House Rent In Cash: It has been seen many times that people pay their house rent in cash. Sometimes the tenants themselves want to pay the rent in cash, and sometimes it has been seen that the landlords also ask for the house rent in cash. Although there is no problem in paying the house rent in cash, but sometimes due to this you may get a notice from the Income Tax Department, which you will have to respond to.
Pay rent online or by check
If you live on rent, you should pay your house rent either online or through cheque. This will be a proof of the amount paid by you as rent. If you do not do this and pay in cash, then it is possible that you may get a notice from the Income Tax Department due to mismatch between your income and expenses. In this situation, you will have to show some important documents to the Income Tax Department, which can prove that you have paid the rent. You may need these 4 documents.
1- Valid rent agreement
If you are a tenant, then you must have a valid rent agreement. That is, you must enter into a rent agreement with your landlord. Also, you should keep in mind that the rent agreement should be as per the income tax rules. For example, if your monthly rent is more than Rs 50,000, then TDS must be deducted from it. The rent agreement should state whether TDS will be deducted on the rent or not and how it will be deducted. Apart from this, the rent agreement should contain all the basic details of both the landlord and the tenant. Also, the PAN details of both should be there.
2- Rent receipt
To claim HRA, you must have a valid rent agreement as well as a rent receipt. That is, you will also have to keep the receipt of paying rent to your landlord. The rent receipt proves that you have actually paid the house rent to the landlord. While claiming HRA, you have to submit the rent receipt along with the rent agreement.
3- Online rent payment statement
Although no one asks you about the method of paying rent, but if due to some confusion you get a notice from the Income Tax Department, then you may need a bank statement. If you pay in cash, then you will not be able to provide this proof. In such a situation, many CAs and tax experts say that rent should always be paid online like UPI, net banking or credit card. This gives you a solid proof of paying rent, which no one can deny.
4- Make sure to take the PAN of the landlord
You need the landlord’s PAN while filing ITR or while claiming HRA from the company. This is how the Income Tax Department comes to know who actually received the rent you paid. Even if you pay rent in cash, you must provide the landlord’s PAN, otherwise you will get less tax benefit. Please note that if your total rent is more than Rs 1 lakh, you must provide the landlord’s PAN, otherwise you will not be able to claim HRA on an amount more than Rs 1 lakh. Keep in mind that this PAN must be correct. The people to whom the Income Tax Department is sending notices these days had entered the wrong PAN.
