A question might come up in your mind that Why it is important to know total income?? The need to understand the concept of total income becomes vital because it directly impacts your tax payments. Tax is calculated on total income or net income of a person and not on Gross Total Income. If the computation of Total Income is made wrong i.e. either it is calculated higher than actual income or lower, following consequences shall follow
Total Income can be computed by
The resultant amount is Total Income.
For better understanding, find below the tabular presentation of how to compute total income.
|1. Income from salaries|
|Income from salary
Income by way of allowances
Taxable value of perquisites
|Less: Deduction under Section 16|
|Income from salaries||xxxx|
|2. Income from house property|
|Adjusted net annual value
Less: Deduction under section 24
|Income from house property||xxxx|
|3. Profit and gains of business or profession|
|Net profit as per profit and loss account||xxx|
|Add:Amounts which are debited to P&l a/c but are not allowed as a deduction under the act||xxx|
|Less: Expenditure which are not debited to P&L a/c but are allowed as a deduction under the act||xxx|
|Less: Income which are credited to P&L a/c but are exempt under section 10||xxx|
|Add: Income which are not credited to P&L a/c but are taxable under this head||xxx|
|Profit and gains of business or profession||xxxx|
|4. Capital Gains|
|Amount of capital gains
Less: Amount exempt under sections 54, 54B,54D,54EC,54F, 54G, 54GA, 54GB, and 54H
|Income from Capital Gains||xxxx|
|5. Income from other sources|
Less: Deduction under section 57
|Income from other sources||xxxx|
|Total [i.e., (1) +(2) +(3) +(4) +(5)]||xxxx|
|Less: Adjustment on account of set-off and carry forward of losses||xxx|
|Gross total income||xxxx|
|Total Income or Net income||XXXX|
Complete guide covering all the basic tax related terms. So, that tax terms will not work as a road-stopper in your way!!
Comprehensive Guide containing all Information that you must know while filing of your ITR for FY 2018-19 (AY 2019-20).
Free Income Tax Calculator for Assessment Year (AY) 2018-2019 and AY 2017-2018 with new budget changes.
Calculate HRA exemption based on your salary for AY 2018-19. Make accurate calculations of HRA for employees.
Hire smartest eCA's to File Your Income Tax Return. CA Assisted Filing of ITR. File your Income Tax Return with confidence and ease.
Tax2win is an efiling portal to prepare and efile income tax return Online. Tax2win helps individuals to file their income tax return.