A rent receipt is an acknowledgement slip provided by the landlord to the tenant, on receiving the rent as per the terms agreed upon in the rent agreement. Whether you have occupied a residential or a commercial property, rent receipts are vital in both cases. A rent receipt is an important document and plays a crucial role for the tenants and the landlords. Let us check out the importance of rent receipts.
See also: All you want to know about rent receipt & its role in saving tax & tax on rental income
Importance of a rent receipt
Rent receipts are proof of monthly rent payments made to the landlord. Rent receipts often play an important role in solving legal disputes between tenants and landlords. For tenants, possession of the rent receipt shows that the rent was paid, especially when the transaction was done in cash. After giving a rent receipt, a landlord cannot claim rent again for that particular month. From the landlord’s point of view, rent receipts help them maintain a proper record. A landlord can demand a copy of the issued rent receipt to end a dispute, if a tenant falsely claims that rent has already been paid. Thus, a rent receipt makes the rental transaction more authentic and allows legal sanctity to the landlord-tenant relationship.
Here are some more benefits that highlight the importance of the rent receipt:
- Claiming tax benefit under the Income Tax Act
- Maintaining rent payment records
- Dispute settlement
- Works as proof in legal matters
A rent receipt should contain certain specific details, to enable one to claim the above-mentioned benefits. Here is the list of information that needs to be mentioned in a rent receipt.
See also: All about the role of house rent slip in claiming HRA tax benefit
How to fill a rent receipt?
Rent receipts need to contain some key information if you want to claim HRA and prove legal validity. Here is the information that you should include, when you make a rent receipt. These details also play an important role when you have to claim income tax benefits:
- The date on which the payment is received
- Rent period
- Rent amount
- Name of the tenant
- Name of the landlord
- Address of the property for which the rent is paid
- Landlord’s signature
- If the rent amount in a financial year exceeds Rs 1 lakh, then, the PAN detail of the landlord should be mentioned on the rent receipt
- If rent is paid in cash and exceeds Rs 5,000, then, a revenue stamp should be affixed on the rent receipt
- Mode of payment, such as cheque, cash, or online, along with details like cheque number
- Details of balance due when the rent is partly paid
- Details of the reason for excess payment, for example, penalty on late payment, repair charge for damage to property, etc.
See also: Know all about lease vs rent
How to get a rent receipt?
Normally, the landlords provide the rent receipts to the tenants. However, if the landlord is not providing a rent receipt, then, the tenant can get the rent receipt with the essential details printed on paper and request for the landlord’s signature on it, along with the PAN detail (if applicable). A rent receipt can be generated, pre-filled, using rent receipt generators available online. You just need to fill in the necessary details to get the rent receipt in a prescribed format. After getting the rent receipt printed on paper, get the signature of the landlord on it at the time of rent payment.
See also: All about HRA calculation & HRA exemption
How to submit a rent receipt?
When claiming House Rent Allowance (HRA) exemption for income tax returns, it’s crucial to submit a house rent receipt. To calculate HRA exemption, follow these steps:
- The exemption is computed based on the minimum of the following three amounts:
- Actual HRA received.
- 50% of salary (for metro cities) or 40% of salary (for non-metro cities).
- Actual rent paid minus 10% of salary.
- After the calculation, submit the rent receipt along with necessary documents to your employer. Employers will verify the details and consider the HRA exemption while determining your tax liability.
- If your workplace allows digital submission of expenses during tax returns, you can also submit rental proofs online.
- Ensure you fulfill certain conditions for rental receipts and claims:
- Include your landlord’s PAN details if your rental receipt for the year exceeds Rs. 1,00,000.
- Keep your rental agreement updated and renewed every 11 months to validate yearly rental receipts.
If you have more queries on how to fill house rent receipts online and offline, it’s advisable to consult with a finance expert for guidance.
Things to keep in mind
- Rent receipt should be accompanied by a valid rent agreement, if you want to use it for claiming HRA.
- Try to pay rent through online mode or cheque, to keep a parallel record of rent payment apart from the rent receipt.
- Online rent receipt should have a revenue stamp and be duly signed by the landlord.
- If the landlord does not have a PAN number and the rent amount is above Rs 1 lakh in a year, get a declaration and Form 60 from the landlord.
- It is important to know how to write a rent receipt to avoid later discrepancies when you claim the HRA.
Read more on our article on rent agreement sample
FAQs
Is it necessary to provide a rent receipt to my employer to claim the HRA benefit?
If the monthly rent amount is above Rs 3,000, then, the employees must provide the rent receipts for claiming the HRA. However, it is advisable to get the rent receipts from the landlord even if the rent is below Rs 3,000 per month, as you may need the same as proof in case of any future legal queries.
Are there any charges levied on the rent receipt by the landlord?
No, rent receipts are free of charge and a landlord has to provide them voluntarily. If a landlord is not giving you the rent receipts, you may get it printed by yourself and get it signed by the landlord.
Is the revenue stamp compulsory on the rent receipt?
Revenue stamp is compulsory on rent receipts when the rent is paid in cash and the rent amount exceeds Rs 5,000.