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Rent paid in cash vs HRA exempt in income tax

02 February 2023

1. Can employer allow deduction for HRA; if employee paying rent in cash in excess of ₹ 12000/- p.m. and providing PAN of landlord/owner ?

2. Landlord giving me his signed rent receipts against cash payment but employer said " we need only cheque/DD/online transaction proof for rent payment". So please confirm about it that they are telling me true or false, is it legally ok ?

3. is employee violating section section 269ST / 40A(3) in case of cash transactions ? I think section 269ST for receiver and section 40A(3) for sender. I am sender in this case please correct if any mistake

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7 Replies

Dhirajlal Rambhia (SEO Sai Gr. Hosp.) (161012 Points)
Replied 02 February 2023

The employee must provide the following documents if they wish to claim the tax exemptions related to the House Rent Allowances.

If the rent paid during the given financial year exceeds Rs. 1 Lakh, the employee must provide the PAN card details and a copy of the landlord/property owner to claim HRA tax exemption.
The receipts of rent paid by the employee. The details of the receipt include the following:
- Date and Name of the landlord
- Name of the tenant
- PAN card details of the landlord
- Address of the rented accommodation
- Duration of stay
- A revenue stamp
- Signature of the landlord on the revenue stamp
- The same receipt can be used for 3 months. Hence, you need at least the last 4 receipts for a year.
- The photocopy/Xerox of the rent agreement, when required.