Gross Total Income As Per Income Tax Act

What is Total Gross Income?

As the name suggests, Gross Total Income is the aggregate of all the income earned by you during a specified period. According to Section 14 of the Income Tax Act 1961, the income of a person or an assessee can be categorized under these five heads,

Income from Salaries
Income from House Property
Profits and Gains of Business and Profession
Capital Gains
Income from Other Sources

How to Calculate Gross Total Income

Gross Total income is arrived at when your earnings from all these five heads of income are taken together. In other words, the aggregate of the incomes computed under the above 5 heads after setting off and carrying forward of losses and after applying clubbing provisions is known as Gross Total Income (GTI) under section 80B(5). Here’s the formula for calculating G.T.I. -

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

Components of Gross Total Income (GTI):

Gross Total Income (GTI) is the sum of all income earned before any deductions or exemptions are applied. Here's a list of the various components that contribute to GTI:

• Income from Salary: This includes your regular wages, bonuses, commissions, and any allowances paid by your employer.
• Income from House Property: If you own and rent out a property, the rental income you receive falls under this category.
• Income from Business or Profession: Profits earned from running a business or practicing a profession are included in GTI.
• Capital Gains: Profits made from selling capital assets like stocks, bonds, or real estate are considered capital gains and contribute to GTI.
• Income from Other Sources: This is a broad category encompassing various income streams like interest accumulated on savings accounts, dividends income from investments, and income from freelancing gigs.
• Clubbed Income (if applicable): In some cases, income earned by certain family members might be added to your GTI. This depends on specific tax laws.
• Set-off of Losses (if applicable): Under certain circumstances, you might be able to deduct business losses or capital losses from your GTI.

Why Gross Total Income (GTI) needs to be calculated?

The computation of gross total income is vital because

• It is the amount required to be disclosed while filing an Income Tax Return
• Deductions under Chapter VI A are required to be deducted from GTI to arrive at the taxable or total income

Gross Total Income shall not include:

While calculating gross total income, one must sum up all of their income without reducing the amount for any tax-saving investments made under Section 80C to 80U under Income Tax Act 1961.

What are the various additions required to be made in Gross Total Income?

Apart from adding earnings from all five heads of income following shall also be added to calculate your gross total income

• Income is to be added as per the clubbing provisions under the Income Tax Act.
• Adjustments for set-off and carry forward of losses
• Unexplained Tax Credit under section 68 of the Income Tax Act 1961, received whether in cash or credit. Which means receipt of any amount of which you do not have sufficient or valid explanation describing the source of receipt of such income. These categories of income are added to your Gross Total Income.
• Unexplained Investments, i.e., the investments which you have made but you are unable to give a satisfactory explanation about the source or improper disclosures have been made on your part. In all these situations, your investments will be termed as unexplained investments as per the purview of section 69 of the Income Tax Act. also, it shall be added to your Gross Total Income (GTI)
• Assets and other money under Section 69A, valuables like money, jewelry, etc., for which no proper explanation is available with the assessee will be added to the Gross Total Income of the person.
• Undisclosed or lower disclosed income is added to the Gross Total Income as per the provisions of Section 69B of the Income Tax Act 1961. This relates to all those income and assets that you have not reported or made a lower disclosure than the actual funds.
• Unexplained expenditures under section 69C. In case you have made some expenses and no proper explanation regarding the same available, then it would be added to your Gross Total Income and henceforth charged to taxes accordingly.
• Hundi amount borrowed or repaid. In case you have borrowed or repaid some amount on Hundi then it shall be added to your Gross Total income or GI as per the provisions of section 69D of the income tax act.

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

Gross Total Income is calculated foremost by adding your income under all five heads of income. Now, to arrive at the Total income, you must subtract from it the deductions under Chapter VI A of the Income Tax Act 1961. I.e., the deduction ranges from section 80C to 80U. This means -

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