A Bengaluru Paying Guest (PG) accommodation has come under fire after a notice demanding rent payment strictly in cash to avoid a 12% GST on digital transactions went viral on social media. The image, first shared on Reddit, warned tenants that online payments would attract the GST, sparking frustration and fuelling an intense online debate.
The move has angered tenants who prefer secure, traceable payment methods such as UPI or bank transfers. Many have raised concerns over possible tax evasion by landlords avoiding digital records, while legal experts stress that tenants should insist on formal rent receipts to safeguard their interests.
Viral Outrage Over Cash-Only Policy
The posted notice - reading "Rent must be paid in cash. If paid online, 12% GST will be added" - quickly gained traction, amassing more than 30,000 views on Reddit. Users criticised the practice for restricting payment options and making it harder to maintain proof of rent payments, which are crucial for security deposits, dispute resolution and claiming HRA benefits.
Some pointed out that imposing GST only on digital transactions without issuing a valid GST invoice could itself be unlawful, potentially constituting a tax violation. This incident is the latest in a string of similar cases in Bengaluru, where shopkeepers and landlords are increasingly favouring cash to avoid GST-related scrutiny.
GST Fears Driving Cash-Only Trend
The trend reflects growing unease among sections of Bengaluru's rental and business communities over GST enforcement. Many fear that digital payment trails could trigger inspections or penalties, prompting them to avoid online transactions altogether. While cash payments are legal, experts warn that bypassing digital payments to dodge tax reporting obligations could invite legal action.
Regulatory Push for Transparency
The Karnataka government is reportedly considering amendments to the Karnataka Rent Act to address unregulated rental agreements, impose heavier penalties for non-compliance and improve tenant protection. Proposed reforms aim to enhance transparency and formalise rental transactions in the city's booming, but often informal, rental housing sector.
Why It Matters
Forcing tenants into cash-only transactions undermines transparency, complicates record-keeping and weakens tax compliance efforts. It leaves tenants vulnerable in disputes and denies them the legal safeguards that digital transactions and official documentation provide. Landlords, too, risk hefty fines if caught evading GST obligations.
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