Wondering how to calculate gross total income in income tax? It is a crucial step in determining your tax liability. GTI can be calculated by summing all income earned by an individual before deductions under Section 80C to 80U are applied.
How to Find Your Total Gross Income?
GTI can be calculated using the following formula:
G.T.I. = Salary Income + House Property Income + Business/Profession Income + Capital Gains + Other Sources Income + Clubbed Income - Set off of Losses.
It includes income from various sources, which are categorized into five heads as per the Income Tax Act, 1961:
Income from Salary: This includes basic salary, allowances, perquisites, bonuses, and any other income received from your employer. Ensure to include taxable allowances like HRA, transport allowance, and any other benefits in your salary package.
Income from House Property: If you own property, the income earned through it, such as rental income, is added here. If the property is self-occupied, the income is considered NIL, but for let-out properties, the net annual value (after deducting property taxes and standard deductions) is included.
Profits and Gains from Business or Profession:
This head includes income from any business or profession that you run. It also covers freelance earnings and professional income.
You need to calculate the net profit by subtracting the expenses incurred from the gross receipts of the business or profession.
Capital Gains:
Income generated from the sale of capital assets like property, stocks, mutual funds, etc., is added here. Capital gains are classified as short-term or long-term, and the applicable tax rates differ.
This is a residual category that includes income from interest on savings accounts, fixed deposits, dividends, lottery winnings, gifts, and other miscellaneous income.
Once you have your Gross Total Income, you can then proceed to apply deductions under Sections 80C to 80U to arrive at your Total Taxable Income. This is how to calculate gross total income in income tax.
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How to Calculate Gross Total Income in Income Tax?
Ravi
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4 months
2024-08-16T12:13:18+00:00 2024-08-17T12:26:28+00:00Comment
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