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How to Start Real Estate Business

How to Start Real Estate Business

Real estate business is one of the most lucrative business in India and the second largest behind agriculture. The real estate sector can be divided into three main categories – commercial, residential and land with all sectors booming in India due to the growing middle class and foreign investment into India. The Indian real estate market is expected to touch US$ 180 billion by 2020 and making it very attractive to start a real estate business in India.

Real Estate Business – Realtors

Building material suppliers, builders, building labour suppliers, architects, engineers, construction equipment providers, financiers and realtors or brokers all come together to create the vibrant real estate business in India. Key amongst this group are the realtors or brokers who are the interface with the consumers in the transaction processes providing advice, information and help negotiate the deals. In this article we mainly look at how to start a real estate brokerage business.

Business Registration

Most real estate agents operate as unregistered businesses – typically a proprietorship or unregistered partnership. However, the real estate brokerage business is now becoming reformed, formalized and elevated to international standards to win over customer confidence and compete with large online real estate brokerage platforms. Therefore, it is important for those starting a real estate brokerage business to establish their business as a Private Limited Company or Limited Liability Partnership (LLP) to improve customer confidence and bring about professionalism.

Service Tax Registration

The services provided by a Real Estate Agent or Real Estate Consultant are taxable under the Service Tax Act. As per the Service Tax Act,  “Real estate agent” means a person who is engaged in rendering any service in relation to sale, purchase, leasing or renting, of real estate and includes a real estate consultant. “Real estate consultant” means a person who renders in any manner, either directly or indirectly, advice, consultancy or technical assistants, in relation to evaluation, conception, design, development, construction, implementation, supervision, maintenance, marketing, acquisition or management of real estate.

Service tax is chargeable on any taxable service rendered by the real estate agent or real estate consultant for a consideration in money. The gross amount charged by the service provider is taxable at 14% under the service tax act. Therefore, those real estate agents or real estate consultants having an annual taxable services billing of more than Rs.9 lakhs must obtain service tax registration and collect service tax from client when annual taxable services billing exceeds more than Rs.10 lakhs per year.

How to Start Real Estate Business

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