Income Tax for Real Estate Agents India 2026 — Commission, TDS, GST, ITR Filing | RushTax Blog

Real estate agents and property brokers earn commission income from property transactions. This income has specific tax and GST implications that many agents overlook. Here is the complete guide for FY 2025-26.

How Real Estate Commission Is Taxed

Real estate commission is taxed as "Profits and Gains from Business or Profession" — not as salary. This means:

You can deduct legitimate business expenses
You may be eligible for presumptive taxation
You must file ITR-3 or ITR-4

TDS on Real Estate Commission — Section 194H

When a builder, developer, or property owner pays commission to a real estate agent, they must deduct TDS under Section 194H:

Recipient	TDS Rate	Threshold
Individual/HUF agent	2%	Commission > ₹20,000/year
Company/firm agent	2%	Commission > ₹20,000/year

Note: The TDS rate was reduced from 5% to 2% in Budget 2025 (effective April 1, 2025). The threshold was also increased from ₹15,000 to ₹20,000.

If PAN not submitted: TDS at 20%.

The TDS appears in your Form 26AS. Claim it as credit when filing your ITR.

GST on Real Estate Commission

Real estate agents providing brokerage services must charge 18% GST on their commission:

Registration threshold: ₹20L annual commission
GST rate: 18% on commission income
ITC: Available on business expenses

Example:

Commission on property sale: ₹2,00,000
GST at 18%: ₹36,000
Total invoice to client: ₹2,36,000

The client (buyer or seller) pays the GST. You deposit it with the government.

Section 44ADA — Presumptive Taxation

Real estate agents can use Section 44ADA if their gross receipts are within the limit:

Up to ₹75 lakh (if 95% receipts are digital/banking)
Up to ₹50 lakh (if cash receipts exceed 5%)

Under Section 44ADA:

Declare 50% of gross commission as taxable income
No books of accounts required
File ITR-4

Example:

Annual commission: ₹30L (all digital)
Taxable income under 44ADA: 50% × ₹30L = ₹15L
Tax (new regime): ~₹1,50,000

Deductible Expenses (Regular Taxation)

If maintaining regular books and filing ITR-3:

Expense	Deductible?
Vehicle expenses (site visits)	Yes (proportionate)
Mobile and internet bills	Yes (proportionate)
Office rent	Yes
Marketing and advertising	Yes
Property listing fees (99acres, MagicBricks)	Yes
Staff salaries	Yes
Professional fees (CA, legal)	Yes
Travel expenses	Yes
Photography and videography for listings	Yes

Commission from Builders — TDS Issues

Many builders pay commission in cash or delay TDS deduction. Common issues:

Builder pays cash commission — no TDS, but income is still taxable
Builder deducts TDS but does not deposit — TDS shows in Form 26AS only after deposit
Builder issues commission after project completion — may span multiple financial years

Best practice: Insist on proper commission agreements and GST invoices. Report all commission income in your ITR, regardless of whether TDS was deducted.

Which ITR Form for Real Estate Agents?

Situation	ITR Form
Only commission income (44ADA)	ITR-4
Commission + salary	ITR-3
Commission with regular books	ITR-3
Commission + capital gains	ITR-3

Advance Tax for Real Estate Agents

Commission income is often lumpy (large payments on property closings). Pay advance tax in four instalments based on year-to-date receipts. Adjust in the March instalment.

Common Mistakes Real Estate Agents Make

Not reporting cash commission — All income is taxable, regardless of payment mode
Filing ITR-1 — Commission income requires ITR-3 or ITR-4
Not registering for GST — Once commission exceeds ₹20L, GST registration is mandatory
Not charging GST on commission — Failure to charge GST results in penalties
Not claiming TDS credit — Check Form 26AS for all TDS deducted by builders

Frequently Asked Questions

Is commission received from NRI property sellers taxable in India?

Yes. Commission earned for services rendered in India is taxable in India, regardless of whether the client is an NRI or resident.

Do I need to deduct TDS when paying referral fees to other agents?

Yes. If you pay referral fees or sub-brokerage to another agent exceeding ₹20,000 per year, you must deduct TDS at 2% under Section 194H.

Is GST applicable on commission from residential property sales?

Yes. Real estate brokerage services attract 18% GST regardless of whether the property is residential or commercial.

Can I claim home office deduction as a real estate agent?

Yes, proportionately. If you use a room at home as your office, you can claim a proportionate share of rent, electricity, and internet as a business expense.

Real estate agent or property broker needing help with ITR filing, GST registration, or TDS compliance? I handle ITR-4 under Section 44ADA for property professionals. WhatsApp for a quote.

How Real Estate Commission Is Taxed

Real estate commission is taxed as "Profits and Gains from Business or Profession" — not as salary. This means:

You can deduct legitimate business expenses
You may be eligible for presumptive taxation
You must file ITR-3 or ITR-4

TDS on Real Estate Commission — Section 194H

When a builder, developer, or property owner pays commission to a real estate agent, they must deduct TDS under Section 194H:

Recipient	TDS Rate	Threshold
Individual/HUF agent	2%	Commission > ₹20,000/year
Company/firm agent	2%	Commission > ₹20,000/year

Note: The TDS rate was reduced from 5% to 2% in Budget 2025 (effective April 1, 2025). The threshold was also increased from ₹15,000 to ₹20,000.

If PAN not submitted: TDS at 20%.

The TDS appears in your Form 26AS. Claim it as credit when filing your ITR.

GST on Real Estate Commission

Real estate agents providing brokerage services must charge 18% GST on their commission:

Registration threshold: ₹20L annual commission
GST rate: 18% on commission income
ITC: Available on business expenses

Example:

Commission on property sale: ₹2,00,000
GST at 18%: ₹36,000
Total invoice to client: ₹2,36,000

The client (buyer or seller) pays the GST. You deposit it with the government.

Section 44ADA — Presumptive Taxation

Real estate agents can use Section 44ADA if their gross receipts are within the limit:

Up to ₹75 lakh (if 95% receipts are digital/banking)
Up to ₹50 lakh (if cash receipts exceed 5%)

Under Section 44ADA:

Declare 50% of gross commission as taxable income
No books of accounts required
File ITR-4

Example:

Annual commission: ₹30L (all digital)
Taxable income under 44ADA: 50% × ₹30L = ₹15L
Tax (new regime): ~₹1,50,000

Deductible Expenses (Regular Taxation)

If maintaining regular books and filing ITR-3:

Expense	Deductible?
Vehicle expenses (site visits)	Yes (proportionate)
Mobile and internet bills	Yes (proportionate)
Office rent	Yes
Marketing and advertising	Yes
Property listing fees (99acres, MagicBricks)	Yes
Staff salaries	Yes
Professional fees (CA, legal)	Yes
Travel expenses	Yes
Photography and videography for listings	Yes

Commission from Builders — TDS Issues

Many builders pay commission in cash or delay TDS deduction. Common issues:

Builder pays cash commission — no TDS, but income is still taxable
Builder deducts TDS but does not deposit — TDS shows in Form 26AS only after deposit
Builder issues commission after project completion — may span multiple financial years

Best practice: Insist on proper commission agreements and GST invoices. Report all commission income in your ITR, regardless of whether TDS was deducted.

Which ITR Form for Real Estate Agents?

Situation	ITR Form
Only commission income (44ADA)	ITR-4
Commission + salary	ITR-3
Commission with regular books	ITR-3
Commission + capital gains	ITR-3

Advance Tax for Real Estate Agents

Commission income is often lumpy (large payments on property closings). Pay advance tax in four instalments based on year-to-date receipts. Adjust in the March instalment.

Common Mistakes Real Estate Agents Make

Not reporting cash commission — All income is taxable, regardless of payment mode
Filing ITR-1 — Commission income requires ITR-3 or ITR-4
Not registering for GST — Once commission exceeds ₹20L, GST registration is mandatory
Not charging GST on commission — Failure to charge GST results in penalties
Not claiming TDS credit — Check Form 26AS for all TDS deducted by builders

Frequently Asked Questions

Is commission received from NRI property sellers taxable in India?

Yes. Commission earned for services rendered in India is taxable in India, regardless of whether the client is an NRI or resident.

Do I need to deduct TDS when paying referral fees to other agents?

Yes. If you pay referral fees or sub-brokerage to another agent exceeding ₹20,000 per year, you must deduct TDS at 2% under Section 194H.

Is GST applicable on commission from residential property sales?

Yes. Real estate brokerage services attract 18% GST regardless of whether the property is residential or commercial.

Can I claim home office deduction as a real estate agent?

Yes, proportionately. If you use a room at home as your office, you can claim a proportionate share of rent, electricity, and internet as a business expense.

Real estate agent or property broker needing help with ITR filing, GST registration, or TDS compliance? I handle ITR-4 under Section 44ADA for property professionals. WhatsApp for a quote.