Friends, The gross total income of an individual has to be computed under the following heads of income :-
- Income from Salaries;
- Income from House Property;
- Profit or Gains of Business and Profession;
- Income from Capital Gains;
- Income from Other Sources,
Besides the above incomes, sometimes income of other persons is included in the assessee's Total Income due to clubbing provisions enumerated under section 60 to 64.
Since Income-Tax is a composite tax on Total Income of a person earned during a period of one previous year, it may so happen that the net result from a particular source/head may be a loss. This loss can be set off against other source/head as per the provisions for sett off or carry forward and set off of losses contained in sections 70 to 80 of the Income-Tax Act.
The aggregate of income computed under each head, after giving effect to the provisions for clubbing of incomes and set off of losses, is known as "Gross Total Income ". In computing the total income of an assessee, certain deductions are permissible under section 80C to 80U from Gross Total Income. These deductions are however not allowed from the following incomes although these incomes are part of Gross Total Income:
- Long-Term Capital Gains.
- Short-Term Capital Gain on transfer of equity shares and units of equity oriented fund on or after 01-10-2004 through a recognised stock exchange i.e. short-term capital gain covered under section 111A.
- Winnings of lotteries, races, etc.
- Incomes referred to in sections 115A,115AB,115AC, 115AD, 115BBA AND 115D.
These deductions are of two types"-
- deductions on account of certain payments and investments covered under section 80C to 80GGC.
- Deductions on account of certain incomes which are already included under Gross total Income covered under sections 80IA to 80U>
The income arrived at, after claiming the above deductions from Gross Total Income, is known as Total Income. It may also be called Taxable Income. The Total Income thus calculated, should be rounded off to the nearest of Rs. 10/-.
To know more regarding summary of Deductions under section 80C to 80U (Click Here)