This explains about how an Income Tax department can issue notice for taking or paying rent in cash. In the past few years, IT Department has made a strict rules for cash transactions to prevent tax evasion. Large cash transactions are more closely monitored now.

If you pay rent in cash, especially above certain amounts, that payment may raise red flags with the tax department.

If a tenant pays ₹50,000 or more per month in rent, the law requires that TDS be deducted and deposited with the IT Department unless exempted. Otherwise, the department can issue notices for non-compliance.