Gross Total Income vs Net Taxable Income: How Tax Is Computed
Last verified: June 2026, against the Income Tax Act and Budget 2025 provisions cited below. Figures apply to FY 2025-26 (AY 2026-27). General information, not personal tax advice.
“Gross total income”, “total income”, “taxable income” — these terms get used loosely, but the tax law treats them precisely, and your tax is charged only on the final figure. Understanding the journey from gross to net helps you read your own computation and spot errors. Here is how it works.
Step 1: the five heads of income
All income is first classified under five heads:
- Salaries
- Income from house property — see our house property guide
- Profits and gains from business or profession
- Capital gains
- Income from other sources (interest, dividends, winnings)
Step 2: Gross Total Income (GTI)
After applying set-off of losses, the income under all five heads is added together. This total is your Gross Total Income (GTI).
Step 3: Net (Total) Taxable Income
From GTI you subtract Chapter VI-A deductions (80C, 80D, 80CCD, 80G, etc., if you are on the old regime). The result is your Total Income, also called Net Taxable Income — and this is the figure on which slab tax is computed.
| Stage | What it is |
|---|---|
| Income under 5 heads | Salary, house property, business, capital gains, other sources |
| = Gross Total Income | Sum of all heads after set-off of losses |
| − Chapter VI-A deductions | 80C, 80D, 80CCD(1B), 80G, etc. |
| = Net Taxable Income | The figure tax is charged on |
Worked example
Salary ₹12,00,000 + savings interest ₹20,000 + rental income ₹1,00,000 = GTI ₹13,20,000. Less 80C ₹1,50,000 and 80D ₹25,000 (old regime) = Net Taxable Income ₹11,45,000. Slab tax applies to ₹11,45,000, not ₹13,20,000.
Why the distinction matters
Some limits are tested against GTI (for example, certain 80G donation ceilings are a percentage of adjusted GTI), while your tax and the 87A rebate are based on net taxable income. Mixing them up leads to wrong claims.
FAQs
Is GTI the same as taxable income?
No. GTI is before Chapter VI-A deductions; taxable (total) income is after them, and tax is charged on the latter.
Are deductions subtracted before or after GTI?
After. You arrive at GTI first, then subtract Chapter VI-A deductions to get net taxable income.
Which figure is the 87A rebate based on?
Net taxable income (total income), not GTI.
