HR and payroll for property and real estate in India
Reviewed by Mellow Editorial Team, HR & payroll content team
Real estate and property businesses in India face a specific combination of payroll complexity: a mixed workforce of salaried staff and commission-based agents, project-linked hiring cycles, and obligations under both central labour law and RERA. Here is what employers in this sector need to manage correctly.
The mixed workforce problem
Most property businesses run two distinct categories of workers simultaneously. First, there are permanent salaried employees — office staff, project coordinators, accounts teams — who sit squarely within standard payroll obligations. Second, there are sales agents, brokers and channel partners who may be engaged on a commission basis, sometimes as independent contractors rather than employees.
Getting this classification right matters. If a commission-based agent works exclusively for you, follows your working hours and uses your resources, they may legally be an employee regardless of what the contract says. Misclassification exposes you to back-dated EPF contributions, ESI liabilities and penalties under the Labour Codes. Before treating anyone as a contractor, look at the practical reality of the working relationship, not just the paperwork.
Payroll components specific to real estate
Basic and HRA: Most property companies are city-based. House Rent Allowance forms a significant part of CTC structuring because it can reduce employee tax liability. The actual exemption calculation depends on the city category and rent paid — this affects how you design salary structures for employees in metros versus Tier 2 cities.
Commission and variable pay: Sales incentives and brokerage commissions paid to employees are taxable as salary. TDS must be deducted at source on these payments in the month they are paid, not the month the deal closes. If there is a lag between when a sale is booked and when commission is actually credited to the employee, track this carefully — delayed commission payments create TDS timing errors that show up in Form 24Q filings.
Project-linked bonuses: Many developers pay milestone bonuses tied to project completion. These are fully taxable and must be included in TDS calculations for the relevant month.
Advances and recoveries: It is common in real estate to advance salaries or recoverable loans to site staff. Any advance that is later recovered through payroll needs to be reflected correctly in the monthly payslip and should not distort the TDS computation for that month.
Statutory compliance for a project-based workforce
Real estate businesses hire heavily at project launch and wind down teams when a project is handed over. This creates a constant cycle of onboarding and offboarding, each of which carries compliance obligations.
EPF and ESI registration and contributions: The 12% employee and 12% employer EPF contributions apply to all eligible employees from their first month. ESI applies to employees below the notified wage threshold and covers medical benefits — relevant for site-level staff. When employees leave at project close-out, their EPF accounts must be correctly updated and exit formalities filed with EPFO promptly.
Gratuity: Any employee who completes five continuous years of service is entitled to gratuity on exit. In real estate, where staff sometimes move between a developer's various project entities, continuity of service can be disputed. If the same management controls multiple project SPVs and an employee moves between them, courts have generally looked at continuity of effective employment rather than the legal entity on the contract.
Contract labour on site: Construction and site-maintenance workers are frequently engaged through labour contractors. The principal employer — the developer or the construction company — carries compliance obligations under the Contract Labour (Regulation and Abolition) Act where it still applies, and under the relevant provisions of the consolidated Labour Codes from 2025. Ensure your contractors hold valid registrations and that their workers' EPF and ESI contributions are actually being remitted, because the principal employer bears residual liability if they are not.
RERA and payroll governance
RERA-registered projects require developers to maintain project-level accounts and cost disclosures. While RERA does not directly regulate payroll, project-specific staffing costs are audited as part of fund utilisation disclosures. If payroll for a specific project is being run through a shared entity, document clearly how costs are allocated across projects. Auditors and homebuyer associations increasingly scrutinise these allocations.
Tax year 2026/27 payroll housekeeping
For the current tax year, all employees should have submitted their investment declarations and regime choice (old versus new regime) at the start of the year. Under the new income tax regime, slabs rise to 30% at higher income levels, the section 87A rebate applies for lower incomes, and a 4% health and education cess applies to the final tax liability.
Quarterly TDS returns on Form 24Q remain mandatory. Year-end, Form 16 must be issued to all employees. In real estate, where commission-heavy pay means some employees have highly variable taxable income month to month, review TDS projections mid-year — typically in October or November — to avoid large under-deductions in the final quarter.
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