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
| A | Salary | XXX |
| B | House Property | XXX |
| C | Profits and Gains of Business and Profession | XXX |
| D | Capital Gain | XXX |
| E | Income from Other Sources | XXX |
| F | Gross 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
