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What is Gross Total Income and Casual Income?


Gross Total Income




The aggregate of the income under the following heads is known as gross total income:

1.   Income from Salaries;
2.   Income from House Property;
3.   Profit and gains of business or profession;
4.   Capital gains;
5.   Income from other sources.

The income under each head is computed after making deductions permissible under that head.
Further, the brought forward losses shall be deducted (as provided in the Act) to arrive at the assessable income.

Total income means the amount left after making the deductions under sections 80C to 80U from the gross total income.

The amount so arrived is rounded off to the nearest multiple of ten rupess.

Difference between Gross Total Income and Total Income


Gross Total Income

1.   Aggregate of various heads of income is called Gross Total Income.
2.   Gross Total Income is not rounded off.
3.   Tax is not levied on Gross Total Income.
4.   Gross Total Income cannot be less than Total Income.
5.   Agricultural Income is not included in GTI.

Total Income

1.   After deduction under sections 80C to 80U, the balance is called Total Income.
2.   Total Income is rounded off to the nearest multiple of ten rupees.
3.   Tax is levied on the Total Income at the prescribed rates.
4.   Total Income can be equal to GTI or less than GTI.
5.   If agricultural income exceeds Rs. 5000, it is included in the Total Income of an individual or HUF to determine the tax payable by the assessee.

CASUAL INCOME



Any receipt which is of a casual and non-recurring nature is casual income. In other words, casual income is that income the receipt of which is accidental and without any stipulation. It is in nature of an unexpected wind-fall.

Winning from lottery, crossword puzzles, card games and other games of any sort or from gambling or betting are non-recurring receipts and assessable as casual income.

The casual income does not include:
1.   A. Capital gains; or
B. Receipts arising from business or the exercise of a profession or occupation; or
C. Receipts, by way of addition to remuneration of an employee, such as bonus, gratuity, perquisites, etc.

2.   Voluntary payment received in exercise of an occupation is not treated as casual income, e.g., tips given in the ordinary way to taxi-drivers in the employ of taxi-owners are income arising from the exercise of an occupation. Similarly, gratuities to waiters in a hotel are taxable. A receipt may be taxable as income arising from the legal exercise of the profession even if the amount  is received as a gift from third parties to whom the legal services were not rendered and who were under no obligation to pay anything at all.
If an architect submitted a plan in a competition for construction of a building, the prize won by him, is income from profession.

3.   A gift from a relative is not income at all. Birthday and wedding gifts are simplest instance in point. A gift from a relative does not become income merely because it is repeated year after year. A regular allowance given year purely as a voluntary gift by a parent to a child or by a husband to his wife, or by one relation to another, is merely a fresh gift every time it is paid and does not amount to income.

4.   Payment by husband to his wife under an agreement to live apart as maintenance allowance is neither casual income nor a personal gift. Hence, it is taxable.


OTHER PROVISIONS RELATING TO CASUAL INCOME

1.   Expenses are not deductible: If expenses are incurred to receive casual income, such expenses are not deductible from any income. For example, an individual purchases lottery tickets, the cost of lottery tickets is not deductible from any income whatsoever. Similarly, if postal charges have been paid for sending crossword puzzles, such charges (expenses) are not deductible from income.

2.   Set-off losses not permitted: If instead of casual income there is casual loss, such loss cannot be set-off from any income. For example, if a person wins in a card game on the first day and losses the next day, he cannot set-off the loss against any income.

3.   Tax deduction at source:
A.  If the winnings from horse race exceed Rs. 10000, tax will be deducted at source at the prescribed rate.
B.   If the winning from any lottery, crossword puzzle, card game and other game of any sort exceed Rs. 10000, tax will be deducted at source at the prescribed rate.

4.   Rate of tax: On winning from lottery, crossword, puzzle, races, gambling, betting, etc. Tax is chargeable @30%.



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