Does the tenant of a residential place risk any legal liability if he/she pays rent in cash, at the landlord's insistence, and only gets a phone message as acknowledgement of payment (no formal receipt)? For this question, please consider that it is not fully clear what the intentions of the landlord are in asking for payment in cash and refusing issue of any formal receipt of the rent, but they vaguely mentioned something to do with "TDS" to the tenant, and more details may come to light later. The landlord is ok to sign a lease deed signed in which the amount of rent will be mentioned. If relevant for this scenario, please consider that the rent is quite low, at around Rs. 10,000 per month. My question is if this arrangement is legally problematic from the tenant's perspective, if the tenant does not want to engage or participate in any financial or other wrongdoing but agrees to this arrangement because that's what the landlord prefers. In other words, is it possible that the tenant may be held liable for any financial concealment or wrongdoing by the landlord related to this arrangement? Thanks.
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1. The tenant can't be held liable for the financial concealment or wrongdoing by the landlord in respect of rent payment by cash.
2. Phone message as acknowledgement confirms your payment by cash to the landlord. Please preserve those messages as it will bailout the tenant if a dispute is raised.
- As per law, even there is an agreement between the landlord and tenant , then also the tenant is under obligation to pay the rent regularly , otherwise the landlord has right to evict the tenant and to claim the arrears of rent.
- If the tenant is paying the rent in cash and the landlord not issue a written acceptance of the said rent amount , then there will not be any evidence with the tenant to prove that he has paid the rent to the landlord.
- Further, an oral acceptance cannot be produced before the Court , however, if the landlord is giving a phone text message as an acknowledgement of the amount with clearly mention that " The rent of Rs-----. has been received then it can be saved by the tenant to prove that the rent has been paid by him.
Thank you for the answers so far. To clarify, the concern here is not that the tenant may not be able to prove that he/she has paid the rent, but whether he/she is doing anything legal wrong, or abetting any potential wrongdoing by the landlord, by agreeing to making the payment in cash and getting only the phone message as acknowledgement.
You can pay 10 k by cash but need a rent receipt from landlord
you need proof that rent has been paid . Mere phone message is not sufficient
Payment up to Rs 20 k can be done by cash
If the insistence by the landlord to pay the rent only by cash then the tenant is not doing anything legally wrong as long as you receive phone message as acknowledgement.
- As per section 269ST of the Income Tax Act, it is prohibited from receiving an amount of Rs 2 lakh or more in cash:
- Further, the penalty for failure to comply with the provisions of Section 269ST is a sum equal to the amount of such receipt of the rent.
- Hence, as per this law, the landlord can accept rental income in cash up to the limits or 2 Lakh
- However, the tenant not come under this law for the payment of rent in cash , and the landlord is only accountable for the violation of this Section.
As there's a lease agreement in writing entered between you both, the landlord and tenant relationship can be evidently proved in case of any dispute at a later date, besides the acknowledgement for receipt of rental amount has been made through phone message will be an additional evidence to prove that you have been paying the monthly rental amount regularly.
There's no necessity for any TDS for this small amount of Rs. 10,000/-.
So there's nothing to be so much concerned about.
The cash payment up to Rs. 20,000/ is a legal transaction hence your concern in this respect is also unnecessary.
Dear Client,
In the Present Scenario, with respect to payment of rent in case, the same may be considered legal, however, the same requires a proper documentation to be substantiated with, like a proper receipt. For the lease agreement, it is suggested that the same is present in the written form, that clearly mentions the rent amount, the duration of lease, payment mode, and signed by both parties. On the issue of TDS, it can be observed that, the landlord may be referring to the income tax obligations in relation to the income of rent. However, if cash payment has been insisted for the reason of avoiding tax, this may raise concerns on the legality of the arrangement. But, if the tenant is not involved, or does not support the landlord in the wrongdoings intentionally or knowingly, he may not be held liable. Nevertheless, it is important that all the records pertaining to payments are maintained safely.
Hope you find this answer beneficial for resolving the dispute.
