Differentiate between the Gross Total Income and Total Income.
Gross Total Income [Sec. 80 B(5)]: Gross Total Income means total income as computed in accordance with the provisions of this Act, before making any deduction under Chapter VIA of the Act. (i.e. u/s 80C to 80 U)
In other words, Gross Total Income of an assessee consists of the following:
- His own income as computed under different heads (salary, income from house property, profits and gains from business or profession, capital gains and income from other sources) according to the provisional of this Act.
- Adjustment for set-off and carry forward of losses and
- Adding Income of all other persons (such as spouse or minor child) in the income of the assessee. (such income is chargeable under ‘Income
from other sources)
The aggregate of the above incomes shall be the Gross Total Income. Total Income [Sec. 2(45)]. Total income means the total amount of income, referred to in Sec. 5, computed in the manner laid down in this Act. Sec. 5 defines the scope of total income with reference to the residential status of an assessee. The computation of total income will be done according to the pro-visions of this Act. In other words, it means, Gross Total Income as computed under various provisions of this Act minus deductions allowed therefrom u/s 80 C to 80 U.
It is total income that constitutes the tax base. If a person has total income exceeding the maximum tax-free amount only is liable to pay tax under the Act.