A STUDY OF

Gross Income and Total Income

A
PROJECT REPORT SUBMITTED
TO SAVITRIBAL PHULE PUNE UNIVERSITY,
FOR THE AWARD OF BACHELOR IN BUSINESS
ADMINISTRATION (BBA)
SUBMITTED BY
Mr. Aditya Walunj UNDER THE
GUIDANCE OF
Prof. Prerna Tulve
THROUGH
SNBP COLLEGE OF ARTS COMMERCE
SCIENCE AND
MANAGEMENT STUDIES, MORWADI,
PIMPRI 2019-20
CERTIFICATE
This is to certify that Aditya Walunj of the class SY
BBA, Roll no.BB212028. Has Satisfactorily
completed project and semester 4 . As laid down
by the Savitribai Phule Pune University Pune for
the academic year 2021-2022
DECLERATION:

I, the undersigned Mr. Aditya Walunj hereby

declare that the Project report entitled
"Memorandum, with reference to Business
Communication Written and Submitted by Me to
University of Pune in Partial fulfilment of The
Requirement for Award of Degree of Bachelor of
Business Administration Under the Guidance of
Prof. Prerna Mam Is my original Work the
Empirical Findings and Suggestion in The Report
Are Based on The Original Information Collected
By me
Place: Pimpri Chinchwad Name of the Student:
Aditya Walunj Date: 11/05/22 Sign: Aditya
Preface
Research in common man's language refers to a
search for knowledge. One can also define
research as a scientific and systematic search for
pertinent information on a specific topic, in fact
research is an art of scientific investigation.
Research is done to gain familiarity with a
phenomenon event/product/service or to
determine the frequency with which something
occurs, with which is associated with something
else or to test a hypothesis of casual relationship
between variables. In short customer perception
research is the objective and formal process
Index
1)Introduction
2) Gross income and total income
3) The various additions required to be made in
Gross Total Income
4) Total Income
5) The Steps to determine the total income
6)What are the five heads of income
Introduction
Business gross income
Gross income is a line item that is sometimes included in a company’s income statement. If
not displayed, it’s
calculated as gross revenue minus COGS.

Gross Income=Gross Revenue−COGS

where:
COGS=Cost of Goods Sold

Gross income is sometimes referred to as gross margin. There’s also gross profit margin,
which is more correctly defined as a percentage and is used as a profitability metric. The
gross income for a company reveals how much money it has made on its products or
services after subtracting the direct costs to make the product or provide the service.

While the gross income metric factors in the direct cost of producing or providing goods and
services, it does not include other costs related to selling activities, administration, taxes,
and other costs related to running the overall business.
Example of Individual Gross Income
Assume that an individual has a $75,000 annual salary, generates $1,000 a year in interest
from a savings
account, collects $500 per year in stock dividends, and receives $10,000 a year from rental
property income.
Their gross annual income is $86,500.
How do I calculate my gross income?
An individual’s gross income is the total amount earned before taxes or other deductions.
Usually, an
employee’s paycheck will state the gross pay as well as the take-home pay. If applicable,
you’ll also need to add
other sources of income that you have generated—gross, not net.

Gross income and total income

In India, any person who has an income that is exceeding the minimum limit given as
under the specific income tax slab has to pay the income tax. The income tax has to be
calculated based on the total income or taxable total income (TTI).
The ‘gross total income’ (GTI) is the total income you earn by
adding all heads of income. Income from salary, property, other sources, business or
profession, and capital gains earned in a financial year are all added to arrive at the GTI.
Aggregate of incomes computed under the above 5 heads, after
applying clubbing provisions and making adjustments of set off and carry forward of losses,
is known as Gross Total Income (GTI). [Section 80B(5)]

The various additions required to be made in Gross Total Income

Apart from adding earnings from all five heads of income following
shall also be added to calculate your gross total income.
Income to be added as per the clubbing provisions under the Income Tax Act
Adjustments for set off and carry forward of losses
 Unexplained Tax Credit under section 68 of the Income Tax Act 1961, received whether in
cash or credit.
Unexplained Investments as per the purview of section 69 of the Income.
Although we have obtained an understanding on the above income and assets or
expenditures which are added to the gross total income. But, these additions or nature of
additions are not generally witnessed in routine

Assets and other money under Section 69A, valuables like money, jewellery etc for which
no proper explanation is available with the assessee
Undisclosed or lower disclosed income is added to the Gross Total Income as per the
provisions of Section 69B of the Income Tax Act 1961. This relates to all those income and
assets which you have not reported or made a lower disclosure then the actual funds.
Unexplained expenditures under section 69C.
Hundi amount borrowed or repaid. In case you have borrowed or repaid some amount on
Hundi then it shall be added to your Gross Total income or GI as per the provisions of section
69D of the income tax act.

• Section 5 determines the scope of total income for a resident or a non-resident

assessee. It follows that for a resident assessee, the total income include all income that
accrue, arise, earned or received in India (except those income which accrues or arises
outside India)
•However various chapters and sections of the Income tax Act further lays down which
income would not form part of total income, computation to be made, Clubbing of Income,
set off or carry forward of loss and deductions to be made in computing total income.

Total income or
taxable total income-
As per section 14, all income shall, for purposes of Income-tax and computation of total
income, be classified under the following heads of income:
1. Salary
2. Income from house property
3. Profits and gains of business and profession
4.Capital gains and
5.Income from other sources

•The computation of total income of an Assessee is made by deducting from the gross total
income.
•Means total income = grass total income [ (A)+ (B) + (C) +
(D) + (E) and head wise deduction ] – deduction available under chapter VIA (sec. 80C to 80U)

The steps in which the Total Income, for any assessment year, is
determined are as follows:
A. Determine the residential status of the Assessee to find out which
income is to be included in the computation of his Total Income.
B. Classify the income under each of the following five heads. Compute the income under
each head after allowing the deductions prescribed for each head of income.
C. subtracting all deductions permissible under Chapter VIA of the Income-tax Act i.e.,
deductions under sections 80C to 80U

What are the five heads of income?

As per section 14 of the Income Tax Act, income is classified into the following categories
known as Heads of Income.

Income from Salary

Income from House Property
Income from Profits and Gains of Profession or Business
Income from Capital Gains
Income from Other Sources

What are the five heads of income?

As per section 14 of the Income Tax Act, income is classified into the following categories
known as Heads of Income.

Income from Salary

Income from House Property
Income from Profits and Gains of Profession or Business
Income from Capital Gains
Income from Other Sources

What are the various additions required to be made in Gross Total Income?
Apart from adding earnings from all five heads of income following shall also be added to
calculate your gross total income

Income to be added as per the clubbing provisions under the Income Tax Act
Adjustments for set off and carry forward of losses
Unexplained Tax Credit under section 68 of the Income Tax Act 1961, received whether in
cash or credit. Which means receipt of any amount of which you do not have sufficient or
valid explanation describing the source of receipt of such income. These categories of
income are added to your Gross Total Income.
Unexplained Investments i.e. the investments which you have made but you are unable to
give satisfactory explanation about the source or improper disclosures have been made on
your part. In all these situations your investments will be termed as unexplained
investments as per the purview of section 69 of the Income Tax Act. also, it shall be added to
your Gross Total Income (GTI)
Assets and other money under Section 69A, valuables like money, jewellery etc for which no
proper explanation is available with the assessee will be added to the Gross Total Income of
the person.
Undisclosed or lower disclosed income is added to the Gross Total Income as per the
provisions of Section 69B of the Income Tax Act 1961. This relates to all those income and
assets which you have not reported or made a lower disclosure then the actual funds.
Unexplained expenditures under section 69C. In case you have made some expenses and no
proper explanation regarding the same available then it would be added to your Gross Total
Income and henceforth charged to taxes accordingly.
Hundi amount borrowed or repaid. In case you have borrowed or repaid some amount on
Hundi then it shall be added to your Gross Total income or GI as per the provisions of section
69D of the income tax act.
Although we have obtained an understanding on the above income and assets or
expenditures which are added to the gross total income. But, these additions or nature of
additions are not generally witnessed in routine.

Difference between Gross Total Income & Total Income

To understand their difference in simple terms, look at the following formulae:

TI = GTI – deductions under Section 80

Or

GTI = TI + deductions under Section 80

So, GTI is the total of all the heads of income while TI is GTI minus the deductions.

To calculate GTI, you add the following:

Income from salary: This includes the earning from employment.

Income from house property: This includes any rent you earn by letting out a house.
Income from business or profession: This includes the income earned by a businessman or a
self-employed professional.
Capital gains/loss: This includes profits or losses you incur by selling any movable or
immovable capital property. That would include land, building, house, shares, jewellery, etc.
Income from other sources: The income not included in the above-mentioned heads
features in this. Examples would be income from interest, a lottery gain, etc.
To calculate TI, the following deductions under Section 80 of Chapter VI of the Income Tax
Act are subtracted from the GTI

80C: Allows specific investments and expenses to be deducted from the GTI up to Rs 1.5 lakh.
80CCD: NPS (National Pension System) contribution up to Rs 50,000 is allowed as deduction.
80D: Health insurance premiums, up to Rs 60,000, paid for self and for parents qualify under
this section.
80TTA: Interest earned from the savings account, up to Rs 10,000, is tax-free.
80E: Interest paid on education loan is deducted.
80GG: This includes housing rent allowance (HRA) exemption for those who do not have an
HRA component in their salary.
80DDB: Expenses incurred on specific illnesses are deducted up to Rs 40,000 or Rs 60,000,
depending on the patient’s age.
80U: This gives a fixed deduction if you have a physical disability. The deduction is Rs 75,000
or Rs 1.25 lakh, depending on the severity of the disability.
80G: Charitable donations made to recognised institutes are allowed as deduction.
To sum up, the difference between the GTI and TI must be clear to you now. Do not confuse
between the two the next time you file your returns.

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CH
1. (I) Total Gross Salary Income (Refer Note 2) :
a)Gross Salary received
b)Pay Arrears received
c)D.A. Arrears/ Bonus received
d)Honorarium received
e)Remuneration received : Rs.
: Rs.
: Rs.
: Rs.
: Rs.

(II) ADD (a) Any other perquisites Remuneration,.

etc. received (Refer Note. 3) : Rs.
2.LESS:
(i)HRA exempted (Refer Note 4) Rent Receipt Format enclosed : Rs.
(ii)Transport Allowance exempted : Rs. (Max 1600/pm)
(iii)Professional Tax paid : Rs.

3.: Rs.

4.Income from House Property

i) For Self Occupied property

LESS: Interest paid on HBA/Housing Loan {Max 2.0 Lakhs} : Rs.
Section 24(b)
(ii)For Income from Let out property
a)Income from Let out property : Rs.
b)LESS House Tax paid : Rs.
c)Net Value of income [(a) – (b)]
d)LESS 30% of Net Value (c) for repairs and maintenance : Rs.
e)LESS Interest paid on HBA/Housing loan : Rs.
f)Income chargeable under income from house property
(c ) – [ (d) +(e) ] : Rs.
5.Income from Other Sources
(i)Interest from Bank FD : Rs.
(ii)Bank Interest on Savings Bank A/C (Mandatory) : Rs.
(iii)Remn./Honorarium received from other University/
Institutions (Valuation/ Invigilation work etc., : Rs.
(iv)Any Other Income / Family Pension : Rs.

: Rs.

2-

7.LESS -
Deduction under Section 80 C, 80 CCC & 80 CCD * (Refer Note 6)
(i)a) Contribution in Provident Fund(GPF/CPF): Rs.
b)Life Insurance Premium paid : Rs.
c)Repayment of Housing Loans paid (Principal) : Rs.
d)Tuition fees paid (Two Children) : Rs.
e)Group Insurance premium : Rs.
f)PLI Premium paid/PPF : Rs.
g)NSC Investment : Rs.
h)Investment on Govt. Securities : Rs.
i)Investment on approved shares : Rs.
j)Contribution in Pension Fund : Rs.
k)Investment in approved mutual funds (Sec 80 CCC) : Rs.
l)Investment on other approved institutions : Rs.
m)Other’s Refer Note: 6) : Rs.
Total Deduction Claimed (Subject to maximum of Rs.1,50,000) : Rs.
8.LESS Contribution to Rajiv Gandhi equity saving scheme 80CCG :Rs. (Maximum Rs.25,000/-)(less than Rs.
10,00,000) (Refer Note 10)
9.LESS Contribution in Medical policy (Sec 80 D) * : Rs.
(Refer Note 6)
10.LESS Expenditure on Medical Treatment incurred
for physically Handicapped dependant (Sec 80 DD)* : Rs.
(Refer Note 7)
11.Interest paid on Loan taken for Education (Sec 80 E)* : Rs.
12.LESS Interest earned on deposits in a saving A/c upto : Rs.
Rs. 10,000/- (Sec 80 TTA)*
13.LESS Interest earned on deposits in a saving and FD A/c upto : Rs.
Rs. 50,000/- (Sec 80 TTB)* (Only for Senior Citizens not claiming benefit u/s. 80TTA)
14.Donation (Swachh Bharat Kosh) & (Clean Ganga) (Sec 80G)* : Rs.
: Rs.
(To be rounded off to the nearest ten rupees)

: Rs.
17.Tax Rebate Rs.2500 – for below Rs. 3,50,000/-
(Sec 87 A)* ( Refer note 11) : Rs.
18.Education Cess (4% on Tax) : Rs.
: Rs.
20. LESS Tax deducted at source/from arrears : Rs.
: Rs.
22. Proposal to recover the Balance Tax
I hereby authorize the Drawing Officer/Disbursing Officer to deduct the balance amount of tax from my
monthly salary as detailed below.
Sept’18 Rs. Oct’18 Rs.
Nov’18 Rs: Jan’19 Rs:
Dec’18 Rs: Feb’19 Rs:
Declaration
I hereby certify that the above, information submitted by me is true and correct to the best of my
knowledge and I did not suppress any material facts. In case of any discrepancy/controversy in r/o proofs
furnished, I agree to go by the IT deductions made by the University based on the records of University.
Signature :
Place : Guwahati Name :
Date : / / 2018 Designation :
The income of an assessee is computed separately after considering the permissible deductions in each heads.
The net income of these heads is aggregating to get Gross Total income. From the gross Total Income
deductions are allowed in respect of certain payments and expenses made and income received by the assessee.
Income Tax Chapter VI-A Deductions for AY 2020-2021 and FY 2019-2020 (with 80C Deduction) are explained
below. The list of Chapter VI-(Income Tax) Deductions starts with Section 80C and ends with Section 80U. This
complete list of Chapter VI-(Income Tax) Deductions for AY 2020-2021 and FY 2019-2020 are provided based on
Union Budget 2019introduced by the Central Government.
The aggregate amount of Deduction U/S 80C to 80U cannot exceed the Gross Total income. The deductions are
available only to the assessees where the gross total income is positive. If however, the gross total income is nil
or negative, the question of any deduction from the gross total income does not arise.
For this purpose, the expression 'Gross Total Income' means the total income of the assessee computed in
accordance with the provisions of the Income-Tax Act, before making any deduction under Chapter VI-A
(Income Tax), i.e., the aggregate income computed under each head, after giving effect to the provisions for
clubbing of income and set off of losses, is known as "Gross Total Income".
Basic Rules Governing Deductions Under Sections 80C to 80U
The following essential rules have to be kept in mind while calculating deductions under section 80C to 80U:
1.Deductions not available from: Deductions under chapter VIA are not available from :
•Long-term capital gain;
•Short term capital gain covered u/s 111A (i.e., STCG on which STT is charged); and
•Casual income like winning from lotteries, races, etc.

2.Limit of deduction: The aggregate amount of deduction under chapter VIA cannot exceed Gross Total Income
of the assessee excluding -
•Long term capital gain;
•Short term capital gain covered u/s 111A;
•Casual income like winning from lotteries, card-games, horse races, etc.; and
•Income referred in Sec.115A, 115AB, 115AC, 115ACA, etc.
3.Deduction must be claimed: Deduction under chapter VIA shall be available only if the assessee claims for it.
4.Double deduction not permissible: Where deduction under any section of chapter VIA has been claimed then
the same shall not qualify for deduction in any other section.

Section 80C
Section 80C provides for a deduction from the Gross Total Income, of savings in specified modes of investments.
The deduction under section 80C is available only to an individual or HUF. The maximum permissible deduction
under section 80C is Rs.1,50,000.
1.Life insurance premium policy: Premium paid on insurance on the life of the individual, spouse or any child
(minor or major) and in the case of HUF, any member thereof. This will include a life policy and an endowment
policy. Life insurance premium paid for parents (father / mother / both) or in-laws is not eligible for deduction
under section 80C. If paying premium for more than one insurance policy, all the premiums can be included. It is
not necessary to have the insurance policy from Life Insurance Corporation (LIC) - even insurance bought from
private players can be considered.
Deduction will be allowed only for premiums upto a maximum of 10% (15% if insured is disabled) of the sum
assured for policy issued on or after April 1, 2013 (10% in 2012-13 and 20% if insured before 1st April 2012).
2.Premium paid in respect of a contract for deferred annuity: Premium paid to effect and keep in force a
contract for a deferred annuity on the life of the individual and/or his or her spouse or any child (However,
contract does not contain an option to receive cash payments in lieu of annuity).
3.Any sum deducted from the salary payable of a Government employee for securing a deferred annuity or
making provision for his wife/children [qualifying amount limited to
20% ofsalary]
4.Contribution by an individual (not being repayment of loan) to SPF/PPF/RPF: Contributions to any provident
fund to which the Provident Funds Act, 1925 applies, Superannuation Fund and recognized provident fund.
Contribution made to any Public Provident Fund established under the Public Provident Fund Scheme, 1968 also
qualifies for deduction under section 80C. Such contribution can be made in the name of the individual, his
spouse and any child of the individual; and any member of the family, in case of a HUF. The maximum limit for
deposit in PPF is Rs. 1,50,000 in a year.
5.Any sum paid an individual for NSC VIII and IX issue and deposit in Sukanya Samruddhi Scheme Account. The
accrued interest thereon is deemed to be reinvested and is eligible for deduction.
6.Contribution by an individual or HUF to Unit Linked Insurance Plan (ULIP) of UTI in the name of self, spouse or
any child (any member in the case of HUF) and such Unit Linked Insurance Plan of LIC Mutual Fund
(Dhanaraksha).
7.Subscription to any deposit scheme or contribution to any pension fund set up by the National Housing Bank
i.e., National Housing Bank (Tax Saving) Term Deposit Scheme, 2008.
8.Repayment of housing loan including stamp duty, registration fee and other expenses: Any payment made
towards the cost of purchase or construction of a new residential house property. The deduction is available in
respect of:
a.Any payment by way of instalment or part payment of the amount due to Housing Board, Co-operative
Society, etc.
b.Any repayment of loans borrowed by the assessee from Government, Bank or LIC of India or any public
company formed in India for providing long term finance for the construction or purchase of residential house.
c.Stamp duty, registration fee and other expenses incurred for transferring such house to the assessee.
(1)Payments made towards the cost of land, of any addition, renovation or repairs of the house carried out
after its completion or any expenditure in respect of which deduction is allowable under section 24 are not
qualified.
9.Subscription to notified schemes of
(a)Public sector companies engaged in providing long-term finance for purchase/ construction of houses in India
for residential purposes
(b)Authority constituted under any law for satisfying need for housing accommodation or for planning,
development or improvement of cities, towns and villages, or for both.
10.Tuition fees (excluding development fees, donations, etc.) paid by an individual to any university, college,
school or other educational institution situated in India, for full time education of any 2 of his/her children.

11.Sum paid towards notified annuity plan of LIC or other insurer approved by IRDA.
12.Subscription to any units of any notified [u/s 10(23D)] Mutual Fund or the UTI (Equity Linked Saving Scheme,
2005).
13.Contribution by an individual to any pension fund set up by any mutual fund which is referred to in section
10(23D) or by the UTI (UTI Retirement Benefit Pension Fund).
14.Subscription to equity shares or debentures forming part of any approved eligible issue of capital made by a
public company or public financial institutions.
15.Subscription to any units of any approved mutual fund referred to in section 10(23D), provided amount of
subscription to such units is subscribed only in 'eligible issue of capital' referred to above.
16.Term deposits for a fixed period of not less than 5 years with a scheduled bank, and which is in accordance
with a scheme framed and notified.
17.Subscription to notified bonds issued by the NABARD.
18.Deposit in an account under the Senior Citizen Savings Scheme Rules, 2004 (subject to certain conditions).
19.5-year term deposit in an account under the Post Office Time Deposit Rules, 1981 (subject to certain
conditions)
Section 80CCC: Deductions for contributions made to certain pension funds
Section 80CCC of the Income Tax Act, 1961, allows individuals to claim tax deductions for contributions made to
certain pension funds. This section provides tax deduction up to a maximum of Rs. 1,50,000 during a year on
costs incurred in buying a new policy or continuing an existing plan that pays pension or a periodical annuity (as
referred to in Section 10(23AAB)). However, the pension amount received, including interest or bonus accrued
on the annuity, is taxable during the year of receipt. An essential point to be noted is that the deduction limit
under Section 80CCC is clubbed with the limit of section 80C and section 80CCD - which means the overall tax
deduction limit that can be claimed is Rs. 1,50,000.

What is Gross Income?

Gross income refers to the total income earned by an individual on a paycheck before taxes and other
deductions. It comprises all incomes received by an individual from all sources – including wages, rental income,
interest income, and dividends. For example, if the revenue earned by an individual for rendering consultancy
services amounts to $300,000, the figure represents the gross income earned by that individual.

Gross Income

For businesses, gross income can also be referred to as gross profit when preparing financial statements for
companies, and it equals the revenues from the sale of goods or services less the cost of goods sold.

The revenue sources may comprise income from selling goods and services, intellectual properties, income
from rental property, capital gains from investments, etc. The gross profit is a line item in the profit and loss
statement.

How to Calculate Gross Income

The gross income of an individual is often a figure required by lenders when deciding whether or not to advance
credit to an individual. The same applies to landlords when determining whether a potential tenant will be able
to pay the rent on time. It is also the starting point when calculating taxes due to the government.

Gross Income for an Individual

The gross income for an individual is the amount of money earned before any deductions or taxes are taken out.
An individual employed on a full-time basis has their annual salary or wages before tax as their gross income.
However, a full-time employee may also have other sources of income that must be considered when
calculating their income.

For example, any dividends on stocks held by an individual should be factored into the gross income. Other
incomes that should be considered include income from rental property and interest income from investments
and savings.

Example

Assume that John earns an annual income of $100,000 from his financial management consultancy work. John
also earns $70,000 in rental income from his real estate properties, $10,000 in dividends from shares he owns
at Company XYZ, and $5,000 in interest income from his savings account. John’s income can be calculated as
follows:

Gross Income = 100,000 + 70,000 + 10,000 + 5,000 = $185,000

Gross Income for a Business
Gross profit is an item in the income statement of a business, and it is the company’s gross margin for the year
before deducting any indirect expenses, interest, and taxes. It represents the revenue that a company earned
from selling its goods or services after subtracting the direct costs incurred in producing the goods being sold.

Direct costs can include expenses such as labor costs, equipment used in the production process, supply costs,
cost of raw materials, and shipping costs. Taxes are not deducted since they are not directly related to the
production and sale of the product.

The formula for calculating the gross income, or gross profit, of a business is as follows:

Gross Income = Gross Revenue – Cost of Goods Sold

Example

Assume that the gross revenue of ABC, a paint manufacturing company, totaled $1,300,000, and the expenses
were as follows:

Cost of raw materials: $150,000

Supply costs: $60,000
Cost of equipment: $340,000
Labor costs: $150,000
Packaging and shipping: $100,000

The gross profit is calculated as follows:

Gross Income = (1,300,000) – (150,000 + 60,000 + 340,000 + 150,000 + 100,000)

= (1,300,000) – (800,000) = $500,000