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Taxation
Calculate your Gross Total Income: The Simplified Way
Imagine building a puzzle. Each piece represents a different source of income: salary, rental income, investment returns, capital gains, and likewise. You see, on their own, the pieces don’t show the full picture. But when you fit them all together, you reveal your Gross Total Income (GTI). Only when the puzzle is complete can you begin planning your taxes effectively.
What are the components of the Gross Total Income?
Your Gross Total Income includes five main components:
- Income from Salary: This is your regular paycheck, bonuses, and allowances.
- Income from House Property: If you earn rent from a property, it counts.
- Profits and Gains from Business or Profession: If you're self-employed or a freelancer, your business income comes under this category.
- Capital Gains: Earnings from selling shares, mutual funds, or property fall here.
- Income from Other Sources: Interest on savings, dividends, lottery winnings (yes, even that lucky scratch card!)
So, GTI will be the sum of all these earnings.
When you apply deductions under Chapter VI A to the GTI (u/s 80C to 80U), you arrive at the total income or taxable income.
Let us consider a simple example:
| Item | Amount (₹) |
|---|---|
| Income From Salary | 1000 |
| Add: Income Under the Head House Property | 12 |
| Add: Profits and Gains of Business and Profession | 2 |
| Add: capital gains Income | 2 |
| Add: Income from Other Sources | 1 |
| Gross Total Income | 1017 |
| Less: Deductions under Section 80C to 80U | 8 |
| Total Income | 1009 |
So, your GTI is ₹1,017 and your tax payable will be on the total income of ₹1,009.
Conclusion
You need to compute your Gross Total Income correctly. Doing so helps you avoid overpaying taxes or getting an IT notice. It is also vital since your tax liability and eligibility depend largely on the total earnings reported for the year.
Disclaimer: This article is for information purpose only. The views expressed in this article are personal and do not necessarily constitute the views of Axis Bank Ltd. and its employees. Axis Bank Ltd. and/or the author shall not be responsible for any direct / indirect loss or liability incurred by the reader for taking any financial decisions based on the contents and information. Please consult your financial advisor before making any financial decision.
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