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Difference Between Gross Total Income and Total Income

Difference Between Gross Total Income and Total Income

Q: 1. Are gross income and total income the same?

No, they are not the same. Gross income refers to total earnings before deductions or exemptions, while total income is the amount remaining after applying deductions, exemptions, and allowances, which is subject to taxation.

Q: 2. What do you mean by the computation of gross total income and total income?

Gross total income is the sum of all income sources before deductions. Total income is calculated by subtracting eligible deductions, exemptions, and allowances from the gross total income, resulting in the final taxable income.

Q: 3. Why do people use gross income instead of net income?

Gross income is often used as an indicator of financial health, as it reflects total earnings before deductions. Net income, which accounts for expenses and taxes, is more relevant for understanding take-home pay but isn't suitable for evaluating overall income potential.

Q: 4. What is the minimum taxable income in India?

As of FY 2024-25, the minimum taxable income in India is ₹2.5 lakh for individuals below 60 years of age, which means no tax is payable if total income is below this threshold. For senior citizens, the limit is ₹3 lakh.

Q: 5. What is the difference between net income and total income?

Net income is the amount left after all expenses, taxes, and deductions are subtracted from total income. Total income refers to the total earnings before deductions or exemptions, which can include salaries, investments, and other sources of income.

Q: 6. How can I calculate my Gross Total Income?

You can calculate your Gross Total Income or GTI by adding up all of your income sources, ranging from your salary, business profits, capital gains, rental income, and interest, without considering any deductions or exemptions.

Q: 7. Is Gross Total Income used in loan applications?

Yes, Gross Total Income is often used in loan applications to assess an applicant's financial stability. Lenders use it to determine an applicant’s repayment capacity before approving loans, as it reflects the total earnings before deductions, helping them evaluate eligibility.

Q: 8. Can Gross Total Income be negative?

Yes, Gross Total Income can be negative if an individual’s expenses or losses exceed their income, such as in cases of business losses or negative returns from investments. However, this typically means the individual or entity has faced significant financial challenges during that period.

Q: 9. Which income is considered to determine whether someone is eligible for a certain government subsidy?

In order to determine whether someone is eligible for a government subsidy and can benefit from a certain subsidy for welfare or inclusion, your gross total income is considered as your income.

Q: 10. Will Gross Total Income include income from foreign sources?

Yes, Gross Total Income includes income from all sources, including foreign earnings. Foreign income, such as earnings from abroad, investments, or property, is part of the total income and must be disclosed during tax filings in India.

By upGrad

Updated on Feb 11, 2025 | 7 min read | 1.3k views

Table of Contents

If you want to achieve effective financial management, you must be aware of the various useful terminologies for filing your taxes and tracking your income. As India advances towards economic development, financial literacy is a must in 2025!

Did you know? The Indian gross national income was estimated to amount to over 319 trillion INR in FY 25. As India is on the path to becoming one of the largest economies in the world, it becomes crucial for all of us to understand the basic financial terms.

In this article, we will explore what is the difference between gross total income and total income while also highlighting their similarities and features.

Read along to brush up on your financial basics and understand these terms!

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What is Gross Total Income

Gross Total Income or GTI refers to the sum of all income earned by an individual or entity during a financial year before any deductions or exemptions are applied, as per Section 14 of the Income Tax Act, 1961. Think of this figure as the starting point for calculating taxable income.

Your gross total income is the basis for applying eligible deductions under various sections (e.g., Section 80C, Section 80D). You must report your gross total income accurately in order to enable proper assessment of your tax liability for the financial year.

Gross Total Income includes income from various sources:

Salary
Business profits
Capital gains
Rental income
Interest.

Here is an example of gross total income:

If someone earns ₹10,00,000 from salary, ₹2,00,000 from rental income, and ₹50,000 from interest, GTI = ₹12,50,000.

What are the Features of Gross Total Income?

So, let’s enlist the main features of gross total income:

Gross total income Includes all types of income is income from your salary, business, rental income, and so on.
It is calculated before applying any deductions or exemptions.
GTI is used as the base for tax calculations.
Gross total income represents your total earnings without considering tax-saving provisions.
It is essential for determining eligibility for tax benefits or rebates.

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What is Total Income

When talking about “total income”, it refers to the income that remains after applying applicable deductions, exemptions, and rebates from the gross total income as defined under Section 2(45) of the Income Tax Act, 1961. It is the income on which tax is calculated, and it forms the basis for determining the individual's or entity's tax liability for the financial year.

Total Income is assessed after considering the following:

Deductions under Section 80C, Section 80D
Exemptions such as HRA (House Rent Allowance)
Rebates like Section 87A for eligible taxpayers.

Here is an example of total income:

Suppose a person has a Gross Total Income of ₹1250000, then after deductions of ₹1,50,000 under 80C and ₹50,000 under 80D, their Total Income would amount to ₹10,50,000.

What are the Features of Total Income?

Let’s take a look at the features of total income:

Total income is calculated after applying all deductions and exemptions.
It represents taxable income after tax-saving provisions.
Total income forms the basis for tax assessment.
It is the total income that determines the amount of tax an individual or entity must pay.
Your total income can include rebates and exemptions under specific tax laws.

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Key Differences Between Gross Total Income and Total Income

Both Gross Total Income and Total Income are two of the most important numerical terms in terms of determining your tax liability and consequently arriving at determining your taxable income at the end of the financial year.

Let’s take a look at the key differences between gross total income and total income according to various differentiating factors:

Differentiating Factor	Gross Total Income (GTI)	Total Income
Calculation	Calculated by adding income from all sources like salary, business, etc.	Calculated by subtracting eligible deductions and exemptions from GTI.
Taxability	Not taxable, as it includes all income before deductions.	Taxable amount used to calculate tax liability.
Use	It is used to determine the overall income from all sources.	Used to calculate the tax payable.
Deductions & Exemptions	Does not account for deductions, exemptions, or rebates.	Accounts for deductions and exemptions are allowed under the tax laws.
Final Figure for Tax	Not the final amount for tax assessment.	The final amount used to determine tax liability.
Inclusion of Income	Includes income from all sources (salary, interest, capital gains, etc.).	Excludes income that is exempt or reduced through deductions.
Application in Tax Filing	Appears in tax returns to calculate Total Income.	Used to assess how much tax an individual owes.
Impact of Tax Provisions	No impact from tax-saving provisions.	Affected by tax-saving provisions like Section 80C, 80D, etc.

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Similarities Between Gross Total Income and Total Income

Since gross total income and total income are both part of your total income structure, there are various similarities between these two financial components in terms of income. Let’s highlight the similarities between these two:

Both gross total income and total income are financial figures that are essential for determining the tax liability of an individual or entity.
Both involve income earned from various sources such as salary, business profits, rental income, and interest.
Both GTI and total income are applicable within the financial year for tax filing and assessment purposes.
Both figures are mentioned in the income tax return (ITR) to assess tax obligations.
Both are used to determine eligibility for certain exemptions or tax rebates and reliefs.
Both gross total income and total income are governed by tax laws and the applicable provisions for deductions, exemptions, and rebates.

Conclusion

By now, you must have arrived at a clarity in understanding the difference between gross total income and total income. By learning these finance and tax basics, you will be able to lead the way towards better financial management and be updated with tracking your finances better.

Understanding gross total income and total income can help you make informed decisions about your income and expenses and consequently make informed decisions. In fact, you should not stop here, continue your learning journey and learn about all the financial fundamentals.

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