Latest Post

HomeBusinesswhat is gross total income

what is gross total income

If you earn money, one of the crucial annual activities is calculating your taxes and investing in tax-saving plans. You could occasionally feel overburdened by the different tax terminologies and deductions in this country. For instance, total income and gross total income both indicate the same thing in plain English. However, legal definitions can vary.

Both terms are defined as follows by the Income Tax Act of 1961:

The IT Act’s Section 80B(5) defines Gross Total Income.

Included is revenue you received or owed that was adjusted for clubbing and carryover amounts from prior years.
To calculate your “Gross Total Income,” subtract your non-taxable income from this sum.

Note: From this sum are subtracted investments and costs covered by sections 80C through 80U.

Simply put, your gross total income for the prior year is the sum of all of your taxable receipts. It will also include any revenue after clubbing provisions and any profit or loss carried over from prior years. but won’t include any of the deductions allowed under sections 80C to 80U.

Total income is defined in Section 2(45) of the Income Tax Act of 1961, with Section 5 defining its scope.

Any income earned, accrued, or presumed to be received by you during the prior year if you were an Indian resident will be accounted for.

Incomes from India will only be included if they are from a business controlled or performed from India if you were not habitually resident in the prior year.
For non-residents (NRI), only income originating from or accruing in India would be taken into account.
All allowable deductions from “Gross Total Income” are subtracted to arrive at Total Income.
Your tax obligation will be calculated based on your total income. You pay tax on your total income, to put it simply.

Clarifications for the Estimate’s Treatment of Different Incomes
1. Income from Real Estate ($)
For the purposes of our estimate, we’re assuming that the property is rented out for Rs 4.8 lakhs per year.

We must subtract the following from the property’s taxable income:

Municipal taxes (referred to as Net Annual Value after this deduction)
Interest on a home loan is paid at a rate of 30% of net annual value, up to Rs 2 lakh.

Income from Agriculture.
Agriculture-only income is exempt from taxes.
Your tax slab is determined by adding your agricultural revenue to any other taxable income you may have.
Agricultural income is used to determine your first tax burden. Tax on agricultural income is then calculated without taking into account the minimum exemption limit of Rs. 2.5 lakhs in the slabs.
Your total tax obligation is determined by subtracting the expected tax on agricultural income from your total taxable income.

In one fiscal year, gifts from non-relatives up to Rs. 50,000 are exempt.
Blood-related gifts are fully exempt.
Gifts you receive from any party for your marriage are tax-free.
Indian Income Tax Savings Programmes
You still have the opportunity to lower your annual tax obligation once you have taken into account your gross income. The numerous assets and expenses that you can account for under Section 80C will lower your overall income.

Several well-known tax-saving plans under section 80C include:

Life insurance companies’ Unit Linked Insurance Plans, or ULIPs. provides goal protection, life insurance, and a customisable portfolio of different equities and debt funds.

Life insurance companies’ Guaranteed Savings Plans. offers guaranteed profits in addition to coverage for goal protection and life insurance.
Term insurance plans are pure protection insurance policies to ensure the financial security of your family in the event of your untimely death.
PPF accounts, often known as public provident funds, are safe investments for long-term objectives.
The Sukanya Samriddhi Yojana, also known as SSY, is a fantastic investment opportunity for young girls. It is a fantastic strategy to guarantee wealth transfer to your female offspring.
Pure equity mutual funds that give tax savings on your investments are called Equity Linked Saving Schemes, or ELSS.
A fantastic way to save for retirement is through the National Pension Scheme, or NPS. However, this investment is locked in until you turn 60, making it only helpful for your goals at that point.