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Difference-between-Gross-Total-Income-and-Total-Income

 

Difference between Gross Total Income and Total Income

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Introduction-

Difference between Gross Total Income and Total Income can be calculated very easily. Every person has source of income from anywhere, all incomes are coming under five heads of income under Income Tax Act i.e.

  • Income from Salary
  • Income from House Property
  • Income from Business or Profession
  • Income from Capital Gain
  • Income from Other Sources
Difference between Gross Total Income and Total Income1

Provision of Clubbing of Income is applicable (included) but Incomes which are exempted under section 10 will be not included in computation of Gross Total Income.

The total income of above five heads are called Gross Total Income and if the deduction falling under category of section 80C to 80U (if any) is deducted from Gross Total Income, the balance taxable income is called Total Income.

Note- Inter source losses, inter head losses, brought forward losses, unabsorbed depreciation, etc., (if any) will have to be adjusted while computing the gross total income.

   
Gross Total Income-

Gross Total Income means Income received from all sources of Income i.e. Income from Salary (if any) +Income from House Property (if any) + Profits and gains of business or profession (if any) + Income from Capital Gain (if any) + Income from other sources (if any).

 
Total Income-

Total Income is the income on which tax liability is determined means Gross Total Income less Deductions (under section 80C to 80U), if any.

    Difference between Gross Total Income and Total Income2

 

How to compute Gross Total Income (GTI) and Total Income-

Example 1-

Mr. X has the following incomes for the financial year 2017-18-

Particulars

Amount (Rs.)

Income from Salary (Net of deductions u/s 10 & u/s 16)

6,00,000

Income from House Property (Net)

3,00,000

Income from Business or Profession

2,00,000

Income from Capital Gain

50,000

Income from Other Source (Included Income of Minor Child)

2,50,000

Deduction u/s 80C (Investments)

1,50,000

Deduction u/s 80D (Mediclaim)

30,000

Deduction u/s 80G (Donation)

10,000

Deduction u/s 80TTA (Interest on Savings)

10,000

Deduction u/s 80U (Physical Disability)

50,000

How to calculate Gross Total Income and Total Income?

Answer-

Computation of Taxable Income of Mr. X, for the year 2017-18

Particulars

Amount (Rs.)

Amount (Rs.)

           

 

F.Y. 2017-18

Income from Salary (Net of deductions u/s 10 and u/s 16)

 

6,00,000

Income from House Property (Net)

 

3,00,000

Income from Business or Profession

 

2,00,000

Income from Capital Gain

 

50,000

Income from Other Source (Included Income of Minor Child)

 

2,50,000

Gross Total Income

 

14,00,000

Less: Deductions under chapter VI-A

 

 

Under Section 80C

1,50,000

 

Under Section 80D

30,000

 

Under Section 80G

10,000

 

Under Section 80TTA

10,000

 

Deduction u/s 80U

50,000

2,50,000

Total Income (Net Taxable Income)

 

11,50,000

 

See the related posts : Bank Reconciliation Statement (BRS)
 
How to round off total income before computing tax liability?

​​​​As per section 288A, total income computed in accordance with the provisions of the Income-tax Law, shall be rounded off to the nearest multiple of ten.

Following points should be kept in mind while rounding off the total income:

  • First any part of rupee consisting of any paisa should be ignored.
  • After ignoring paisa, if such amount is not in multiples of ten, and last figure in that amount is five or more, the amount shall be increased to the next higher amount which is in multiple of ten and if the last figure is less than five, the amount shall be reduced to the next lower amount which is in multiple of ten and the amount so rounded off shall be deemed to be the total income of the taxpayer.​

Example 2-

Total Income of Mr. X comes to Rs. 11, 50,156.88 for the financial year 2017-18. How the total income of Mr. X is rounded off?

Answer-

First the part of rupee consisting of 0.88 paisa should be ignored.

Then after ignoring paisa, the remaining amount of Rs. 11,50,156 shall be rounded off to Rs. 11,50,160 because the last figure is greater than five (i.e. 6 convert to Rs. 10).​

 
See the related posts : Eight ways to save Income Tax
 

Example 3-

Total Income of Mr. X comes to Rs. 11, 50,154.88 for the financial year 2017-18. How the total income of Mr. X is rounded off?

Answer-

First the part of rupee consisting of 0.88 paisa should be ignored.

Then after ignoring paisa, the remaining amount of Rs. 11,50,154 shall be rounded off to Rs. 11,50,150 because the last figure is less than five (i.e. 4 convert to Rs. 0).​

 




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