Compulsory Registration

[Ethirajan Parthasarathy]

Are reel Estate brokers, liable for compulsory registration under GST as per section 24 read with section 2(15)CGST Act. Their activity is to introduce tenants to land lords and get commission from the both the parties. Similarly then may find a buyer for sale of any property and get commission from both buyer and seller.

[V Rajalakshmi]

Conjoint reading of sec 22 and sec 2(71) of CGST Act will give a clear idea of registration requirement and in your case the real Estate broker has to obtain registration when his Aggregate income exceeds Rs 20 lakh.

[Amit Agrawal]

I am presuming your are referring to clause (vii) of Section 24 of the CGST Act, 2017 which reads as follows:

"persons who make taxable supply of goods or services or both on behalf of other taxable persons whether as an agent or otherwise;"

I am further presuming that your feel that as real estate broker is acting as "agent', he is liable for compulsory registration in above-said clause.

If my presumptions are correct, in my view, such real estate broker is NOT liable for compulsory registration till his aggregate turnover reaches Rs. 20 Lac (or Rs. 10 Lac, depending upon state / UT) in a year.

Even though they are acting as 'broker / agent', 'they are really not making taxable supply of goods or services or both on behalf of other taxable persons whether as an agent or otherwise' while performing your business activities (i.e. for facilitating agreement between landlord and tenants / for facilitating selling of properties between two parties, as real estate broker).

In other words, 'Real estate broker / agent' are not giving property on rent on some else's behalf or selling / buying property on some else's behalf.

In my view, these services are provided by 'Real estate broker / agent' on their own behalf and not on behalf of any other person. Hence, said Section 24 (vii) does not come into play.

I could not link definition given u/s 2 (15) with context of your query.

If I am mistaken in my presumptions or context of your doubts / query etc., request you to elaborate & clarify your query further.

All above are strictly personal views of mine and the same should not be construed as professional advice / suggestion.

[Ravinesh Sinha]

I agree with Amit ji but with due respect I want to add the real estate agent is required to be registered for Tax payment under RCM

[Amit Agrawal]

Dear Shri Ravinesh Sinha Ji,

Kindly elaborate your views with reference/s to concerned legal provision & notification/s please.

[Ravinesh Sinha]

Amit ji ,my view for taking registration is only for tax is payable under RCM if any by any tax payer including real estate agent. In present case ,i endorse your view in toto

[Amit Agrawal]

Thanks you, Shri Ravinesh Sinha Ji, for the clarification!

[KASTURI SETHI]

The burden of proof is cast upon a person who avails exemption. Here the burden of proof is cast upon Real Estate Broker to prove that the nature of transaction/activity is out of the scope of Section 24 (vii) of CGST Act.

[Shilpi Jain]

I too agree that compulsory registration is not attracted

[Amit Agrawal]

Burden to prove liability to get registered under GST and thereby, taxability against supplies made - in my humble view - lies about Dept.

One needs to claim before Dept. that he is not required to be registered under GST Act under any provisions of law and thereby, there is no tax liability under GST.

Of-course, once Dept's makes its case (to get compulsorily registered and thereby, liability to pay taxes against supplies made), defendant needs to explain why and how grounds taken by Dept. are not tenable in given situation.

This is not a case where one is claiming exemption from paying taxes using any exemption-notification issued under the act.

Hence, initial burden will always be on the Tax-Department in such a case in my personal view.

P.S. I understand reasons behind contrary views and I fully respect those contrary views.

[KASTURI SETHI]

Yes everybody has right to differ. Dissent is always decent. Such dissent may lead to novel ideas.In this scenario, exemption from registration means availment of threshold exemption. Value based exemption from GST exists. Hence burden of proof is cast on the person who avails exemption whether threshold exemption or otherwise.

AI Summary

Compulsory GST registration for real estate brokers hinges on turnover thresholds and whether brokerage is treated as agency supply.
Real estate brokers' obligation for compulsory GST registration depends on whether their services are supplies made on behalf of others (agency) or on their own account, and on whether their aggregate turnover exceeds the statutory threshold. Brokers who act in their own capacity and do not supply on behalf of other taxable persons will attract registration only upon crossing the threshold, while reverse charge exposure and evidentiary allocation between the taxpayer and the tax department remain contested factual and legal points.