Business Accountant Tutorial | Computation of Total Income

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Computation of Total Income

The steps in which the Total Income, for any assessment year, is determined are as follows:

1. Determine the residential status of the assessee to find out which income is to be included in the computation of his Total Income.
2. 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.

(a) Income from Salaries
Salary/Bonus/Commission, etc. —
Taxable Allowance —
Value of Taxable perquisites —
Gross Salary —
Less: Deductions under section 16 —
Net taxable income from Salary —

(b) Income from House Property
Net annual value of House Property —
Less: Deductions under section 24 —
Income from House Property —

(c) Profit and Gains of Business and Profession
Net profit as per P & L Account —
Less/Add: Adjustments required —
to be made to the profit as per
provisions of Income-tax Act.
Net Profit and Gains of Business and Profession —

(d) Capital Gains
Capital Gains as computed —
Less: exemptions under section 54/54B/54D, etc.—
Income from Capital Gains —

(e) Income from Other Sources
Gross Income —
Less: Deductions —
Net Income from Other Sources —
—
Gross Total Income [(a) + (b) + (c) + (d) + (e)]Less: Deduction available under Chapter VIA —
(Sections 80C to 80U) —
—

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