The Difference Between Total Income and Gross Total Income
What is Total Income?
Total income refers to an individual’s entire income for the year, including all sources of income such as wages, salaries, commissions, bonuses, tips, and other forms of compensation. It also includes income from self-employment, contract work, rental income, dividends, interest, and capital gains.
What is Gross Total Income?
Gross total income, on the other hand, is the sum of all taxable incomes of an individual before making any deductions, exemptions, or exclusions. It includes all sources of income such as salary, interest on bank deposits, rent, capital gains, and so on. It also includes any income that is exempt from taxation, such as agricultural income up to a certain limit.
The Key Differences
The key difference between total income and gross total income is that total income is the actual income received during the year, while gross total income is the sum of all the taxable incomes before any deductions.
Another significant difference is that while total income takes into account all sources of income, gross total income only considers taxable income. This means that an individual’s gross total income may be higher than their total income if they have non-taxable income sources.
It is also important to note that while gross total income is used to determine an individual’s tax liability, the total income is used to assess their ability to repay debts or qualify for loans and other financial products.
In summary, total income and gross total income are two different concepts that are frequently used in financial reporting and taxation. While they may seem similar, they have significant differences that are important for individuals to understand. By knowing the difference between these terms, individuals can make informed financial decisions and better manage their finances.
Table difference between total income and gross total income
|Gross Total Income