A notice at a Bengaluru Paying Guest (PG) accommodation demanding rent payment strictly in cash to avoid a 12% Goods and Services Tax (GST) on online payments has triggered a heated online debate. Shared on Reddit, the notice warned tenants that digital payments would attract this GST, forcing cash-only transactions.
The move has frustrated tenants who prefer safe, traceable payment methods and raised concerns over potential tax evasion by landlords. Social media users have called for government action, while legal experts advise tenants to insist on formal receipts for protection.
This incident highlights broader rental market tensions in Bengaluru amid GST enforcement fears.
Cash-Only Rent Notice Sparks Outrage and Legal Concerns
A photograph of the PG notice that reads “Rent must be paid in cash. If paid online, 12% GST will be added” went viral on Reddit, garnering over 30,000 views and widespread condemnation. Tenants expressed anger at being forced to pay cash, which limits payment options and complicates record-keeping necessary for security and legal proof.
Some netizens pointed out that charging a GST only on digital payments without issuing an official GST invoice may itself be unlawful, calling the practice an attempt to evade taxes. Across Bengaluru, similar cash-only attitudes have emerged among shopkeepers and other landlords who fear GST raids triggered by digital transactions.
Legal experts emphasise that while cash payments are not illegal, tenants must demand proper rent receipts, and landlords are legally required to comply with GST regulations on taxable services.
Growing GST Fears Fuel Cash-Only Payment Trends
This demand for cash-only rent payments is symptomatic of a wider anxiety among Bengaluru’s business and rental sectors regarding GST inspections and penalties. Landlords and shopkeepers are increasingly refusing UPI or bank transfers to avoid digital paper trails that could expose undeclared income. Such practices create friction for tenants and customers who prefer digital, transparent transactions for safety and convenience.
Experts advise tenants to maintain detailed records and demand invoices, while authorities consider stricter rent regulations and dispute resolution mechanisms.
The government of Karnataka is also discussing amendments to the Karnataka Rent Act to crack down on unregulated rental agreements and improve transparency, including heavier penalties for violations and provisions for complaint redressal.
The Legal and Social Implications
Forcing tenants to pay rent only in cash undermines the transparency required in landlord-tenant relationships and obstructs tax compliance efforts. This cash-first approach disproportionately impacts tenants by limiting payment choices and complicating proof of payment, which could affect tax benefits like House Rent Allowance claims. The practice exposes landlords to risks of fines and inspections for evasion but also presents tenants with vulnerability in disputes without formal documentation.
Advocates call for enhanced legal awareness among tenants and landlords to encourage compliance and fairness. There is a growing demand for regulatory clarity to balance the government’s tax enforcement priorities with the need to protect tenant interests in a rapidly expanding and informal rental market like Bengaluru’s.
The Logical Indian’s Perspective
The Bengaluru PG’s cash-only payment notice is a troubling sign of informal and opaque practices that hinder trust and legal accountability between landlords and tenants. Such actions risk normalising tax evasion and inconvenience tenants who rely on digital payments for safety and record-keeping.
How can Bengaluru’s community, regulators, and landlords collaborate to ensure rent payment methods that are both legally compliant and tenant-friendly?
