Difference Between Gross Total Income And Total Income

Understanding Gross Total Income vs. Total Income in Income Taxation

1. Gross Total Income (GTI):

Gross Total Income refers to the total income earned by an individual from all sources before any deductions or exemptions are applied.

It encompasses income from various sources, including salaries, wages, business profits, rental income, interest, dividends, capital gains, and any other forms of income.

GTI is calculated by aggregating all sources of income without considering any deductions, exemptions, or other adjustments.

2. Total Income (TI):

Total Income, on the other hand, represents the income remaining after allowable deductions and exemptions have been subtracted from Gross Total Income.

It is the income that is subject to taxation after accounting for eligible deductions, exemptions, and other adjustments allowed under tax laws.

TI reflects the net amount of income earned by an individual that is liable to be taxed, taking into account any deductions or exemptions that reduce the taxable income.

Key Differences:

Treatment of Deductions and Exemptions: 

The primary difference between GTI and TI lies in the treatment of deductions and exemptions. 

GTI represents the total income earned before any adjustments, while TI reflects the income remaining after deducting allowable deductions and exemptions to arrive at the taxable income.

Taxable Income Determination: 

GTI serves as the starting point for calculating taxable income, while TI represents the final taxable income amount used to determine the tax liability of the taxpayer.

Scope of Income: 

GTI encompasses all income earned by an individual from various sources, whereas TI focuses on the income remaining after accounting for deductions and exemptions that are permissible under tax laws.