How to Calculate Total Income And It’s Detailed Info

Total Income (TI) or Gross Total Income (GTI) terms differ in substance. Gross Total Income is calculated by adding earnings received as per all five heads of income. Total income is arrived at after deducting from Gross Total Income deductions under Section 80C to 80U under the Income Tax Act 1961. This means GTI is a bigger component out of which on deducting certain specified amount we can get the TI.

Why Finding of Total Income (TI) important for Income Tax Act?

You must be wondering why it is important to know total income?? Understanding total income becomes necessary because it directly impacts your tax payments. Tax is calculated on total income or net income of a person and not on Gross Total Income. If the calculation of Total Income is made wrong i.e. either it is calculated higher than actual income or lower, following consequences may follow

  • In case TI has been calculated more than the actual amount. Then the tax would be calculated on such enhanced amount and you might end up paying higher taxes unnecessarily.
  • The other side is even more distressing. Computing lower Total Income and resultantly paying lower income tax will be an open invite for tax notices, penalties & prosecution.

How Total Income is Calculated?

Total Income can be calculated by

  • Adding up earnings from all five heads of income
  • Reducing from it allowable deductions under Section 80C to Section 80U of the Income Tax

The resultant amount is Total Income.

For better understanding, find below the tabular presentation of how to compute total income.

Particulars

Amount

Rs. Rs.
1. Income from salaries
Income from salary
Income by way of allowances
Taxable value of perquisites
xxx
xxx
xxx
Gross salary xxx
Less: Deduction under Section 16
Entertainment allowance
Professional tax
xxx
xxx
Income from salaries xxxx
2. Income from house property
Adjusted net annual value
Less: Deduction under section 24
xxx
xxx
Income from house property xxxx
3. Profit and gains of business or profession
 Net profit as per profit and loss account xxx
Add:Amounts which are debited to P&l a/c but are not allowed as a deduction under the act xxx
Less: Expenditure which are not debited to P&L a/c but are allowed as a deduction under the act xxx
Less: Income which are credited to P&L a/c but  are exempt under section 10 xxx
Add: Income which are not credited to P&L a/c but are taxable under this head xxx
Profit and gains of business or profession xxxx
4. Capital Gains
Amount of capital gains
Less: Amount exempt under sections 54, 54B,54D,54EC,54F, 54G, 54GA, 54GB, and 54H
xxx xxx
Income from Capital Gains xxxx
5. Income from other sources
Gross income
Less: Deduction under section 57
xxx
xxx
Income from other sources xxxx
Total [i.e., (1) +(2) +(3) +(4) +(5)] xxxx
Less: Adjustment on account of set-off and carry forward of losses xxx
Gross total income xxxx
Total Income or Net income XXXX
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Certicom Consulting [ Kedia Arpana & Co ] is a group of Chartered Accountants in the business of Small Business Setup & Statutory Compliance including for Professionals for the past 15 years. We have been an established and popular company with an excellent track record for the best customer satisfaction.

Certicom Consulting

Certicom Consulting [ Kedia Arpana & Co ] is a group of Chartered Accountants in the business of Small Business Setup & Statutory Compliance including for Professionals for the past 15 years. We have been an established and popular company with an excellent track record for the best customer satisfaction.