EDC, IDC and IFMS Charges: What They Are and When Builders Can Charge

A Gurgaon price sheet rarely ends at the basic sale price. Two of the most common add-ons, External Development Charges (EDC) and Infrastructure Development Charges (IDC), are government levies that developers pay and pass on to buyers. A third, Interest-Free Maintenance Security (IFMS), is not a government charge at all but a deposit set by the developer's contract. Knowing which is which tells you what can change, who decides it, and when you can be asked to pay.

This is general information. For a specific dispute or agreement, consult a qualified lawyer.

The three charges at a glance

Haryana agreements may also mention infrastructure augmentation charges and other government charges. Treat them the same way: identify who levies them and what the agreement says about them.

EDC and IDC in more detail

When DTCP grants a colony licence, the developer becomes liable to pay EDC and IDC to the government for the licensed area. The developer recovers these from buyers, either built into the price or shown as separate lines on the cost sheet, usually in proportion to the unit's area. For how these levies are worked out at the licence stage, see our guide to EDC and IDC for private colonies.

Two practical points matter most to buyers:

• Whether the price includes them. Some projects quote an all-inclusive price; others list EDC and IDC separately. Compare projects on the same basis.
• What happens if the government revises them. In the Haryana RERA agreement format, the total price is escalation-free except for the variations the agreement specifies, and when a promoter demands an increase in government charges, it must enclose the notification or order with the demand letter. Some agreements also let government charges levied retrospectively from the licence date be passed on proportionately. Read these clauses carefully.

Under Section 11(4)(g) of the Real Estate (Regulation and Development) Act, 2016, a promoter must pay the outgoings it has collected from allottees, including dues payable to competent authorities, until physical possession is transferred. If you have paid EDC to the developer, you are entitled to expect that it has reached the government.

IFMS in more detail

IFMS is a one-time deposit, usually collected around the offer of possession, that the developer or its maintenance agency holds as security against maintenance dues. It earns no interest for the buyer. It is different from:

• Advance maintenance charges, which pay for services and are spent;
• A sinking fund, which builds a reserve for major replacements.

There is no standard rate fixed by law. The amount, timing and purpose should be written into the agreement and the maintenance agreement. When the residents' association takes over maintenance, the unspent IFMS should be accounted for and transferred as the agreement provides. Our guide on handover of common areas and documents covers what associations should ask for.

When can a developer demand these charges?

1. Only as the agreement allows. Every charge, its basis and its payment stage should appear in the agreement for sale and the payment plan.
2. Within the booking limit. Under Section 13 of RERA, a promoter cannot take more than 10% of the cost as an advance or application fee before a registered agreement for sale. See the 10% booking rule.
3. With proof for increases. A demand for higher EDC, IDC or other government charges should come with the government order that caused it.
4. IFMS at the stage stated. Usually with the offer of possession. If it is asked for earlier, check that the agreement provides for it.

How to check the numbers

• Ask for a written cost sheet that separates the basic price, PLC, parking, club, EDC, IDC, other government charges, IFMS, maintenance, GST, stamp duty and registration.
• Confirm whether EDC and IDC are included in the quoted price or extra.
• Check the project's licence details and approvals on the Haryana RERA project page.
• For any revised demand, ask for the government notification and the calculation for your unit.
• Get an IFMS receipt that states the amount and purpose.

To build your full budget, see the total cost of buying property in Gurgaon.

If you disagree with a demand

Write to the developer asking for the basis of the demand and the supporting order. If the issue is not resolved, an allottee can file a complaint with the Haryana Real Estate Regulatory Authority under Section 31 of RERA. Keep copies of your agreement, payment receipts, the demand letter and all correspondence.

How NStay Homes can help

NStay Homes can help you compare cost sheets across projects on a like-for-like basis, flag charges that are missing or unclear, and list the questions to put to the developer before you sign. Speak to NStay Homes advisor Naresh Shekhawat on 911 911 9605.

Frequently asked questions

Is EDC included in the price of a Gurgaon flat?

It depends on the project. Some developers quote an all-inclusive price, while others show EDC and IDC as separate lines. Always ask for a written cost sheet and compare projects on the same basis.

Can a builder increase EDC after I book?

Only if the government revises the charge and the agreement allows the variation. In the Haryana RERA agreement format, the promoter must enclose the government notification or order with any demand for increased charges.

Is IFMS refundable?

IFMS is a security deposit, not a fee. The unspent amount is normally adjusted or transferred to the residents' association when it takes over maintenance, as provided in the agreement. Check the exact clause before you pay.

Do I pay GST on EDC, IDC or IFMS?

The GST treatment of each component depends on how it is structured and on current tax rules. Ask the developer for the tax break-up in writing and check with a tax adviser.

Where do I complain about an unjustified charge?

First ask the developer in writing for the basis of the demand. If unresolved, you can file a complaint with Haryana RERA under Section 31 of the RERA Act, with your agreement, receipts and the demand letter.