Head of the Income, Income Tax Laws | Income Tax Laws - B Com PDF Download

 Page 1


Head of the Income, Income T ax Laws 
 
Gross T otal Income As Per Income T ax Act 
 
T ax in itself is a tedious phenomenon, and the complexity increases when various terms are also 
added to the list. We all know that tax is levied upon income. However, income has been further 
classi?ed and referred to by various names in the Indian Income T ax Act, such as 
? Exempt Income 
? T axable Income 
? T otal Income 
? Gross T otal Income 
In this blog post we will get you a detailed understanding of Gross T otal Income or GTI. What is the 
relevance of Gross T otal Income? Why should you know about it? How is it calculated and The 
difference between GTI and TI (T otal income) under the Income T ax Act in India and much more. 
 
What is T otal Gross Income? 
As the name suggests, Gross T otal Income is the aggregate of all the income earned by you during a 
speci?ed period. According to Section 14 of the Income T ax Act 1961, the income of a person or an 
assessee can be categorized under these ?ve heads, 
? Income from Salaries 
? Income from House Property 
? Pro?ts and Gains of Business and Profession 
? Capital Gains 
? Income from Other Sources 
 
How to Calculate Gross T otal Income 
Gross T otal income is arrived at when your earnings from all these ?ve heads of income are taken 
together. In other words, the aggregate of the incomes computed under the above 5 heads after 
setting off and carrying forward of losses and after applying clubbing provisions is known as Gross 
T otal Income (GTI) under section 80B(5). Here’s the formula for calculating G.T.I. - 
G.T.I. = Salary Income + House Property Income + Business/Profession Income + Capital Gains + 
Other Sources Income + Clubbed Income - Set off of Losses. 
 
Components of Gross T otal Income (GTI) 
Gross T otal Income (GTI) is the sum of all income earned before any deductions or exemptions are 
applied. Here's a list of the various components that contribute to GTI: 
? Income from Salary: This includes your regular wages, bonuses, commissions, and any 
allowances paid by your employer. 
? Income from House Property: If you own and rent out a property, the rental income you 
receive falls under this category. 
Page 2


Head of the Income, Income T ax Laws 
 
Gross T otal Income As Per Income T ax Act 
 
T ax in itself is a tedious phenomenon, and the complexity increases when various terms are also 
added to the list. We all know that tax is levied upon income. However, income has been further 
classi?ed and referred to by various names in the Indian Income T ax Act, such as 
? Exempt Income 
? T axable Income 
? T otal Income 
? Gross T otal Income 
In this blog post we will get you a detailed understanding of Gross T otal Income or GTI. What is the 
relevance of Gross T otal Income? Why should you know about it? How is it calculated and The 
difference between GTI and TI (T otal income) under the Income T ax Act in India and much more. 
 
What is T otal Gross Income? 
As the name suggests, Gross T otal Income is the aggregate of all the income earned by you during a 
speci?ed period. According to Section 14 of the Income T ax Act 1961, the income of a person or an 
assessee can be categorized under these ?ve heads, 
? Income from Salaries 
? Income from House Property 
? Pro?ts and Gains of Business and Profession 
? Capital Gains 
? Income from Other Sources 
 
How to Calculate Gross T otal Income 
Gross T otal income is arrived at when your earnings from all these ?ve heads of income are taken 
together. In other words, the aggregate of the incomes computed under the above 5 heads after 
setting off and carrying forward of losses and after applying clubbing provisions is known as Gross 
T otal Income (GTI) under section 80B(5). Here’s the formula for calculating G.T.I. - 
G.T.I. = Salary Income + House Property Income + Business/Profession Income + Capital Gains + 
Other Sources Income + Clubbed Income - Set off of Losses. 
 
Components of Gross T otal Income (GTI) 
Gross T otal Income (GTI) is the sum of all income earned before any deductions or exemptions are 
applied. Here's a list of the various components that contribute to GTI: 
? Income from Salary: This includes your regular wages, bonuses, commissions, and any 
allowances paid by your employer. 
? Income from House Property: If you own and rent out a property, the rental income you 
receive falls under this category. 
? Income from Business or Profession: Pro?ts earned from running a business or practicing a 
profession are included in GTI. 
? Capital Gains: Pro?ts made from selling capital assets like stocks, bonds, or real estate are 
considered capital gains and contribute to GTI. 
? Income from Other Sources: This is a broad category encompassing various income 
streams like interest accumulated on savings accounts, dividends income from 
investments, and income from freelancing gigs. 
? Clubbed Income (if applicable): In some cases, income earned by certain family members 
might be added to your GTI. This depends on speci?c tax laws. 
? Set-off of Losses (if applicable): Under certain circumstances, you might be able to deduct 
business losses or capital losses from your GTI. 
 
Why does Gross T otal Income (GTI) need to be calculated? 
The computation of gross total income is vital because 
? It is the amount required to be disclosed while ?ling an Income T ax Return 
? Deductions under Chapter VI A are required to be deducted from GTI to arrive at the 
taxable or total income 
 
Gross T otal Income shall not include: 
While calculating gross total income, one must sum up all of their income without reducing the 
amount for any tax-saving investments made under Section 80C to 80U under Income T ax Act 
1961. 
What are the various additions required to be made in Gross T otal 
Income? 
Apart from adding earnings from all ?ve heads of income following shall also be added to 
calculate your gross total income 
? Income is to be added as per the clubbing provisions under the Income Tax Act. 
? Adjustments for set-off and carry forward of losses 
? Unexplained Tax Credit under section 68 of the Income Tax Act 1961, received whether 
in cash or credit. Which means receipt of any amount of which you do not have sufficient 
or valid explanation describing the source of receipt of such income. These categories of 
income are added to your Gross Total Income. 
Page 3


Head of the Income, Income T ax Laws 
 
Gross T otal Income As Per Income T ax Act 
 
T ax in itself is a tedious phenomenon, and the complexity increases when various terms are also 
added to the list. We all know that tax is levied upon income. However, income has been further 
classi?ed and referred to by various names in the Indian Income T ax Act, such as 
? Exempt Income 
? T axable Income 
? T otal Income 
? Gross T otal Income 
In this blog post we will get you a detailed understanding of Gross T otal Income or GTI. What is the 
relevance of Gross T otal Income? Why should you know about it? How is it calculated and The 
difference between GTI and TI (T otal income) under the Income T ax Act in India and much more. 
 
What is T otal Gross Income? 
As the name suggests, Gross T otal Income is the aggregate of all the income earned by you during a 
speci?ed period. According to Section 14 of the Income T ax Act 1961, the income of a person or an 
assessee can be categorized under these ?ve heads, 
? Income from Salaries 
? Income from House Property 
? Pro?ts and Gains of Business and Profession 
? Capital Gains 
? Income from Other Sources 
 
How to Calculate Gross T otal Income 
Gross T otal income is arrived at when your earnings from all these ?ve heads of income are taken 
together. In other words, the aggregate of the incomes computed under the above 5 heads after 
setting off and carrying forward of losses and after applying clubbing provisions is known as Gross 
T otal Income (GTI) under section 80B(5). Here’s the formula for calculating G.T.I. - 
G.T.I. = Salary Income + House Property Income + Business/Profession Income + Capital Gains + 
Other Sources Income + Clubbed Income - Set off of Losses. 
 
Components of Gross T otal Income (GTI) 
Gross T otal Income (GTI) is the sum of all income earned before any deductions or exemptions are 
applied. Here's a list of the various components that contribute to GTI: 
? Income from Salary: This includes your regular wages, bonuses, commissions, and any 
allowances paid by your employer. 
? Income from House Property: If you own and rent out a property, the rental income you 
receive falls under this category. 
? Income from Business or Profession: Pro?ts earned from running a business or practicing a 
profession are included in GTI. 
? Capital Gains: Pro?ts made from selling capital assets like stocks, bonds, or real estate are 
considered capital gains and contribute to GTI. 
? Income from Other Sources: This is a broad category encompassing various income 
streams like interest accumulated on savings accounts, dividends income from 
investments, and income from freelancing gigs. 
? Clubbed Income (if applicable): In some cases, income earned by certain family members 
might be added to your GTI. This depends on speci?c tax laws. 
? Set-off of Losses (if applicable): Under certain circumstances, you might be able to deduct 
business losses or capital losses from your GTI. 
 
Why does Gross T otal Income (GTI) need to be calculated? 
The computation of gross total income is vital because 
? It is the amount required to be disclosed while ?ling an Income T ax Return 
? Deductions under Chapter VI A are required to be deducted from GTI to arrive at the 
taxable or total income 
 
Gross T otal Income shall not include: 
While calculating gross total income, one must sum up all of their income without reducing the 
amount for any tax-saving investments made under Section 80C to 80U under Income T ax Act 
1961. 
What are the various additions required to be made in Gross T otal 
Income? 
Apart from adding earnings from all ?ve heads of income following shall also be added to 
calculate your gross total income 
? Income is to be added as per the clubbing provisions under the Income Tax Act. 
? Adjustments for set-off and carry forward of losses 
? Unexplained Tax Credit under section 68 of the Income Tax Act 1961, received whether 
in cash or credit. Which means receipt of any amount of which you do not have sufficient 
or valid explanation describing the source of receipt of such income. These categories of 
income are added to your Gross Total Income. 
? Unexplained Investments, i.e., the investments which you have made but you are unable 
to give a satisfactory explanation about the source or improper disclosures have been 
made on your part. In all these situations, your investments will be termed as 
unexplained investments as per the purview of section 69 of the Income Tax Act. also, it 
shall be added to your Gross Total Income (GTI) 
? Assets and other money under Section 69A, valuables like money, jewelry, etc., for 
which no proper explanation is available with the assessee will be added to the Gross 
Total Income of the person. 
? Undisclosed or lower disclosed income is added to the Gross Total Income as per the 
provisions of Section 69B of the Income Tax Act 1961. This relates to all those income 
and assets that you have not reported or made a lower disclosure than the actual funds. 
? Unexplained expenditures under section 69C. In case you have made some expenses 
and no proper explanation regarding the same available, then it would be added to your 
Gross Total Income and henceforth charged to taxes accordingly. 
? Hundi amount borrowed or repaid. In case you have borrowed or repaid some amount 
on Hundi then it shall be added to your Gross Total income or GI as per the provisions of 
section 69D of the income tax act. 
What is the difference between Gross T otal Income and T otal 
Income? 
Gross T otal Income is calculated foremost by adding your income under all ?ve heads of 
income. Now, to arrive at the T otal income, you must subtract from it the deductions 
under Chapter VI A of the Income T ax Act 1961. I.e., the deduction ranges from section 
80C to 80U. This means - 
Income From Salary xx 
Add: Income Under the Head House Property xx 
Add: Pro?ts and Gains of Business and Profession xx 
Add: capital gains Income xx 
Page 4


Head of the Income, Income T ax Laws 
 
Gross T otal Income As Per Income T ax Act 
 
T ax in itself is a tedious phenomenon, and the complexity increases when various terms are also 
added to the list. We all know that tax is levied upon income. However, income has been further 
classi?ed and referred to by various names in the Indian Income T ax Act, such as 
? Exempt Income 
? T axable Income 
? T otal Income 
? Gross T otal Income 
In this blog post we will get you a detailed understanding of Gross T otal Income or GTI. What is the 
relevance of Gross T otal Income? Why should you know about it? How is it calculated and The 
difference between GTI and TI (T otal income) under the Income T ax Act in India and much more. 
 
What is T otal Gross Income? 
As the name suggests, Gross T otal Income is the aggregate of all the income earned by you during a 
speci?ed period. According to Section 14 of the Income T ax Act 1961, the income of a person or an 
assessee can be categorized under these ?ve heads, 
? Income from Salaries 
? Income from House Property 
? Pro?ts and Gains of Business and Profession 
? Capital Gains 
? Income from Other Sources 
 
How to Calculate Gross T otal Income 
Gross T otal income is arrived at when your earnings from all these ?ve heads of income are taken 
together. In other words, the aggregate of the incomes computed under the above 5 heads after 
setting off and carrying forward of losses and after applying clubbing provisions is known as Gross 
T otal Income (GTI) under section 80B(5). Here’s the formula for calculating G.T.I. - 
G.T.I. = Salary Income + House Property Income + Business/Profession Income + Capital Gains + 
Other Sources Income + Clubbed Income - Set off of Losses. 
 
Components of Gross T otal Income (GTI) 
Gross T otal Income (GTI) is the sum of all income earned before any deductions or exemptions are 
applied. Here's a list of the various components that contribute to GTI: 
? Income from Salary: This includes your regular wages, bonuses, commissions, and any 
allowances paid by your employer. 
? Income from House Property: If you own and rent out a property, the rental income you 
receive falls under this category. 
? Income from Business or Profession: Pro?ts earned from running a business or practicing a 
profession are included in GTI. 
? Capital Gains: Pro?ts made from selling capital assets like stocks, bonds, or real estate are 
considered capital gains and contribute to GTI. 
? Income from Other Sources: This is a broad category encompassing various income 
streams like interest accumulated on savings accounts, dividends income from 
investments, and income from freelancing gigs. 
? Clubbed Income (if applicable): In some cases, income earned by certain family members 
might be added to your GTI. This depends on speci?c tax laws. 
? Set-off of Losses (if applicable): Under certain circumstances, you might be able to deduct 
business losses or capital losses from your GTI. 
 
Why does Gross T otal Income (GTI) need to be calculated? 
The computation of gross total income is vital because 
? It is the amount required to be disclosed while ?ling an Income T ax Return 
? Deductions under Chapter VI A are required to be deducted from GTI to arrive at the 
taxable or total income 
 
Gross T otal Income shall not include: 
While calculating gross total income, one must sum up all of their income without reducing the 
amount for any tax-saving investments made under Section 80C to 80U under Income T ax Act 
1961. 
What are the various additions required to be made in Gross T otal 
Income? 
Apart from adding earnings from all ?ve heads of income following shall also be added to 
calculate your gross total income 
? Income is to be added as per the clubbing provisions under the Income Tax Act. 
? Adjustments for set-off and carry forward of losses 
? Unexplained Tax Credit under section 68 of the Income Tax Act 1961, received whether 
in cash or credit. Which means receipt of any amount of which you do not have sufficient 
or valid explanation describing the source of receipt of such income. These categories of 
income are added to your Gross Total Income. 
? Unexplained Investments, i.e., the investments which you have made but you are unable 
to give a satisfactory explanation about the source or improper disclosures have been 
made on your part. In all these situations, your investments will be termed as 
unexplained investments as per the purview of section 69 of the Income Tax Act. also, it 
shall be added to your Gross Total Income (GTI) 
? Assets and other money under Section 69A, valuables like money, jewelry, etc., for 
which no proper explanation is available with the assessee will be added to the Gross 
Total Income of the person. 
? Undisclosed or lower disclosed income is added to the Gross Total Income as per the 
provisions of Section 69B of the Income Tax Act 1961. This relates to all those income 
and assets that you have not reported or made a lower disclosure than the actual funds. 
? Unexplained expenditures under section 69C. In case you have made some expenses 
and no proper explanation regarding the same available, then it would be added to your 
Gross Total Income and henceforth charged to taxes accordingly. 
? Hundi amount borrowed or repaid. In case you have borrowed or repaid some amount 
on Hundi then it shall be added to your Gross Total income or GI as per the provisions of 
section 69D of the income tax act. 
What is the difference between Gross T otal Income and T otal 
Income? 
Gross T otal Income is calculated foremost by adding your income under all ?ve heads of 
income. Now, to arrive at the T otal income, you must subtract from it the deductions 
under Chapter VI A of the Income T ax Act 1961. I.e., the deduction ranges from section 
80C to 80U. This means - 
Income From Salary xx 
Add: Income Under the Head House Property xx 
Add: Pro?ts and Gains of Business and Profession xx 
Add: capital gains Income xx 
 
Parameter Gross Income T otal/ Net Income 
Meaning T otal income is calculated 
under all ?ve income source 
heads after clubbing and 
setting off losses. 
The income amount is 
used to calculate an 
assessee’s tax payable. 
Equals to The entire income earned in a 
?nancial year before claiming 
deductions under Chapter 
VI-A 
Deductions under Section 
80 (80C to 80U) 
T ax Treatment T ax is not levied Income tax is payable on 
this sum 
Add: Income from Other Sources xx 
Gross T otal Income xxx 
Less: Deductions under Section 80C to 80U xx 
T otal Income Xxx 
Page 5


Head of the Income, Income T ax Laws 
 
Gross T otal Income As Per Income T ax Act 
 
T ax in itself is a tedious phenomenon, and the complexity increases when various terms are also 
added to the list. We all know that tax is levied upon income. However, income has been further 
classi?ed and referred to by various names in the Indian Income T ax Act, such as 
? Exempt Income 
? T axable Income 
? T otal Income 
? Gross T otal Income 
In this blog post we will get you a detailed understanding of Gross T otal Income or GTI. What is the 
relevance of Gross T otal Income? Why should you know about it? How is it calculated and The 
difference between GTI and TI (T otal income) under the Income T ax Act in India and much more. 
 
What is T otal Gross Income? 
As the name suggests, Gross T otal Income is the aggregate of all the income earned by you during a 
speci?ed period. According to Section 14 of the Income T ax Act 1961, the income of a person or an 
assessee can be categorized under these ?ve heads, 
? Income from Salaries 
? Income from House Property 
? Pro?ts and Gains of Business and Profession 
? Capital Gains 
? Income from Other Sources 
 
How to Calculate Gross T otal Income 
Gross T otal income is arrived at when your earnings from all these ?ve heads of income are taken 
together. In other words, the aggregate of the incomes computed under the above 5 heads after 
setting off and carrying forward of losses and after applying clubbing provisions is known as Gross 
T otal Income (GTI) under section 80B(5). Here’s the formula for calculating G.T.I. - 
G.T.I. = Salary Income + House Property Income + Business/Profession Income + Capital Gains + 
Other Sources Income + Clubbed Income - Set off of Losses. 
 
Components of Gross T otal Income (GTI) 
Gross T otal Income (GTI) is the sum of all income earned before any deductions or exemptions are 
applied. Here's a list of the various components that contribute to GTI: 
? Income from Salary: This includes your regular wages, bonuses, commissions, and any 
allowances paid by your employer. 
? Income from House Property: If you own and rent out a property, the rental income you 
receive falls under this category. 
? Income from Business or Profession: Pro?ts earned from running a business or practicing a 
profession are included in GTI. 
? Capital Gains: Pro?ts made from selling capital assets like stocks, bonds, or real estate are 
considered capital gains and contribute to GTI. 
? Income from Other Sources: This is a broad category encompassing various income 
streams like interest accumulated on savings accounts, dividends income from 
investments, and income from freelancing gigs. 
? Clubbed Income (if applicable): In some cases, income earned by certain family members 
might be added to your GTI. This depends on speci?c tax laws. 
? Set-off of Losses (if applicable): Under certain circumstances, you might be able to deduct 
business losses or capital losses from your GTI. 
 
Why does Gross T otal Income (GTI) need to be calculated? 
The computation of gross total income is vital because 
? It is the amount required to be disclosed while ?ling an Income T ax Return 
? Deductions under Chapter VI A are required to be deducted from GTI to arrive at the 
taxable or total income 
 
Gross T otal Income shall not include: 
While calculating gross total income, one must sum up all of their income without reducing the 
amount for any tax-saving investments made under Section 80C to 80U under Income T ax Act 
1961. 
What are the various additions required to be made in Gross T otal 
Income? 
Apart from adding earnings from all ?ve heads of income following shall also be added to 
calculate your gross total income 
? Income is to be added as per the clubbing provisions under the Income Tax Act. 
? Adjustments for set-off and carry forward of losses 
? Unexplained Tax Credit under section 68 of the Income Tax Act 1961, received whether 
in cash or credit. Which means receipt of any amount of which you do not have sufficient 
or valid explanation describing the source of receipt of such income. These categories of 
income are added to your Gross Total Income. 
? Unexplained Investments, i.e., the investments which you have made but you are unable 
to give a satisfactory explanation about the source or improper disclosures have been 
made on your part. In all these situations, your investments will be termed as 
unexplained investments as per the purview of section 69 of the Income Tax Act. also, it 
shall be added to your Gross Total Income (GTI) 
? Assets and other money under Section 69A, valuables like money, jewelry, etc., for 
which no proper explanation is available with the assessee will be added to the Gross 
Total Income of the person. 
? Undisclosed or lower disclosed income is added to the Gross Total Income as per the 
provisions of Section 69B of the Income Tax Act 1961. This relates to all those income 
and assets that you have not reported or made a lower disclosure than the actual funds. 
? Unexplained expenditures under section 69C. In case you have made some expenses 
and no proper explanation regarding the same available, then it would be added to your 
Gross Total Income and henceforth charged to taxes accordingly. 
? Hundi amount borrowed or repaid. In case you have borrowed or repaid some amount 
on Hundi then it shall be added to your Gross Total income or GI as per the provisions of 
section 69D of the income tax act. 
What is the difference between Gross T otal Income and T otal 
Income? 
Gross T otal Income is calculated foremost by adding your income under all ?ve heads of 
income. Now, to arrive at the T otal income, you must subtract from it the deductions 
under Chapter VI A of the Income T ax Act 1961. I.e., the deduction ranges from section 
80C to 80U. This means - 
Income From Salary xx 
Add: Income Under the Head House Property xx 
Add: Pro?ts and Gains of Business and Profession xx 
Add: capital gains Income xx 
 
Parameter Gross Income T otal/ Net Income 
Meaning T otal income is calculated 
under all ?ve income source 
heads after clubbing and 
setting off losses. 
The income amount is 
used to calculate an 
assessee’s tax payable. 
Equals to The entire income earned in a 
?nancial year before claiming 
deductions under Chapter 
VI-A 
Deductions under Section 
80 (80C to 80U) 
T ax Treatment T ax is not levied Income tax is payable on 
this sum 
Add: Income from Other Sources xx 
Gross T otal Income xxx 
Less: Deductions under Section 80C to 80U xx 
T otal Income Xxx 
Deductions made 
under Chapter VI-A 
of the 1961 Income 
T ax Act 
The income before 
deductions under 
ChapterVIA of the I-T Act of 
1961 is referred to as gross 
total income. 
After deductions under 
Chapter VIA of the I-T Act 
of 1961, income is de?ned 
as total income. 
Income T ax 
Obligation 
Gross T otal Income is not 
used to determine income tax 
obligations. 
The total income is used 
to determine and/or 
assess the income tax 
obligation. 
What is Marginal T ax Rate? 
The marginal tax rate refers to the tax percentage applied to the last unit of income earned. Unlike 
a ?at tax rate, where all income is taxed at a single rate, a progressive tax system ensures that 
lower-income earners pay a smaller percentage in taxes compared to higher-income earners. 
In simple terms, as your income rises, your additional earnings are taxed at progressively higher 
rates. This system is designed to ensure fairness, where those with higher incomes contribute 
more towards public ?nances. 
 
How Does Marginal T axation Work? 
Marginal tax rates do not apply to your entire income but rather to income falling within speci?c 
tax brackets. Each portion of income is taxed at a different rate, ensuring that not all of your 
income is taxed at the highest rate applicable. 
Example of Marginal T ax Calculation 
Let’s consider an individual earning ?18,50,000 per year under the latest income tax slabs for FY 
2025-26: 
 
Income Slab (?) Marginal T ax Rate T ax Calculation 
Upto 4,00,000 0% (No T ax) ?0 
4,00,001 – 8,00,000 5% ?4,00,000 × 5% = ?20,000