How Demonetisation Has Affected Mighty Landlords
Sakshi Singh stays in Noida and has rented a one-room set from a Bengali family for Rs 10,000. To avoid paying income tax, her landlord insists on getting the monthly rent in cash.
Shweta Gupta rented a 3BHK with two of her friends for Rs 27,000 from a retired couple who also insisted on paying the rent in cash as they don't want to queue up at a bank to pull out cash.
Theirs are not one-off cases
Post-demonetisation announcement by Prime Minister Narendra Modi on November 8, landlords in the country are unhappy about the move especially those who accept the money in cash. As not all property owners show their rental income in income tax, since demonetisation many of them have been forced to transfer monthly rents directly into their bank accounts.
It is not illegal to demand rental income in cash, what is illegal is to not showing this income one's income tax return. Rental hubs in cities where there are ample jobs and employment opportunities, landlords often make it a point to be paid in cash.
However, as the demonetisation drive has left old high currency notes invalid, several property owners are confused on where to park their rental income.
Also read: Could Rents Go Up After Demonetisation?
Why should you not pay rent in cash?
Accepting cash as a rent is not an unheard notion in rental markets of India. However, if the rent is more than Rs 8,333 per month, the renter could not apply for House Rent Exemption (HRA) without providing PAN of the landlord. There have been cases where landlords do not provide PAN number as the income is not accounted for, renters usually avoid declaring the name and details of landlord and provide forged rental receipts, which is illegal. But this won't be the case anymore.
Since, the country is facing a cash crunch, after demonetisation drive, a landlord must take the rent in a legit way and this would add to his assessed Income Tax and would readily give you PAN number.
What could be the next step?
Long queues at ATM and banks have forced the common man to digitised payments. Tenants are either transferring money directly into the bank account of the landlord or resorting to one of the many apps available in the cyberspace to ease the rent-payment process.
Other than this, the Benami Transaction Act will be putting a brake on such transactions which are accounted that also includes the rental amount.
Also Read: Understand the term 'Benami Transactions'
Accepting cash for a transaction worth more than Rs 10,000 is not allowed. Hence, if you are paying rent of this huge sum through cash, make sure you raise your voice and ask your landlord to provide his PAN details. If he is still adamant, its' time to change your residential address.