SAC Code for Real Estate Commission & Brokerage Services: A Complete Guide

As a real estate agent or broker in India, you’ve just closed a deal. The excitement is high, and your hard work has paid off. Now it’s time to create an invoice, but one crucial detail can cause confusion: What is the correct sac code real estate services? This single piece of information is essential for Goods and Services Tax (GST) compliance. Using the right Services Accounting Code (SAC) is not just a formality; it’s a legal requirement that ensures your business operates smoothly and avoids unnecessary tax complications. This comprehensive guide will demystify the SAC code for real estate services, specifically focusing on commission and brokerage, ensuring your invoices are accurate and your GST filings are fully compliant. We will cover the specific code you need, the applicable GST rate, and exactly how to use it in your day-to-day business operations.

What Are SAC Codes and Why Do They Matter?

Understanding the framework of GST is crucial for any service provider in India, and SAC codes are a foundational element of this system. They provide a uniform language for classifying services, which simplifies tax administration for both businesses and the government. For a real estate professional, grasping the significance of these codes means moving from just earning a commission to managing a compliant and professional business enterprise. Incorrect classification can disrupt this harmony, leading to invoicing errors, client disputes over tax credits, and unwelcome attention from tax authorities.

Decoding the Services Accounting Code (SAC)

The Services Accounting Code (SAC) is a systematic classification method developed by India’s service tax department to identify and categorize different services under the GST regime. Think of it as a unique address for every type of service offered in the country. This system is designed to bring uniformity to service classification, making it easier to determine the applicable tax rate and report transactions accurately. It’s the service industry’s equivalent of the HSN (Harmonized System of Nomenclature) codes, which are used to classify physical goods. Just as an HSN code tells a customs officer exactly what product is being shipped, a SAC code tells the tax department precisely what service has been rendered, ensuring clarity and consistency across all transactions nationwide.

The Importance of Using the Correct SAC Code

Using the correct SAC code is far more than an administrative task; it is a cornerstone of your GST compliance and professional credibility. Getting this detail right has a direct impact on the financial health and legal standing of your real estate business. For small business owners and individual agents, this diligence is particularly important as it builds a foundation of trust and reliability.

Accurate GST Filing: The primary purpose of a SAC code is to link a service to its correct GST rate. Using the appropriate code ensures that you calculate and remit the exact amount of tax required by law. This precision prevents overpayment, which can hurt your cash flow, and underpayment, which can lead to significant penalties and interest charges down the line.
Professional Invoicing: A GST-compliant invoice is a non-negotiable requirement for any formal business transaction. Including the correct SAC code validates your invoice, making it a legitimate document. For your clients, especially corporate entities or other GST-registered businesses, this is critical as they require a valid tax invoice to claim Input Tax Credit (ITC) on the GST you have charged them. An incorrect invoice can cause them to lose this benefit, potentially damaging your professional relationship.
Compliance & Avoiding Penalties: The GST authorities have robust systems to track transactions and identify discrepancies. Consistently using the wrong SAC code for commission in real estate can flag your business for scrutiny. This could result in GST notices, audits, and potential financial penalties for non-compliance. Ensuring accuracy from the outset is the best way to maintain a clean record and operate without fear of legal repercussions.

The Primary SAC Code for Real Estate Commission & Brokerage Services

When it comes to real estate services in India, the government has provided specific codes to distinguish between different types of activities. While the broader category of “Real Estate Services” has several sub-codes, it is essential for brokers and agents to identify and use the one that precisely matches their function: providing services on a fee or commission basis. Using the wrong code, such as one meant for property developers, can lead to significant compliance issues. Therefore, understanding the nuances between these codes is a critical step for every real estate professional aiming for seamless business operations under the GST framework.

The Key Code You Need to Know: SAC 997212

For any professional engaged in real estate agency or brokerage, the most important code to remember is SAC 997212. This is the primary SAC code for real estate commission India and related brokerage activities. The official description for this code is “Real estate services on a fee or contract basis,” which perfectly encapsulates the work of an agent or broker. It is specifically designed for intermediaries who facilitate property transactions without holding ownership of the property themselves.

This code applies to a wide range of services commonly offered by real estate professionals. Here are some clear examples of services that fall under SAC 997212:

Facilitating the sale or purchase of residential properties like apartments, houses, or plots for a commission.
Brokerage services for the transaction of commercial properties such as office spaces, retail shops, or industrial land.
Assisting clients in renting or leasing residential or commercial properties and earning a brokerage fee.
Providing advisory, negotiation, and consultancy services related to real estate transactions where the payment is on a fee-based model.

Using the correct real estate commission services SAC code is not just about compliance; it’s about accurately describing the value you provide in the official language of the tax system.

Differentiating from Other Real Estate SAC Codes

To further clarify why 997212 is the correct choice, it’s helpful to differentiate it from other related codes within the broader real estate SAC code list. This distinction demonstrates a deeper understanding of the GST framework and helps prevent common classification errors. The most frequently confused code is SAC 997211.

SAC Code	Official Description	Who Should Use It?	Example
997212	Real estate services on a fee or contract basis	Real estate agents, brokers, and consultants who earn a commission or fee for facilitating transactions.	An agent who helps a client sell their flat and charges a 2% commission on the sale price.
997211	Services involving own or leased property	Property developers, builders, landlords, and property owners who are selling, renting, or leasing property they own.	A construction company selling apartments directly from their new residential project.

Understanding this difference is crucial. As a broker, you are providing a service to connect a buyer and a seller or a landlord and a tenant. You are not transacting with your “own or leased property.” Therefore, SAC 997212 is the only correct classification for your commission-based income.

Understanding the GST Rate on Real Estate Brokerage Services

Once you have identified the correct SAC code real estate services India, the next logical step is to understand the applicable GST rate. This is where the financial aspect of compliance comes into play. Applying the correct tax rate is fundamental to creating an accurate invoice, collecting the right amount from your client, and remitting it to the government. A misunderstanding at this stage can lead to financial errors that are often complicated to rectify later. The GST on real estate brokerage is straightforward, but it’s essential to apply it correctly to the taxable value of your service.

Current GST Rate for SAC 997212

The current GST rate applicable to services classified under SAC 997212 (“Real estate services on a fee or contract basis”) is 18%. This is a standard rate that applies to many professional services across India. A critical point to remember is that this 18% GST is levied only on the commission or brokerage fee you earn, not on the total value of the property being sold or rented. This is a common point of confusion for new agents. The property transaction itself may be subject to other taxes like stamp duty and registration fees, and understanding the full Tax Implications When Selling Property: What to Know is crucial for advising clients.

How to Calculate GST on Your Commission (With Example)

To eliminate any confusion, let’s walk through a simple, step-by-step calculation. This practical example will illustrate how to apply the 18% GST to your commission fee and determine the final invoice amount.

Scenario: You have successfully facilitated the sale of a residential property.
Property Sale Value: ₹60,00,000
Your Agreed Brokerage Fee: 2% of the property value
Step 1: Calculate Your Taxable Commission
- Commission = Property Value × Brokerage Rate
- Commission = ₹60,00,000 × 2% = ₹1,20,000
- This ₹1,20,000 is the “taxable value” of your service.
Step 2: Calculate the GST Amount
- GST Amount = Taxable Value × GST Rate
- GST Amount = ₹1,20,000 × 18% = ₹21,600
Step 3: Calculate the Total Invoice Value
- Total Invoice Value = Taxable Value + GST Amount
- Total Invoice Value = ₹1,20,000 + ₹21,600 = ₹1,41,600

You will raise an invoice to your client for a total of ₹1,41,600. The GST component of ₹21,600 must be deposited with the government when you file your returns.

CGST, SGST, or IGST? What Applies to You?

The 18% GST is not always charged as a single slab. It is divided into Central GST (CGST), State GST (SGST), or charged as a whole in the form of Integrated GST (IGST). The type of tax you apply depends on the “place of supply”—essentially, whether the transaction is within a state or between states.

Intra-State Supply (Within the same state): This occurs when the service provider (you, the agent) and the service recipient (your client) are located in the same state. In this case, the 18% GST is split equally into two components:
- 9% CGST (goes to the Central Government)
- 9% SGST (goes to the State Government)
- Example: You are a real estate agent based in Mumbai, Maharashtra, and you provide brokerage services to a client who is also in Mumbai. On your commission of ₹1,20,000, you will charge ₹10,800 as CGST (9%) and ₹10,800 as SGST (9%).
Inter-State Supply (Between different states): This occurs when the service provider and the service recipient are in different states. In this situation, the full GST amount is charged as a single component:
- 18% IGST (goes to the Central Government, which then apportions it)
- Example: You are an agent based in Delhi, and you help a client based in Bengaluru, Karnataka, sell a property in Delhi. Since you and your client are in different states, you will charge the full 18% IGST on your commission, which amounts to ₹21,600.

Practical Application: Invoicing and Filing

Knowing the correct SAC code and GST rate is only half the battle. The real test of compliance lies in its practical application—how you reflect this information on your invoices and report it in your GST returns. A properly structured invoice not only ensures you get paid correctly but also serves as a critical legal document for both you and your client. Similarly, accurate reporting in your GST filings is essential for maintaining a clean compliance record and enabling your clients to claim their rightful Input Tax Credit (ITC).

How to Correctly Display the SAC Code on Your Invoice

Your invoice is a reflection of your professionalism. A GST-compliant invoice must contain specific details to be considered valid. For a real estate agent providing brokerage services, here is a checklist of essential components to include:

Your Business Details: Your registered business name, full address, and your Goods and Services Tax Identification Number (GSTIN).
Invoice Details: A unique sequential invoice number and the date of issue.
Client’s Details: The client’s full name, address, and their GSTIN (if they are a registered business). This is mandatory for B2B (Business-to-Business) transactions where the client intends to claim ITC.
Description of Service: A clear and concise description of the services provided. For instance, “Real Estate Brokerage Services for the sale of property at [Address]” or “Commission on residential property transaction.”
SAC Code: This is a mandatory field. Clearly mention the code: SAC Code: 997212.
Taxable Value: The amount of your commission or brokerage fee before adding GST.
Tax Breakdown: Clearly show the applicable tax rates and amounts.
- For intra-state transactions: Show CGST @ 9% and SGST @ 9% separately.
- For inter-state transactions: Show IGST @ 18%.
Total Invoice Amount: The final amount payable by the client (Taxable Value + GST).

Reporting in Your GST Returns (GSTR-1)

Once you issue invoices and collect payments, the next step is to report these transactions to the government through your GST returns. The details of all the outward supplies (services you have provided) are reported in the GSTR-1 form, which is typically filed monthly or quarterly depending on your turnover. In this form, you will need to provide a summary of the services you’ve rendered, categorized by their respective SAC codes.

Correctly reporting the transaction value against SAC 997212 is crucial. This information is used by the GSTN system to auto-populate the GSTR-2A/2B of your client, which is the form they use to view their eligible Input Tax Credit. If you report the SAC code and invoice details correctly, your client can seamlessly claim the ITC for the GST they paid you. This accuracy strengthens your business relationships and ensures the entire GST chain functions as intended. For detailed, step-by-step instructions on filing, it is always best to refer to the official GST Portal.

Conclusion

In the dynamic world of Indian real estate, staying compliant with tax regulations is as important as closing a deal. To summarize, the definitive sac code real estate services involving commission and brokerage is 997212. This code is subject to a GST rate of 18%, which is levied only on your commission fee, not the property’s value. Mastering this detail is fundamental to your business operations. Using this code correctly ensures you create valid invoices that your clients can trust, file accurate GST returns, and run a hassle-free, professional brokerage business in India. It protects you from potential penalties and solidifies your reputation as a credible and knowledgeable professional in the field.

Navigating GST and SAC codes can be complex, and errors can be costly. If you need expert assistance with GST registration, filing, or any other financial compliance, the team at TaxRobo is here to help. Contact us today to ensure your business stays on the right side of the law!

Frequently Asked Questions (FAQs)

1. What is the SAC code for commission received on a real estate deal in India?

The correct SAC code for commission earned from a real estate transaction is 997212. This code is officially designated for “Real estate services on a fee or contract basis,” which directly covers the income of agents and brokers.

2. Is the SAC code the same for brokerage on rental properties and commission on property sales?

Yes, the code is the same for both. Whether you are earning a commission from the sale of a property or a brokerage fee for facilitating a rental agreement, the nature of the service remains the same: a real estate service provided on a fee basis. Therefore, the applicable brokerage services SAC code India for both activities is 997212.

3. Do I need to charge GST on my commission if my annual turnover is below ₹20 lakhs?

Generally, under the GST law, service providers whose aggregate annual turnover is below the threshold of ₹20 lakhs are not required to obtain GST registration. For special category states, this threshold is ₹10 lakhs. If you are not required to register, you cannot charge or collect GST. However, thresholds and rules can change, so it is always advisable to consult with a tax professional to confirm your specific obligations.

4. What happens if I use the wrong SAC code on my invoice?

Using an incorrect SAC code can create several problems. It may lead to the application of a wrong GST rate, resulting in either overpayment or underpayment of taxes. For your client, it can cause difficulties in claiming their rightful Input Tax Credit (ITC), as the service description will not match their records. Most importantly, it can flag your business for scrutiny by the GST department, potentially leading to notices, audits, and financial penalties for non-compliance.

5. Where can I find the official list of all SAC codes?

The official and most up-to-date list of all Services Accounting Codes is maintained by the Central Board of Indirect Taxes and Customs (CBIC). You can access the comprehensive list directly on their website to verify any code. You can find the detailed list on the CBIC-GST website under the services rate schedule.

SAC Code Real Estate Services: What You Need to Know