What is the difference between gross total income and total income?​​​​

The income tax filing season can be a bit intimidating for some taxpayers. If you are one of those taxpayers, it is completely natural to be overwhelmed by the entire tax filing process. Just as is the case with anything new, tax filing might seem like a daunting task at first. However, if you spend a small amount of time on it, things clear themselves out.

Being aware of a few small things will ensure that the intimidating or overwhelming feeling is diminished to a large extent. The entire process can be broken down into three major actions.

• You file your income tax returns.
• You verify your income tax returns.
• And the income tax department starts processing your returns.

While filing your tax returns, you might come across a few terminologies that might set you off a bit. Here are two such terms or jargons. And the similarities between the name are bound to stir confusion among people who are new to tax filing, at times even for people who have done it in the past.

Gross Total Income (GTI) and Total Income (TI) are two such terms. GTI Vs TI, on the surface one might feel the addition or omission of just Gross as a term, but it changes the underlying meaning to a large extent. Based on these two values, your net income tax liability is calculated. 

Thus, it is important to be aware of the differences between both of them and how it impacts your taxes. The income of an individual for a year is usually tagged as Gross Total Income. And the income that is taxable, would qualify as Total Income. 

Deductions/Exclusions

As mentioned above, taxpayers can claim deductions or exclusions from their Gross Total Income, within permissible limits. Here is a list of all the deductions and exclusions that they can claim.

• Section 80C

One of the most popular deductions, under which you can invest in certain instruments and get deductions up to INR 1,50,000 from your Gross Total Income.

• Section 80D

Under this section you can claim premiums paid towards health insurance plans of up to INR 60,000 for yourself as well as your dependent parents.

• Section 80E

This section allows you to exclude any amount that you have paid as interest for an educational loan.

• Section U

You can claim deductions under this section if you are physically disabled. The limit for the deduction ranges between INR 75,000 to INR 1,25,000 depending on the extent of disability.

• Section G

This section allows you to claim the amount spent on charitable donations.

• Section 80CCD

Any investments made towards National Pension Scheme of up to INR 50,000 can be claimed under this section.

• Section 80TTA

As per this section, interest earned up to INR 10,000 is tax-free for a fiscal year.

• Section 80GG

House Rent Allowance or HRA is deducted from your salary based on this section, provided your salary has an HRA component.

• Section 80DDB

You can deduct amounts between INR 40,000 to INR 60,000 if you are diagnosed with a specific illness.

Here are some additional details and computation of gross total income and Taxable Income along with an example of Income computation to make it easier for you to understand. 

Original Content

Total Income is the income on which tax liability is determined. It is necessary to compute total income to ascertain tax liability. Section 80C to 80U provides certain deductions which can be claimed from Gross Total Income (GTI). After claiming these deductions from GTI, the income remaining is called as  Total Income. In other words, GTI less Deductions (under section 80C to 80U) = Total Income (TI). Total income can also be understood as taxable income. Following table gives a better understanding of the difference between GTI and TI :

Computation of gross total income and Taxable Income

Note : Inter source losses, inter head losses, brought forward losses, unabsorbed depreciation, etc., (if any) will have to be adjusted (as per the Income-tax Law) while computing the gross total income. ​

How to round off total income before computing tax liability?

​​​​As per section 288A​​, total income computed in accordance with the provisions of the Income-tax Law, shall be rounded off to the nearest multiple of ten. Following points should be kept in mind while rounding off the total income:

First any part of rupee consisting of any paisa should be ignored.

After ignoring paisa, if such amount is not in multiples of ten, and last figure in that amount is five or more, the amount shall be increased to the next higher amount which is in multiple of ten and if the last figure is less than five, the amount shall be reduced to the next lower amount which is in multiple of ten and the amount so rounded off shall be deemed to be the total income of the taxpayer.​

Illustration for better understanding

If the taxable income of Mr. Keshav is Rs. 2,52,844.99, then first paisa shall be ignored, i.e., 0.99 paisa shall be ignored) and  the remaining amount of Rs. 2,52,844 shall be rounded off to Rs. 2,52,840 (since last figure is less than five). If the total income is Rs. 2,52,845 or Rs. 2,52,846.01, then it shall be rounded off to Rs. 2,52,850 (since the last figure is five or above).​

Can I claim deduction for my personal and household expenditure while calculating my taxable income or profit?​

No, you cannot claim deduction of personal expenses while computing the taxable income.

While computing income under various heads, deduction can be claimed only for those expenses which are provided under the Income-tax Act.

While it might seem, there isn’t a lot of difference in both the values, there actually is. The Income Tax Act of 1961, which governs all income tax related activities has provisions for deductions and exclusions. These deductions and exclusions must be removed from your Gross Total Income. 

Once done, you will arrive at the Total Income for a taxpayer for a fiscal year or your taxable income. What is taxable income you ask? As the name suggests, it is the amount on which income taxes are calculated for a taxpayer. To calculate total Income from gross total income, you need to subtract any deductions or exemptions. 

And knowing both the values will help you plan your income taxes in a more efficient manner. If you haven’t already availed certain deductions or exemptions, you can do so after figuring out your GTI and TI. More importantly, do not get confused between both the amounts while filing your income tax returns.

FAQs

1. What is GTI?
   GTI or Gross Total Income is the salary/income that you have received or generated for a fiscal year in question. It is left out of any deductions or exemptions.
   
   
2. Why is my total income less than gross total income?
   Under most circumstances, your total income will always be less than your gross total income. The gross total income is subject to deductions and exemptions, which bring the value down to total income.
   
   
3. What are the deductions or exemptions that I can claim?
   The income tax department allows for a lot of deductions or exemptions under sub sections of Section 80. You can refer to the details above to find out the sections under which you can claim deductions/exemptions.