Three pieces of paperwork protect a PG owner more than any other: a written agreement, a clear deposit record and police verification of every tenant. This guide explains each in plain language, with notes for Odisha (Bhubaneswar) and Karnataka (Bengaluru).
Please note: this is general information, not legal advice. Rules differ by state and change over time. For anything important, check with a local lawyer or chartered accountant.
The PG rent agreement
What it should include
A good PG agreement is short and specific. It should cover:
- The parties: owner (or operator) and tenant, with addresses and ID numbers.
- What is being rented: the room and bed, and whether it is single, double or triple sharing.
- Rent and due date: the monthly amount, the due date, the grace period and the late fee.
- What rent includes: food, Wi-Fi, laundry, housekeeping and electricity, or how electricity is charged.
- Security deposit: the amount, what it can be used for, and when it is refunded.
- Notice period: how many days' notice each side must give, and what happens without it.
- House rules: guests, timings, noise, smoking and cooking. A signed one-page annexure works well.
- Condition at move-in: furniture and fittings in the room, ideally with photos.
- Signatures and date, with a witness if possible.
Why most agreements are for 11 months
Under Section 17 of the Registration Act, 1908, a lease for more than one year must be registered, which means paying stamp duty and registration charges and visiting the sub-registrar. Agreements of 11 months generally do not need registration, so most landlords and PG owners use them and renew each year. Stamp duty on the agreement itself still varies by state, so check your state's rate.
Some states treat short stays and leave and licence agreements differently. If you are unsure, ask a local lawyer once and then use the same template for everyone.
Security deposit
How much is fair?
There is no single national limit for PGs today. Common practice is one to two months' rent.
The Model Tenancy Act, 2021 is a model law from the central government. It suggests a cap of two months' rent for residential deposits. It applies only in states that adopt it, and reports in 2026 differ on exactly which states have done so. Assam is listed in every report; Tamil Nadu, Andhra Pradesh and Uttar Pradesh are listed as having adopted it or aligning their laws with it, and Karnataka as having adopted parts of it. We found no report of Odisha adopting it as of October 2026. Even where it does not apply, two months is a sensible upper limit that tenants see as fair.
Avoiding deposit disputes
- Write down exactly what the deposit can be used for: unpaid rent, unpaid electricity and damage beyond normal wear.
- Record the room's condition at move-in, with photos.
- Note each deduction when it happens, with a reason and the amount.
- At move-out, give a written settlement showing rent due, electricity, deductions and the refund. Then pay the refund on the date you promised.
Police verification of tenants
Police verification means sharing each tenant's details with the local police so they can be checked. Many cities require landlords and PG operators to do this, and it protects you if a tenant turns out to be using a false identity.
What you usually need
- The tenant's full name, photo, phone number and permanent address
- A copy of one government ID (Aadhaar, passport, voter ID or driving licence)
- Their workplace or college details
- Your details as owner and the PG's address
Odisha (Bhubaneswar and Cuttack)
The Odisha Police Citizen Portal lists a "Tenant/PG Verification Request" service. You create an account, fill in the tenant's details and upload their ID. You can also ask at your local police station.
Karnataka (Bengaluru)
Ask at your local police station about the current process for PG tenant verification. In September 2026 the Karnataka High Court directed authorities to identify unlicensed PGs in Bengaluru and to enforce fire, building and electrical safety norms (report). If you run a PG in Bengaluru, make sure your trade licence, safety measures and tenant records are in order.
Keep your own records too
Whatever your city's rules, keep a copy of every tenant's ID, agreement and verification for as long as they stay and for some time after they leave. If police or a court ever ask, you can show them in minutes.
Other registrations to check
- Trade licence from your city's municipal body, where it applies to PGs.
- FSSAI registration if you serve food to tenants.
- Fire safety clearances, especially for larger buildings.
GST on PG rent
Since July 2024, accommodation such as PGs and hostels is exempt from GST when the charge is ₹20,000 or less per person per month and the stay is at least 90 continuous days (CBIC Notification No. 04/2024-Central Tax (Rate), dated 12 July 2024, following the 53rd GST Council meeting). Most long-stay PG rents fall within this exemption. Short stays and higher rents may be taxable, so check with your chartered accountant.
Make the paperwork easy to follow
The rules matter only if you follow them for every single tenant. That is easiest when the same steps happen at every check-in: ID collected, agreement signed, verification submitted and deposit recorded.
HostelKeeper's check-in flow collects tenant details and ID from the tenant's own phone, keeps the agreement with their record and keeps a running deposit ledger. Book a free demo to see it.
Sources: Registration Act, 1908 (Section 17); Model Tenancy Act, 2021 and state adoption reports (NoBroker, Outlook Money); Odisha Police Citizen Portal; Bar and Bench, 18 September 2026; CBIC Notification 04/2024 summary (Taxmann). Checked October 2026.