Broker's Fee on a Bangalore Home: Who Pays, How GST Applies and What to Get on Paper

Hardly anyone budgets properly for the agent's fee when planning to buy in Bangalore. Quarrels follow because the deal was shaken on and never recorded. Read on for the rules, the tax and the paperwork, plus a sample calculation for a home worth Rs. 1.2 Crore.

Start With the Money: A Worked Example

Suppose the deed records a price of Rs. 1.2 Crore. The three rates below are only examples, since nothing sets a standard figure.

At the top rate, Rs. 43,200 depends on whether the quote already contains GST or adds it afterwards. Clarify that before agreeing to anything.

Is There an Official Rate?

Under the 2016 RERA law, an agent is anyone who negotiates for others, or acts on their behalf, when plots, flats or buildings are transferred, and who earns a fee or commission for it. What the law controls is registration and behaviour. Section 9 demands registration before an agent helps sell in a registered project. Section 10 lays down conduct rules on record-keeping, truthful statements and help with documents at booking.

Section 62 puts a penalty of Rs. 10,000 on every day of default. The Act names no percentage and no ceiling, so the rate comes from the agreement itself, and any claim about a "legal rate" is simply wrong.

Whose Pocket Does It Come From?

Resale and new launches follow different customs. For a second-hand flat, each side generally pays the broker working for it, as a share of the price. Ask the seller's agent outright if you are expected to pay too. One agent may be serving both parties, and each party should know what the other hands over.

With a new launch, it is the builder who usually pays the commission of the channel partner who brought you in, while the buyer settles only the builder's price. Raise the question at the very first meeting. The About page confirms that nothing is charged to buyers by this site for projects booked here, and the cost sheet always comes from the builder.

What GST Means Here

Brokers supply a service, and the GST rate for real estate services on a fee or commission basis is 18%, comprising 9% central and 9% state tax. The base is the fee alone. Registration becomes mandatory when an agent's yearly service turnover goes beyond Rs. 20 Lakhs.

Registered agents put the tax on top of the fee and send an invoice that lists their GSTIN, the fee and the tax in turn. People without registration cannot collect GST at all, so a demand for tax on a bill with no GSTIN needs an explanation.

Spelling Out the Job

Some agents merely introduce a buyer to a seller. Others arrange viewings, gather title papers, bargain over the price and follow the file until the deed is registered. Agreeing the task list together with the fee avoids later disputes. The list below shows what a short agreement should hold.

A One-Page Agreement

An email that both sides acknowledge can serve as the agreement. Send it when viewings begin, and make sure it covers the points that follow.

• Percentage or flat sum in rupees
• What the percentage is applied to, ideally the price in the registered deed
• Whether the quote is inclusive of GST or adds it
• Who is paying, and if the seller is also paying this agent
• The milestone that triggers payment
• The services included, from viewings and paperwork to bargaining and attendance at registration
• What, if anything, comes back if the deal collapses

Flat sums have an edge. Since the agent earns the same whatever the final price, there is no reason to push it up. If a percentage is preferred, say that stamp duty, registration charges and furniture are outside the base.

Choosing the Payment Moment

Completion, meaning the day the deed is registered, is the natural point. Before that the transaction can still unravel over title, the loan or the seller's cooperation, so paying in full at the first introduction is too soon.

Many agents ask for something at the sale agreement stage. That compromise works when the remainder waits for registration and the paper trail explains any refund. Always pay through the bank against a receipt that names the property and the amount, and avoid cash.

Beware of the Double-Paid Broker

An agent who is paid by both parties earns only if the sale closes. The agent's incentive therefore leans towards completion, while yours is a fair price with clean papers. The two can coincide, but they are not the same thing.

That is why checks should come from elsewhere. Check sale values on record and the street's guidance value, and engage an independent lawyer to examine the title. Think of the agent's advice as one voice among several.

The Full Bill Beyond the Price

A Karnataka home worth more than Rs. 45 Lakhs attracts stamp duty of 5.6% (cess and surcharge included) and 2% registration, with legal fees, loan processing and the society's transfer charges on top. For the Rs. 1.2 Crore example, the 7.6% for duty and registration comes to Rs. 9,12,000. A 1% fee with GST would add Rs. 1,41,600.

Banks lend against the property's value, so these extras usually come from the buyer's own funds. Plan for them before signing the sale agreement.

Is the Agent Genuine?

Agents working on RERA-registered schemes must hold a K-RERA registration and quote the number. Search for it on the state's portal before sharing any papers, where you will see the registered name and the validity period.

Older buildings are generally outside RERA, so the resale agent there might hold no registration. In that case protection comes from written fee terms, payment through the bank and a title check by someone independent. For any question about a project listed on this site, use the contact page.