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Gross Total Income As Per Income Tax Act

Ayush , Last updated: 27 February 2024  
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What is Gross Total Income

Gross Total Income are the total income earned by an individual or entity before subtracting any deductions or taxes. It includes income from various sources such as salary, wages, business income, capital gains, interest, dividends, rental income, and any other sources of income.

Gross Total Income: How to Calculate It

Why the calculation of Gross Total Income is important

Gross Total Income is very crucial figure which helps in determining taxable income, which is calculated by subtracting allowable deductions from Gross Total Income.

It serves as the starting point for reporting income while filing an Income Tax Return.

Various deductions and exemptions such as deductions for investments like Provident Fund, Public Provident Fund, Life Insurance Premiums, etc are available under Chapter VI A of the Income Tax Act. These deductions are subtracted from the Gross Total Income to arrive at the taxable or total income.

Formula for calculating Gross Total Income

The formula for calculating Gross Total Income :

Salary Income + House Property Income + Business/Profession Income + Capital Gains + Other Sources Income + Clubbed Income - Set off of Losses.

Here,

  • Salary Income means earnings from employment, such as wages, bonuses, commissions, and allowances.
  • House Property Income means income earned from owning a property, like rental income.
  • Business or Profession Income means income generated from business activities or professional services rendered.
  • Capital Gains means profits which is earned from the sale of capital assets like stocks or other investments.
  • Other Sources Income means income from sources other than the ones mentioned above, such as interest income from savings accounts, dividends from investments, or any other miscellaneous income.
  • Clubbed income means income that is added to an individual's income, typically from assets transferred to another person but is taxable in the hands of the individual who transferred it.
  • Set off of Losses means losses incurred in one source of income can be set off against profits from other sources, reducing the overall taxable income.
 

How to Calculate Gross Total Income

Particulars Amount
Income From Salary     -------
(+) Income Under the Head House Property  -------
(+) Profits and Gains of Business and Profession   -------
(+) Capital gains Income     -------
(+) Income from Other Sources     -------
Total  -------
(-) Adjustment on account of set-off and carry forward losses -------
Gross Total Income -------
(-) Deductions u/s 80C, 80D, 80DDB, 80E, 80TTA, 80TTB, 80G, 80U -------
Total Income -------
 

Difference Between Gross Total Income & Total Income

Gross Total Income Total Income
Gross total income is the total income earned before any deductions or taxes are applied. Total income includes all sources of income, gross income, as well as additional income such as interest, dividends, capital gains, or other earnings.
Gross total income is used for calculating taxes and other deductions. Taxes are levied on gross income before any adjustments or deductions are made. Total income is also used for tax calculations, but it includes all sources of income which may have different tax treatments.
Tax isn't directly calculated on gross total income it serves as the starting point for tax calculations. Tax is calculated directly on total income which provides clarity on taxable income after deductions and exemptions.
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Published by

Ayush
(Executive )
Category Income Tax   Report

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