Difference between Gross total income and Total income

 Gross total income and Total income

What is gross total income?

The ‘gross total income’ is the total income you earn by adding all heads of income. Income from salary, property, other sources, business or profession, and capital gains earned in a financial year are all added to arrive at the Gross Total Income .

What is total income?

The total income is derived after subtracting the various deductions under Section 80 from the Gross Total Income . So, you first calculate the Gross Total Income and then subtract the deductions to arrive at the Total Income.

Difference between Gross Total Income & Total Income

Total Income = Gross Total Income – deductions under Section 80

Or

Gross Total Income = Total Income + deductions under Section 80

So, Gross Total Income is the total of all the heads of income while Total Income is Gross Total Income minus the deductions.

Gross Total Income

Income from salary: This includes the earning from employment.

Income from house property: This includes any rent you earn by letting out a house.

Income from business or profession: This includes the income earned by a businessman or a self-employed professional.

Capital gains/loss: This includes profits or losses you incur by selling any movable or immovable capital property. That would include land, building, house, shares, jewellery, etc.

Income from other sources: The income not included in the above-mentioned heads features in this. Examples would be income from interest, a lottery gain, etc.

To calculate Total Income, the following deductions under Section 80 of Chapter VI of the Income Tax Act are subtracted from the Gross Total Income 

80C: Allows specific investments and expenses to be deducted from the Gross Total Income up to Rs 1.5 lakh.

80CCD: National Pension System contribution up to Rs 50,000 is allowed as deduction.

80D: Health insurance premiums, up to Rs 60,000, paid for self and for parents qualify under this section.

80TTA: Interest earned from the savings account, up to Rs 10,000, is tax-free.

80E: Interest paid on education loan is deducted.

80GG: This includes housing rent allowance exemption for those who do not have an housing rent allowance component in their salary.

80DDB: Expenses incurred on specific illnesses are deducted up to Rs 40,000 or Rs 60,000, depending on the patient’s age.

80U: This gives a fixed deduction if you have a physical disability. The deduction is Rs 75,000 or Rs 1.25 lakh, depending on the severity of the disability.

80G: Charitable donations made to recognised institutes are allowed as deduction.