Question

Define the total income and gross total income under the income tax act

Answer 1

Answer:

Gross Total Income – Income Tax

Gross Total Income is a cumulative income which is computed under the five heads of income, i.e. salary, house property, business or profession, capital gain and other sources. Gross total income is calculated after the clubbing provisions and making adjustments of set-off and carry forward of losses. In this article, we look at transactions covered under Section 68 to 69D of the Income Tax Act, 1961 which must be included in Gross Total Income.

What is gross total income?

The ‘gross total income’ (GTI) is the total income you earn by adding all heads of income. Income from salary, property, other sources, business or profession, and capital gains earned in a financial year are all added to arrive at the GTI.

What is total income?

The ‘total income’ (TI) is derived after subtracting the various deductions under Section 80 from the GTI. So, you first calculate the GTI and then subtract the deductions to arrive at the TI.

Difference between Gross Total Income & Total Income

To understand their difference in simple terms, look at the following formulae:

TI = GTI – deductions under Section 80

Or

GTI = TI + deductions under Section 80

So, GTI is the total of all the heads of income while TI is GTI minus the deductions.