Property Broker Commission in India: What It Costs

We run a brokerage. So take this as a disclosure rather than a defence: on a Rs 1 crore resale flat, a broker charging 1% from each side collects Rs 2 lakh plus GST on a transaction that took maybe forty hours of work. Whether that is fair depends entirely on what those forty hours contained, and most buyers have never been told what they are supposed to contain.

Here is what brokerage costs across every kind of Indian property deal, when it is payable, what the law says a broker owes you, and the one number the buyer of a new flat never sees.

Key takeaways

• Resale sale: 1% to 2% from each side is the market standard, dropping to 0.5% and below on tickets above Rs 5 crore.
• Residential rent: half a month to one month's rent from each side, most commonly one month from the tenant in Delhi NCR.
• Commercial lease: one to two months' rent, and often one month per year of lock-in on larger office deals.
• Builders pay channel partners 2% to 5% of the base price, rising to 6% on stuck inventory. The buyer pays it inside the price and never sees a line for it.
• GST on brokerage is 18%, so a quoted 1% is really 1.18% of the deal value.

What brokerage actually costs, deal by deal

Two things about that table. First, "per side" means the total leakage on a resale deal is 2% to 4% of value, not 1% to 2% — the seller's brokerage comes out of the price the seller was willing to accept, so the buyer funds part of it indirectly. Second, the rates are conventions, not law. No statute, no RERA rule and no state notification fixes brokerage in India.

The number the buyer never sees

When you book a new flat through a channel partner, you are told there is no brokerage. Technically true. The builder pays the partner 2% to 5% of the basic sale price, and on slow-moving inventory that goes to 6% plus spot incentives. On a Rs 1 crore booking at 3%, Rs 3 lakh leaves the builder's account.

It does not come out of the builder's margin. It sits inside the base price along with marketing, sample-flat cost and interest on construction finance. So "zero brokerage" on a primary sale means the brokerage is invisible, not absent. The useful question is whether the channel partner adds anything for it — a real comparison across three projects, a negotiated waiver on PLC or club, or a price that beats the builder's direct desk. Some do. Many just fill a booking form.

The corollary matters when you compare a new flat to a resale one. The resale brokerage is explicit and negotiable; the primary brokerage is baked in and is not. It is one of several reasons the full cost sheet on a new flat lands 30% or more above the advertised rate, alongside EDC and IDC, GST and stamp duty.

GST, TDS and who pays them

Brokerage is a service, taxed at 18% GST. A broker with turnover above Rs 20 lakh must be registered and must issue a tax invoice with a GSTIN. If someone quotes 1% and then hands you a bill for 1.18%, that is correct behaviour, not a con — but the invoice should exist. A broker who wants cash and offers no invoice is also a broker with no record of having represented you, which matters if the deal goes wrong.

On the deduction side, Section 194H of the Income-tax Act requires TDS on commission and brokerage at 2%, reduced from 5% with effect from 1 October 2024. The threshold is Rs 20,000 of commission in a financial year. An individual or HUF not subject to tax audit is not required to deduct, which covers most private buyers and sellers — but a company, LLP or business paying brokerage on an office lease must deduct and deposit it.

When brokerage is payable

This is where most disputes start. The convention across NCR and Mumbai is that brokerage falls due on registration of the sale deed, not on the token or the agreement to sell. Many brokers ask earlier, and once paid, the money is very hard to recover if the deal collapses.

A reasonable structure on a resale deal: nothing at token, 50% on execution of the agreement to sell, balance on registration. On a rental, the full amount on signature of the registered rent agreement and handover of keys, not before. And write down what happens if the deal falls through — if the seller walks, the broker has done the work and usually deserves something; if the buyer walks after the broker misrepresented a material fact, they do not. Our note on token money refunds when a deal collapses covers the parallel question on the principal amount.

Is it negotiable?

Yes, and openly so. Three things move the rate: ticket size (above Rs 3 crore, 1% per side becomes hard to justify and 0.5% to 0.75% is normal), exclusivity (an exclusive mandate for 90 days should earn a discount, because it removes the broker's biggest risk), and whether the broker sourced the property or you did. If you found the listing yourself and the broker only opened the door, 1% is a stretch.

What does not work is agreeing to 2% and haggling at registration. Fix the number in writing before the first site visit.

RERA registration, and how to check it in two minutes

Section 9 of the Real Estate (Regulation and Development) Act, 2016 makes it compulsory for a real estate agent to register with the state authority before facilitating the sale or purchase of any unit in a registered project. Section 10 sets out the duties: no facilitating the sale of an unregistered project, maintain books of account, do not make false statements, and give the buyer all the information and documents the buyer is entitled to at the time of booking.

Section 62 prescribes a penalty of Rs 10,000 for every day of default for operating without registration, which can extend to 5% of the cost of the unit. Registration fees vary by state and by whether you register as an individual or a company — Maharashtra has long charged Rs 10,000 for an individual agent and Rs 1 lakh for a company. Most run a five-year validity. Check your own state's published schedule rather than a neighbour's.

To check an agent, open your state authority's portal and search the agent registry by name or registration number. Haryana's agent list is on the HRERA portal — see our HRERA guide for where the registers sit. Ask for the number in writing before you engage anyone, and check that the registration has not lapsed. What RERA covers sets out the wider framework.

One honest caveat: RERA's agent provisions bite hardest on primary sales in registered projects. Pure resale and rental broking sits in a greyer zone in several states, and enforcement is thin. A RERA number tells you the agent is traceable and has something to lose. It does not certify competence.

What to put in writing before you engage a broker

• The rate and the base. "1% of the agreed sale consideration" — not "1%", which invites an argument about whether parking and club are included.
• Whether GST is on top. Say it either way, in the same line.
• Which side the broker represents. A broker taking money from both sides has a conflict on price. That is legal and normal in India; it should still be disclosed.
• When it is payable, and in what tranches. Tie the last tranche to registration.
• Exclusivity and its duration, if any, and what happens if you sell to a buyer you found yourself.
• The RERA registration number and the GSTIN.
• What is included — site visits, title document collection, negotiation, coordination with the sub-registrar, follow-through on mutation. Say it, or you will get the first two only.

FAQ

Is broker commission fixed by law in India?

No. There is no statutory rate. The 1% to 2% resale convention and the one-month rental convention are market practice, and both are negotiable. RERA regulates who may act as an agent, not what they may charge.

Do I pay brokerage if I buy directly from a builder?

Not as a separate line. The builder pays the channel partner 2% to 5% of the base price and recovers it inside the quoted rate, so the cost is real but invisible.

Can a broker charge from both buyer and seller?

Yes, and most do. Each side typically pays 1% to 2% independently. It creates a conflict of interest on price, which is why it is worth asking the broker directly whose interest they are representing.

Is GST payable on brokerage?

Yes, at 18%, where the broker is GST-registered. Ask for a tax invoice with a GSTIN. A cash payment with no invoice leaves you with no evidence the broker acted for you.

What if the deal falls through after I paid brokerage?

Recovery depends on what was agreed. If nothing was written down, the broker's position is that the service was rendered. This is exactly why the payment schedule should be tied to registration in writing before the first site visit.

A last word

The rate matters less than what it buys. Brokerage on a resale deal should include verified title documents, a realistic price opinion rather than the seller's number, and someone who stays on the file through registration and mutation. If it does not, you are paying 1% for a phone number. Tell us what you are buying or selling and we will tell you upfront what we charge and what we do for it.