What is Gross Total Income?
The aggregate of all your income from all the five heads - salary, house property, capital gains, business, and other sources, before allowing the deductions under chapter VI-A(section 80C-80U) is known as Gross Total Income.
How to Calculate Gross Total Income with Formula
Formula for Gross Income (Individual):
Gross Income (Individual)=Sum of income from all sources earned by the individual
To calculate for an individual, follow these steps:
Step 1: Identify all sources of income, such as salary, dividends, rent, etc.
Step 2: Sum up these income sources obtained in the first step:
Gross Income = Salary + House Property + Capital Gains + Business/Profession + All Other Sources of Income - Set off of losses.
Formula for Gross Income (Business):
Gross Income (Business)=Total Revenue–Cost of Goods Sold
To calculate for a business, follow these steps:
Step 1: Determine the total revenue of the business.
Step 2: Identify the cost of goods sold for the business.
Step 3: Calculate using the formula:
Gross Income=Total Revenue–Cost of Goods Sold
Examples of Gross Total Income
Example 1
Mr. Albert is an employee in a manufacturing concern. His annual salary is Rs.1,20,000, and he has no other income. Find out his gross income per month.
Solution:
Annual Salary: Rs.1,20,000
Annual Salary: Rs.1,20,000
Per Month:
Gross Income (Individual)=Rs.1,20,000 / 12
Gross Income (Individual)= Rs.10,000
Difference Between Gross Total Income and Total Income
|
Basis |
Gross Total Income |
Total Income |
|
Meaning |
Calculated by adding income from all 5 sources and setting off losses |
Used to calculate the tax payable. |
|
Equals to |
Entire income before claiming Chapter VI-A deductions |
Deductions under Section 80 (80C to 80U) |
|
Tax Treatment |
Tax not levied |
Income tax payable on this sum |
|
Deductions under Chapter VI-A |
Income before deductions is the gross total income |
After deductions, it becomes the total income |
|
Income Tax Obligation |
Gross Total Income doesn't determine tax obligations |
Total income determines and assesses income tax obligation |