of IFMS is to fund the costs of any repairs and maintenance requirements for the common areas of the property. These common areas can include a range of things, such as common corridors, stairwells, courtyards, swimming pools, security and surveillance systems, as well as parking spaces.


The IFMS can also be used for any improvements and developments to any infrastructure on the property that will be available to use for all the residents. This entails improvements to certain amenities or even development of facilities on the property.

Utility Aspects

Another major aspect of IFMS is when it comes to the maintenance as well as the improvement of the property’s common utilities. This includes things such as the upkeep of the lighting fixtures in the common spaces, keeping the property management and disposal of waste, as well as water supply in the common areas.

IFMS Charge vs Sinking Fund Charges

For the uninitiated, sinking fund charge is an amount that is kept in reserve within a housing fund’s account, to be used mainly in cases of repairs and emergencies. The main objective of implementing a sinking fund charge is so that repairs can be undertaken without having to immediately worry about the costs. You might be wondering what exactly the difference is between IFMS and sinking fund charges.
The main point of distinction between sinking fund charges and IFMS is that sinking charges are contributed towards funds that are set aside to be used in case of emergencies and unforeseen circumstances. On the other hand, IFMS is allocated towards funds that will be used for any ongoing expenses such as maintenance and improvements.

How is IFMS Calculated and Collected?

The calculation of the IFMS can vary in many ways, mostly depending on the developer as well as the residents’ welfare association. Currently, there is no standardized method that is used by all developers or associations when it comes to the calculation of the IFMS. However, it’s worth remembering that, in most cases, the IFMS is calculated based on the total area of the property, which could also include the size of each resident’s home. It may also take into account a comparable portion of the amenities and facilities that are available on the property.
In most cases, the IFMS is collected during either the handover stage or the possession stage of the property. The collection of IFMS could also happen as part of the overall payment process for the property.

Benefits of IFMS

Sustainable Upkeep of Property

One of the main benefits of IFMS is that it greatly helps in facilitating a sustainable way of maintaining the property, its common areas, amenities and utilities. It allows for consistent upkeep of the property which helps it maintain its appeal and also enhances its longevity.

Maintains Value

Since the IFMS facilitates the consistent maintenance and even improvement of the property, it also helps in maintaining as well as improving the property’s overall value. On the other hand, without IFMS it’s possible for the property to be neglected, causing it to depreciate drastically in value over time.

Challenges Faced by Homeowners

Idea of Unfair Financial Burden

A common issue that occurs when it comes to IFMS is when homeowners may feel that they are paying for the improvements or upkeep of amenities or facilities that they do not use. This comes across as an unfair financial burden for them to take on, especially when others may be benefiting from a common amenity more than them.

Lack of Transparency

The possibility of mismanagement of funds has made way for a potential lack of trust between homeowners and property management. This is why it’s important to maintain a transparent system that reassures residents that their contributions are accounted for and being used for the right purposes.

Insufficient Services

It is often the case for homeowners who have contributed to an IFMS to be unhappy or dissatisfied about the services that the IFMS funds have paid for, whether it be for repairs, maintenance or any improvement work. It is also possible for there to be delays or postponements in the work, which could also create concern among the residents of the society.

Legal Bases

Real Estate (Regulation and Development) Act, 2016

The Real Estate (Regulation and Development) Act of 2016 has included a number of guidelines in relation to IFMS, that prevent the misuse of the system by developers or by promoters.

  • Section 11(4) (A) of the Real Estate (Regulation and Development) Act of 2016 states that,
    “The promoter shall be responsible for all obligations, responsibilities and functions under the provisions of this Act or the rules and regulations made thereunder or to the allottees as per the agreement for sale, or to the association of allottees, as the case may be, till the conveyance of all the apartments, plots or buildings, as the case may be, to the allottees, or the common areas to the association of allottees or the competent authority, as the case may be:
    Provided that the responsibility of the promoter, with respect to the structural defect or any other defect for such period as is referred to in sub-section (3) of section 14, shall continue even after the conveyance deed of all the apartments, plots or buildings, as the case may be, to the allottees are executed.”
  • Also under Section 11 (4) (E) of the Real Estate (Regulation and Development) Act of 2016,
    “The promoter shall enable the formation of an association or society or co-operative society, as the case may be, of the allottees, or a federation of the same, under the laws applicable:
    Provided that in the absence of local laws, the association of allottees, by whatever name called, shall be formed within a period of three months of the majority of allottees having booked their plot or apartment or building, as the case may be, in the project.”
    This is specified so that, after the formation of the residents’ association, the funds of the IFMS can be passed on to the association.
  • Section 11 (4)(G) of the RERA Act of 2016 also states,
    “The promote shall pay all outgoings until he transfers the physical possession of the real estate project to the allottee or the associations of allottees, as the case may be, which he has collected from the allottees, for the payment of outgoings (including land cost, ground rent, municipal or other local taxes, charges for water or electricity, maintenance charges, including mortgage loan and interest on mortgages or other encumbrances and such other liabilities payable to competent authorities, banks and financial institutions, which are related to the project)”


You might be wondering whether Goods and Service Tax (GST) can be applied on Interest free Maintenance security charges, since that would be another important figure to take into account for budgetary purposes. GST actually is applicable on IFMS charges but only if the charge is above a certain amount. If the contribution to the fund is more than INR 7500 per resident, then a GST of 18% is applicable on that charge.

Influence of IFMS charges in Real Estate Today

IFMS is a crucial component in the current market that appeals to developers as well as real estate investors. For developers, it guarantees a steady reserve for continuing upkeep, which raises the property’s appeal with continued care. This dedication to maintaining quality enhances market perceptions and draws in more skeptical homebuyers.
The application of IFMS in real estate transactions is perceived by purchasers as a transparent and responsible method of handling financial transactions. It ensures that shared spaces, general property upkeep, and common areas are sufficiently funded, fostering peace of mind and a pleasurable living environment. The long-term advantages of well-maintained houses are being more and more valued by buyers, and IFMS is becoming an important consideration in their selection process.

Case Study

Earlier in January 2024, residents of a property in Gurgaon protested outside the developer’s offices, against the transfer of IFMS funds to the RWA. Residents objected to the transfer of funds and assets by the developer, as they alleged that the RWA did not represent them. For more details on the story, click the link below:


In the end, it’s clear to see the important benefits that an Interest free Maintenance System has to offer for residents of a property. While there are certainly some challenges and considerations to keep in mind, the system certainly provides more pros than it does cons. With a more consistent and sustainable way of keeping a property in ideal condition while also not being too much of a financial strain on its residents, the IFMS is incredibly useful in the real estate world today.