Q.Distinguish between 'Gross Total Income' and 'Total Income'. Which of the two figures is used to determine the tax actually payable by an assessee?

Gross Total Income and Total Income are two successive stages in arriving at the figure tax is finally computed on.

Gross Total Income (GTI), defined under Section 80B(5), is the aggregate of income computed under each of the five Heads of Income (after applying clubbing provisions and adjusting for set-off/carry-forward of losses), arrived at BEFORE any deduction under Chapter VI-A (Sections 80C to 80U) is allowed. Total Income, defined under Section 2(45), is Gross Total Income AFTER subtracting every Chapter VI-A deduction the assessee is entitled to. Because Chapter VI-A deductions can only reduce income (never add to it), Total Income is always less than or equal to Gross Total Income, never greater. It is Total Income — the final, post-deduction figure — that is actually used to compu …

A very common error is computing tax directly on Gross Total Income and forgetting to subtract Chapter VI-A deductions first — a …