What is the difference between Gross Total Income and Total Income?

Difference Between Gross Total Income and Total Income

There are the two important concepts of Income Tax, that are, Gross Total Income and Total Income. Many people use them interchangeably thinking that they are synonymous to each other. However, they are absolutely different from each other in legal terms under the Income Tax Act, 1961 as both of the terms are used for different purposes and in different context.

A person can earn income from different sources and the Income Tax Act, 1961, has broadly classified and categorized these income sources under total 5 heads of Income that are namely, Salary, House Property, Income from Business or Profession, Capital Gains and Income from Other Sources.

In simple terms, it can be said that Gross Total Income is the aggregate of income earned in a financial year under the all 5 heads while the Total Income is the Income on which income tax is levied in the financial year after subtracting the deductions available from the Gross Total Income.

Gross Total Income = sum of income earned from all the Sources [salary + Income from house property + business/Profession income + capital gains + Income from other sources]

Total Income = Gross Total Income – Deductions under Chapter VI-A of the Income Tax Act

 

Comparison between Gross Total Income and Total Income

BASIS

Gross Total Income

Total Income

Meaning & concept as per the I-T Act, 1961

It is basically, the sum of total income earned from all sources of income.

It is the total income calculated by subtracting deductions u/c-VIA from the Gross Total Income.

Income-Tax Liability

The income tax liability is not calculated on Gross Total Income.

The income tax liability is calculated and/or levied on Total Income.

Deductions under Chapter-VI-A of the I-T Act, 1961

Gross Total Income is the income before deductions under Chapter VIA of the I-T Act, 1961.

Total Income is the income after deductions under Chapter-VIA of the I-T Act, 1961.

Formulae

Gross Total Income = Income earned from all 5 sources of income

Total Income = Gross Total Income – Deductions u/chapter VI-A

 

Conclusion

The tax liability depends upon the computation of total income thus, it is very significant to understand the difference between the Gross Total Income and Total Income in order to file accurate Income Tax Return and to pay tax liability.

We hope all of your doubts related to the difference between gross total income and total income is clear and in case of further doubts, contact Your Trustworthy Advisors Manthan Experts by dialing +91 9643-969-969 or mail us at info@manthanexperts.com to compute your tax liability and to file your ITR then. 

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