Gross Total Income: How It is Different From Total Income?

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2026-01-15

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Tax calculation and investment in tax-saving schemes are important annual exercises if you are earning money. In this country, you may at times feel overwhelmed by the many tax jargon and numerous deductions. For example, Gross Total Income (GTI) and Total Income may sound similar, but they have different legal meanings.

Understanding this difference is important because it affects how you claim deductions under Chapter VI-A (such as Section 80C) and determine your taxable income. A clear grasp of these terms can also help you plan your taxes better and avoid errors while filing your Income Tax Return (ITR).

Key Takeaways

GTI is income from all sources before deductions; Total Income is taxable income after deductions
GTI includes salary, rental income, business profits, capital gains, and income from other sources, after set-off of losses
Total Income is derived by subtracting deductions (under Sections 80C to 80U) from GTI, and tax is levied based on this final amount
Taxation varies by income type: house property (home loan interest), agricultural income (for rate purposes in some cases), and gifts (taxable above ₹50,000 from non-relatives
Smart investments in tax-saving instruments like PPF, ELSS, health insurance, and education loans can help reduce taxable income and optimise tax liability

Meaning of Gross Total Income & Total Income

Gross Total Income (GTI) and Total Income are two important terms in income tax calculations, and understanding the difference between them helps you estimate your taxable income more accurately.

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What is Gross Total Income?

Section 80B(5) of the Income Tax Act 1961 defines Gross Total Income as income received or receivable by you in the previous year after adjusting for eligible set-off/carry-forward of losses and clubbing provisions.

Deduct applicable exemptions and non-taxable income from this amount to estimate ‘Gross Total Income’

Note: Investments and expenses under section 80C to 80U are deducted from this amount to arrive at the Total Income.

In simple terms, Gross Total Income is the aggregate of all your incomes computed under the heads of income for the previous year. It will also include profit or loss carried forward from past years and any income after clubbing provisions. But will not include any deductions from sections 80C to 80U.

Gross Total Income Example

You can better understand what is Gross Total Income is with an example. It includes all of a person's earnings from all sources, such as dividends, interest, wages, and rental income.

What is Total Income?

Total Income, also known as taxable income, is defined under Section 2(45) with the scope outlined in Section 5 of the Income Tax Act, 1961.

The scope of what is included in your Total Income depends on your residential status during the financial year:

If you are an Indian resident in the previous year, any income received, accrued or deemed to be received by you will be accounted for (subject to exemptions under the Act)

If you are a resident but not ordinarily resident (RNOR) in the previous year, incomes arising outside India will be included only if they are from a business controlled in India or a profession set up in India

In the case of non-residents (NRI), only incomes arising or accruing in India will be counted

Total Income is arrived by deducting all eligible deductions from “Gross Total Income”

Your tax liability will be estimated based on your Total Income. In simple terms, you pay tax on your Total Income.

Total Income Example

To understand Total Income better, consider that it includes all forms of income, such as salary, capital gains, business or professional income, income from house property, and income from other sources, after claiming deductions under Chapter VI-A.

Example: Income Breakdown to Calculate Gross Total Income (GTI) and Total Income (New Tax Regime)

See the example below to understand how and where Gross Total Income and Total Income will reflect in your ITR:

Sources of Income	Income (₹Rs)	Exempt (₹)	Cause of Exemption	Taxable (₹)
Salary/Pension Income	10,00,000	₹75,000	Standard Deduction (New Regime)	9,25,000
House Property Income	4,00,000	0	Deductions like home loan interest are generally not allowed in the New Regime	4,00,000
Business & Profession	3,50,000			3,50,000
Capital Gains	1,00,000			1,00,000
Other Sources (interest, lottery, Dividend)	30,000			30,000
Agricultural Income	50,000	50,000	Fully Exempt	0
Gifts Received				0
from Direct Blood Relations	1,00,000	1,00,000	Fully Exempt	0
from Others (friends & colleagues)	60,000	50,000	Exempt up to 50,000 in a financial year	10,000
Income Share from Partnership Firm	1,50,000	1,50,000	Not taxable (Tax already paid by the firm)	0
Income Share from HUF	80,000	80,000	Generally exempt in the member’s hands	0
Royalty Income on Books/Published work	5,00,000		Deduction u/s 80QQB not available in the New Regime	5,00,000
The income of the Previous Year	28,20,000

Once we arrive at the taxable amounts from each head of income, we can calculate the Gross Total Income (GTI). Under the New Tax Regime, since most Chapter VI-A deductions are not available, the Total Income is usually the same as GTI.

Particulars	Amount (₹)	Notes
Gross Total Income (GTI)	23,15,000	Sum of taxable income from all heads
Less: Chapter VI-A deductions (80C to 80U)	0	Most deductions under Chapter VI-A are generally not available in the New Tax Regime
Total Income (taxable income)	23,15,000	GTI – eligible deductions
Income Tax (as per New Regime slabs)	2,78,750	Calculated slab-wise
Less: Rebate u/s 87A	0	Not applicable as Total Income exceeds ₹12,00,000
Net Tax Liability	2,78,750	Tax after rebate
Health & Education Cess @ 4%	11,150	4% of net tax
Total Tax Payable	2,89,900	Tax + cess

Disclaimer: The table only provides an example of Gross Total Income and Total Income computation. You should refer to the rules governing actual exemptions and deductions from various sources of income.

Difference Between Gross Total Income and Total Income

Gross Total Income is the earnings a person receives in a given fiscal year, before any deductions under Chapter VI-A (Sections 80C to 80U) are made. It encompasses earnings from all sources, including wages, real estate, businesses, capital gains, and other sources.

The full amount of income that is liable to tax is called Total Income. It is computed by deducting from the GTI the deductions and exemptions permitted by the Income Tax Act. The amount of income that must be paid in taxes is the resultant figure. Here is a tabular representation of the difference between Gross Total Income and Total Income:

Parameters	Gross Total Income (GTI)	Total Income (TI)
Definition	Gross Total Income is the Total Income received by a person or entity before deductions under Chapter VI-A are applied. It encompasses all forms of revenue, including wages, capital gains, business earnings, and other types of income.	Total Income is the amount of income left over after all allowed deductions under the Income Tax Act have been deducted. It is basically the Gross Total Income after applicable deductions.
Tax	Instead of using the Gross Total Income, taxes are computed on the entire income.	The Total Income is used to calculate taxes under the applicable income tax slabs.
Components	All forms of income, including capital gains, wages, house and property, business and profession, and other sources, are included in Gross Total Income.	Total Income is calculated by deducting allowable deductions and exemptions from Gross Total Income.
Purpose	Gross Total Income provides a comprehensive picture of a person's or an organisation's income.	Total Income provides a clear picture of a person's or an organisation's taxable income.

Did You Know?

A one-time property sale can inflate your Total Income due to non-indexed LTCG, and may even trigger a surcharge, even if the real gain feels low!

Source: MoneyControl

What are the 5 Heads of Income in India?

In India, the Income Tax Act categorises income into five broad heads for tax purposes. Understanding these classifications can help you manage your tax liabilities efficiently and make informed financial decisions. Here’s a brief overview of these five heads for better understanding:

Income from Salary: This includes earnings received by an individual from an employer, such as salary, wages, bonuses, allowances, or pensions. The employer deducts TDS (Tax Deducted at Source) before disbursing the salary. Employees can claim deductions such as House Rent Allowance (HRA), Standard Deduction, and Professional Tax (subject to applicable tax regime and conditions) to reduce their taxable income.

Example: If you are employed by a company and receive a monthly salary, bonuses, and allowances, this falls under income from salary.
Income from House Property: This head includes income earned from renting out residential or commercial property. Even if the property is vacant but eligible to generate rental income, it remains classified in this category. The tax calculation accounts for municipal taxes and the annual value of the property.

For example, standard deduction (30% of net annual value) and home loan interest deductions under Section 24(b) of the Income Tax Act (as applicable under the chosen tax regime).

For instance, if you own a house and rent it out, the rental income will be taxed under this category. If you have taken a home loan, you can claim deductions on interest payments.
Income from Business or Profession: Any income earned through self-employment, freelancing, business activities, or professional services is classified under this head. This includes profits from businesses, consultancy services, or professional fees. Taxpayers can deduct business expenses such as rent, salaries, depreciation, and office expenses before arriving at their taxable income (as per Income Tax rules).

For example, if you run a business, work as a freelancer, or provide professional services like consulting or legal advice, your earnings are taxed under this head.
Income from Capital Gains: Capital gains arise when you sell capital assets like listed shares, real estate, bonds, stocks, or mutual funds at a profit. These gains are further categorised into:
- Short-term Capital Gains (STCG): Profits from selling assets within a short holding period, taxed as per applicable rates.
- Long-term Capital Gains (LTCG): Gains from assets held for a longer duration, taxed at concessional rates.
  
  Moreover, tax exemptions are available under Sections 54, 54EC, and 54F for reinvesting gains in specified assets.
Income from Other Sources: This category includes income that does not fall under the four heads above. Common examples are:
- Interest earned on savings accounts, fixed deposits, or bonds
- Dividends from investments
- Lottery winnings, gifts, or inheritance (subject to tax laws)
- Pension (other than employer-provided)

Clarifications for Treatment of Different Incomes in the Estimate

The various types of income are treated differently under the Income Tax Act, which is why your tax liability may vary even when the total earnings remain the same. To avoid confusion, here are a few clarifications regarding how certain income components are treated when estimating Gross Total Income and Total Income.

1. House Property Income

For our calculation, we are assuming that the property is let out with an Annual Value of ₹4.8 lakhs

For taxable income from the property, we need to deduct:

Municipal taxes (value after this deduction is called Net Annual Value)
30% of Net Annual Value (standard deduction)
Interest paid on home loan (as per applicable limits under Section 24(b) and the chosen tax regime)

2. Agricultural Income

Agricultural income is generally exempt from tax, but it can still affect your overall tax calculation in certain cases when you have other taxable income.

Agricultural income alone does not attract any tax
If you have other taxable incomes as well, your agricultural income may be considered for rate purposes in specific cases to determine your tax slab
Your tax liability is calculated with agricultural income first
Then tax on agricultural income is calculated by applying the applicable slab rates to (agricultural income + basic exemption limit)
Your final tax liability = Tax on aggregate income (taxable income + agricultural income) – tax estimated on agricultural income

3. Gifts

While gifts are often tax-free, their tax treatment depends on factors like the amount, the giver’s relationship with you, and the occasion on which the gift is received.

Gifts from non-relatives up to ₹50,000 is exempt in one financial year
Gifts from relatives are completely exempt
Gifts received on your marriage from any party are exempt from tax

How to Calculate Gross Total Income vs Total Income?

The formula to calculate GTI in income tax is very simple: simply add the income from all five heads. Meanwhile, the Total Income is calculated after subtracting deductions under Sections 80C to 80U (as applicable under the chosen tax regime).

Gross Total Income Example

Consider an individual earning from multiple sources in a financial year:

Salary Income: ₹11,45,000
Rental Income from House Property: ₹2,31,000
Business or Professional Income: ₹3,12,000
Long-Term Capital Gains from Mutual Funds: ₹1,55,000
Interest from Fixed Deposits: ₹50,900

The Gross Income in total is calculated as GTI = ₹11,45,000 + ₹2,31,000 + ₹3,12,000 + ₹1,55,000 + ₹50,900

Total Income Example

Now, let’s consider deductions under various sections of the Income Tax Act:

Section 80C (Investments in PPF, ELSS, Life Insurance Premium, etc.): ₹1,50,000
Section 80D (Health Insurance Premium): ₹25,000
Section 80E (Education Loan Interest): ₹40,000

Total Deductions = ₹2,15,000

Now, the Total Income (taxable income) is determined as follows:

Total Income = Gross Total Income−Total Deductions

₹18,93,900 - ₹2,15,000 = ₹16,78,900

This Total Income will then be subject to income tax as per the applicable slab rates.

Why is the Classification of Income into Different Heads Necessary?

The Indian tax system categorises income into five heads to ensure proper tax assessment, simplify compliance, and maintain fairness in taxation. Here's why this classification is essential:

Ensures Tax Compliance: By classifying income into different heads, the tax department ensures that all sources of earnings are accounted for. This structure prevents tax evasion and ensures individuals and businesses report their income accurately.
Promotes Fairness and Equity: Different types of income are taxed at different rates. For instance, salary income is taxed at slab rates, whereas capital gains may be taxed at a flat rate. This classification ensures that taxpayers are taxed fairly according to the nature of their income.
Simplifies Taxation for Clarity: Grouping income into specific categories makes tax filing more straightforward. It helps individuals and businesses calculate their tax liabilities accurately without confusion over applicable tax rates and deductions.
Encourages Economic Activities: Certain types of income, such as business profits or capital gains, may be incentivised or taxed favourably to encourage entrepreneurship and investment. This classification helps the government implement targeted tax benefits to boost economic growth.

Considers International Taxation Principles: India follows international taxation principles, and classifying income into distinct categories helps in applying cross-border tax treaties and double taxation avoidance agreements (DTAAs) more effectively.

By understanding these classifications, taxpayers can optimise their tax liability and ensure compliance with the Income-tax Act, 1961.

Summing Up

Despite their similarity, Total Income and Gross Total Income for income tax purposes are not the same. Only the former is subject to income tax. You can lessen your income tax liability by using eligible deductions (as applicable under the chosen tax regime) and investing in tax-saving plans. To classify diverse sources of income for tax purposes, income can be divided into several headings. Your Total Income, after applying applicable deductions and exemptions, includes all of your earnings from employment, dividends, capital gains, retirement benefits, and other sources of income. The purpose of income categorisation is to determine the appropriate tax treatment of various forms of income, ensuring that taxpayers fulfil their legal obligations and pay their fair share of taxes.

Glossary

Gross Total Income (GTI): The aggregate income from all sources before deductions under sections 80C to 80U of the Income Tax Act
Total Income (TI): The income remaining after subtracting eligible deductions from the Gross Total Income; it's the taxable income
Income from Salary: Earnings received from an employer, including wages, pensions, bonuses, and allowances
Income from House Property: Income derived from owning and letting out property, such as rental earnings
Income from Capital Gains: Profits arising from the transfer of capital assets like stocks, bonds, or real estate

FAQs

The Total Income is calculated by adding up all the sources of income to arrive at Gross Total Income (GTI) and then subtracting all eligible deductions under Chapter VI-A from it. This covers wages, profits from a business or profession, income from real estate, capital gains, and income from other sources

The deductions available underChapter VI-A (Sections 80C to 80U) of the Income Tax Act are spread across multiple sections, such as:

Section 80CCC: Deduction of contribution to a pension fund
Section 80CCD: Deduction of contribution to pension scheme of central government
Section 80D: Deduction of premium paid for medical insurance
Section 80E: Deduction of interest paid on education loan taken for higher studies
Section 80GG: Tax deductions on house rent paid
Section 80TTA: Deduction of interest on savings account

You cannot deduct any amount from your Total Gross Income that is not allowed as a deduction under the Income Tax Act.

Common deductions that reduce Gross Total Income to Total Income include:

Section 80C deductions
Deductions under Chapter VI-A
Medical insurance premiums (Section 80D)
Interest on education loans (Section 80E)
Donations to charitable organisations (Section 80G)
Interest on bank savings deposits (Section 80TTA/80TTB)
NPS contributions (Section 80CCD)
Specified medical expenses in eligible cases (Section 80DDB)

Yes, Gross Total Income and Total Income can be the same if you do not claim any deductions under Chapter VI-A (such as Section 80C, 80D, or 80G).

Since Total Income = Gross Total Income – Deductions

So, when deductions are zero, Gross Total Income = Total Income

Disclaimer - This article is issued in the general public interest and meant for general information purposes only. The views expressed in this blog are solely those of the writer and do not necessarily reflect the official policy or position of Canara HSBC Life Insurance Company Limited or any affiliated entity. We make no representations or warranties of any kind, express or implied, about the completeness, accuracy, reliability, suitability, or availability with respect to the blog or the information, products, services, or related graphics contained in the blog for any purpose. Any reliance you place on such information is therefore strictly at your own risk. You should consult with a qualified professional regarding your specific circumstances before taking any action based on the content provided herein.

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What is Gross Total Income?

Gross Total Income Example

What is Total Income?

Total Income Example

Example: Income Breakdown to Calculate Gross Total Income (GTI) and Total Income (New Tax Regime)

Difference Between Gross Total Income and Total Income

Did You Know?

What are the 5 Heads of Income in India?

Clarifications for Treatment of Different Incomes in the Estimate

1. House Property Income

2. Agricultural Income

3. Gifts

How to Calculate Gross Total Income vs Total Income?

Gross Total Income Example

Total Income Example

Why is the Classification of Income into Different Heads Necessary?

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