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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