• Skip to main content
  • Skip to secondary menu
  • Skip to primary sidebar
  • Skip to footer

Your Finance Book

Income Tax | Investing | Stock Market

  • Stocks
    • 10 reasons why share prices decline in the stock market
    • What to look for in growth investing strategy for better return
    • 10 things you must understand before buying stocks
    • Speculating Vs Investing Vs Saving
    • A beginner’s guide to understand stock’s value – Explained with examples
    • Mutual Fund Basics
  • GST
    • GST registration in India – all you need to know
    • Tax invoice in GST-A complete beginner’s guide for taxpayers
    • Input tax credit in GST – A beginners guide to claim ITC
    • What is inter-state supply of goods and/or services under GST
    • What is intra-state supply of goods and/or services under GST
  • Income tax
  • Tax Rates
  • ITR Due dates
  • About Us
  • Privacy Policy
  • Disclaimer
  • Terms of Use and Policies
  • Contact Us
Home / Income tax / What is gross total income and how it’s calculated

What is gross total income and how it’s calculated

Last updated on April 11, 2020 by CA Bigyan Kumar Mishra

Share
Share on Facebook
Pin
Pin this
Share
Share this
Share
Share on LinkedIn

As per section 80B, Gross total income means total of all incomes computed in accordance to the provisions of income tax act 1961 before making any deduction under chapter VIA.

In this article, we have shown you how to calculate gross total income (GTI) of an assessee. To know how to calculate, you are first required to know how total or taxable income is calculated.

First you have to calculate income of an individual under following 5 heads:

  • Salary
  • House property
  • Profits and gains of business or profession
  • Capital gains
  • Other sources

If clubbing provisions are applicable to you, then income of the other person to which clubbing provisions are applied will be included under respective heads. This means if salary paid to spouse is getting clubbed in your hand, then it has to be added to your tax return calculation under the head salary.

While aggregating the income under the heads, if you are eligible for set off of the losses, then it should be done. You also required to carry forward and set off the losses of past years.

In this way you will arrive at Gross total income (GTI). From this amount, based on your eligibility, you can claim tax deduction under section 80C to 80U (Chapter VI-A) from GTI. Please note, deduction will be restricted upto the GTI. If GTI is more than the deduction claimed, then total deduction will be allowed based on your eligibility. If GTI is less than the total deduction claimed, then deduction will be restricted up to the GTI.

However, no deduction is allowed under chapter VI-A from certain incomes such as short-term capital gain covered under section 111A, any long term capital gain and winnings from lotteries even though these are part of your GTI calculation.

Format to calculate GTI

ASalaryXXX
BHouse PropertyXXX
CProfits and Gains of Business and ProfessionXXX
DCapital GainXXX
EIncome from Other SourcesXXX
FGross Total Income (A+B+C+D+E)XXX

Deductions as available to the individual under section 80C to 80U are deducted out of GTI to get Total Income.

Section 80C to 80U allows an individual to take various tax deductions from gross total income based on their eligibility before calculating tax liability. For your ready reference, here is a list of some tax deductions applicable to an individual:

  • Payment of life insurance premium for the individual, spouse or child
  • Amount invested in unit-linked insurance plans
  • Any contribution made to the Provident Fund including Public provident fund and employee provident fund.
  • Amount invested in specified securities, deposit schemes of the Central Government or National Saving Certificate.
  • Subscription to specified units of mutual funds.
  • Tuition fees paid to any university, college, school or other educational institution.
  • Repayment of principal amounts paid by an assessee for purchase or construction of a residential house property.
  • Pension contributions including contribution to national pension scheme – section 80CCD
  • Interest on saving account – section 80TTA
  • House rent paid if HRA not received – Section 80GG
  • Interest on education loan – 80E
  • Premium paid for medical insurance – Section 80D
  • Expenditure incurred for medical treatment of dependent relative – Section 80DD
  • Medical expenditure on self or dependent relative – 80DDB
  • Deduction for person suffering physical disability – 80U
  • Donations – 80G
Share
Share on Facebook
Pin
Pin this
Share
Share this
Share
Share on LinkedIn

Categories: Income tax

About the Author

CA Bigyan Kumar Mishra is a fellow member of the Institute of Chartered Accountants of India. He writes about personal finance, income tax, goods and services tax (GST), company law and other topics on finance. Follow him on facebook or instagram or twitter.

Primary Sidebar

Financial Ratios

  • The 5 Best Investing Books for Beginners
  • Accounting tools you can use to choose a winning stocks
  • What are the tools and techniques used in financial statements analysis
  • Can Price to earnings – P/E ratio be used for stock investing
  • Why Price earnings to growth – PEG is used by investors
  • How Earnings per Share or EPS can help you
  • How to use debt to equity – D/E ratio
  • What is Interest coverage ratio

Don’t see a topic? Search our entire website:

Footer

Trending Now

  • What to look for in the financial statements before investing in stocks
  • How to manage fund while investing in stocks
  • A beginner’s guide to mutual fund investing
  • Why share prices move up and down in stock market
  • Price Action trading – How candlestick helps to read mass psychology

Email Newsletter

Sign up to receive email updates daily and to hear what's going on with us!

Privacy Policy

Stay In Touch With Us

  • Twitter
  • Facebook

Legal Disclaimer

The information available through this Site is provided solely for informational purposes on an “as is” basis at user’s sole risk. The information is not meant to be, and should not be construed as advice or used for investment purposes. Yourfinancebook.com does not provide tax, investment or financial services and advice. We make no guarantees … Continue Reading... about Disclaimer

Copyright © 2024 yourfinancebook.com · All Rights Reserved.