Decoding Terrace Rent: Tax Implications for Senior Citizens on Mobile Tower Income

As we navigate the complexities of personal finance, certain income streams can raise questions, especially for our senior citizens. A common query revolves around the taxability of income derived from renting out terrace space for mobile tower installations. This is particularly pertinent for an 88-year-old individual who recently received a share of terrace rent from a mobile tower company and is now wondering about their tax obligations.

The simple answer is yes, income generated from renting out any portion of your property, including the terrace, is generally subject to income tax.

However, the specific head under which this income is taxed, and the deductions available, can vary based on the ownership and use of the property.

According to tax experts, there are primarily two scenarios for classifying such income:

• Income from House Property: If the individual owns the property (house or building) on which the terrace is situated, and the primary purpose of the property is residential or commercial, the rent received for the terrace is typically taxed under the head "Income from House Property." Under this head, the taxpayer is eligible for a standard deduction of 30% of the Net Annual Value (NAV).

  This deduction is available irrespective of the actual expenses incurred for maintenance.

• Income from Other Sources: In cases where the individual does not directly own the building but possesses rights or has a share in the terrace rent (perhaps through a family arrangement or co-ownership without direct property ownership), the income might be classified under "Income from Other Sources." Unlike "Income from House Property," there is no standard 30% deduction here.

  However, any expenses incurred wholly and exclusively for earning this income can be deducted.

For an 88-year-old, a crucial factor to consider is the basic exemption limit. For super senior citizens (individuals aged 80 years or more), the basic exemption limit for the Financial Year 2023-24 (Assessment Year 2024-25) is Rs 3,00,000.

This means if their total taxable income from all sources (including pension, interest, and this terrace rent) does not exceed Rs 3,00,000, they will not be liable to pay any income tax.

It's vital to aggregate all sources of income. If the 88-year-old has other incomes such as pension, interest from fixed deposits, or any other earnings, these must be added to the terrace rent income to determine the total gross income.

If this aggregated income surpasses the Rs 3,00,000 threshold, then the income exceeding this limit will be taxable as per the applicable slab rates.

Furthermore, even if the net taxable income is zero or below the exemption limit, if the gross total income before any deductions (like Chapter VI-A deductions) exceeds the basic exemption limit, filing an Income Tax Return (ITR) becomes mandatory.

It's always advisable for senior citizens to consult with a tax advisor to ensure accurate calculation of tax liability and proper ITR filing, considering all specific circumstances and available benefits.