Liability for GST registration in case of commission agent dealing in the sale of land.

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Chartered Accountant (Querist)
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16 April 2025 Q.1 A commission agent dealing in the sale of land, being immovable property, is he liable for payment of GST on commission so earned & taking compulsory registration even if turnover is below 20 Lakhs?
This question arises in terms of the definition of " Agent" under Section 2[5], under Section 7 and Entry No. 5 of the Schedule III, who is supposed to deal only in goods or services. Land, not being goods, is it sustainable to demand GST on such commission? Please clarify.

Q.2 Can commission agent of land take the full value of consideration firstly in his account, then deduct his commission & then further transfer the balance amount to original owner of land, what will be treated as turnover of the agent then?

Aashok Kumar Sharma

Aashok Kumar Sharma (Expert)
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12 August 2025 Q1: Is a commission agent dealing in sale of land liable to pay GST on commission & compulsory registration even if turnover is below ₹20 Lakhs?
GST on Sale of Land:
Sale of immovable property (like land) is not a supply of goods or services under GST (per Schedule III, Entry 5). Hence, sale of land itself is not subject to GST.

GST on Commission:
However, commission received for facilitating the sale of land is a service provided by the agent to the seller or buyer.

Is commission on sale of land taxable?
Yes, commission is considered a taxable supply of service, attracting GST (usually 18%). The agent provides a service to facilitate the sale, so GST applies to the commission amount.

Compulsory registration if turnover < ₹20 Lakh?
Normally, registration threshold is ₹20 Lakh (₹10 Lakh for special category states). But Section 24(iii) of CGST Act mandates registration for persons making taxable supplies of services (like commission) even if turnover is below threshold if they are making inter-state supplies or if specifically required under law.

Also, since the commission service is taxable, and if the agent is doing business in multiple states or notified categories, registration may be compulsory.

Summary:

Sale of land → No GST

Commission on sale of land → GST applicable

Registration → Required if threshold exceeded or specific conditions met

Q2: Can the commission agent take full sale consideration first, deduct commission, then transfer balance to owner? What is treated as turnover?
Generally, commission agent acts as a principal agent, receiving full sale proceeds on behalf of the principal.

The turnover of the agent for GST purposes is the commission amount earned, not the full sale consideration.

So, if agent receives ₹1 crore from buyer, deducts ₹2 lakh commission, and remits ₹98 lakh to the owner:

Turnover of agent = ₹2 lakh (commission amount)

The ₹98 lakh is just a pass-through amount and not revenue/turnover for the agent.

This is consistent with GST principles that turnover includes only taxable supplies made by the person.

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