Gross Total Income (GTI) | What is GTI? How To Calculate and Difference Between GTI and TI

Gross Total Income

Gross Total Income (GTI): Tax in itself is a tedious phenomenon, and the complexity increases when various terms are also included in the list. We all know that tax is charged levied on an individual’s income. However, the pay can further be classified and referred to by numerous names in India, such as

  • Exempt Income
  • Taxable Income
  • Total income
  • Gross Total Income Etc.

In this article, we will discuss the understanding of the Gross Total Income or GTI.

What is Gross Total Income?

As the title suggests, Gross Total Income is the accumulation of all the income earned by an individual during a specific period. As per Section 14 of the 1961 Income Tax Act, the income of any individual or any assessee can be classified under these five categories,

  • Income from Salaries
  • Income from House Property
  • Profits and Gains of Business and Profession
  • Capital Gains
  • Income from Other Sources

And, the Gross Total income is calculated when the earnings from all the five categories of income are taken under together.

Taxation calculation and investment in tax-saving schemes are essential annual exercises if you are earning money. In India, one may feel overwhelmed with the number of many tax jargons and numerous deductions.

The 1961 Income Tax Act defines both the terms as follows:

Section 80B (5) of the IT Act defines the Gross Total Income

  • Includes income received or receivable by an individual in the prior-year adjusted for the clubbing and carry-forward amounts from previous years.
  • Deduct the non-taxable parts of one’s income from this amount to estimate ‘Gross Total Income.’

What are the Various Additions that Needed to be Made in the Gross Total Income?

Apart from summing up the earnings from all the five categories of income, the following might also be added in order to calculate one’s total gross income.

  • Income to be added according to the clubbing provisions under the Income Tax Act.
  • Adjustments for the set-off and carry forward of the losses.
  • Unexplained Tax Credit under section 68 of the 1962 Income Tax Act, received in cash or credit. This implies receipt of any amount of which one does not have sufficient or valid explanation describing the source of receipt of such income. These kinds of income are added to one’s Gross Total Income.
  • Unexplained Investments, i.e., the investments one has made, but one cannot give a satisfactory explanation about the source, or improper disclosures have been made on their part. In all such situations, their investments are going to be termed unexplained investments as per the purview of section 69 of the 1961 Income Tax Act. Also, it shall be added to the Gross Total Income (GTI)
  • Assets and other income under Section 69A, valuables such as money, jewelry etc., for which no proper explanation is ready with the assessee, is going to be added to the Gross Total Income of the individual.
  • Undisclosed or the lower disclosed income is going to be added to the individual’s Gross Total Income as per Section 69B of the 1961 Income Tax Act. This relates to all those income and assets that have not been reported or made a lower disclosure than the actual funds.
  • Unexplained expenditures under section 69C. Suppose one has made some expenses and no proper explanation regarding the same available. In that case, it is going to be added to the Gross Total Income and subsequently charged to taxes accordingly.
  • Hundi amount borrowed or repaid. Suppose one has taken or refunded a particular amount on the Hundi. In that case, it is going to be added to the individual’s Gross Total income or GI according to the provisions of section 69D of the 1961 income tax act.

Even though we have understood the above income and assets or expenditures added to the total gross income, these additions or the nature of additions are not usually witnessed in routine.

Why Must the Gross Total Income (GTI) be Calculated?

The computation of total gross income is necessary as

  • It is the amount needed to be disclosed when filing the Income Tax Return.
  • Deductions under Chapter VI A are needed to be deducted from the GTI to arrive at the taxable or total income.

Gross Total Income is not going to include:

While calculating the total gross income, one is needed to sum up all of their income without reducing the amount for any tax-saving investments that have been made under Section 80C to 80U under the 1961 Income Tax Act.

What is the Total Income? State the Difference Between one’s Gross Total Income (GTI) and the Total Income?

The income that arrived after claiming all the allowable deductions from an individual’s Gross Total Income is known as the individual’s Total Income.

Gross Total Income is the sum of all of the income an individual receives during a year. On the other hand, Total income is the amount of income subject to taxation after all the allowable deductions or exemptions have been subtracted from the Gross Total Income.

Total income =Gross Total Income –Allowable Deductions

When Do Taxpayers have to Pay the Taxes on their Income?

The taxes on one’s income can be finalized after the completion of the previous year. But, to enable a regular flow of the funds and easing the taxes collection, the 1961 Income-tax Act has provisions for payment of taxes in advance during the year of earning itself or prior to completion of the previous year. It is also known as the Pay as one’s made concept.

The Government collects taxes by the following means:

  • Voluntary payment by the country’s taxpayers into different designated Banks like the Self-Assessment tax, Advance tax, etc.
  • Taxes deducted at source.
  • Taxes collected at source
  • Equalisation Levy

FAQ’s On Gross Total Income

Question 1.
What is included in total gross income?

Gross income is an individual’s income earned, the total income on a paycheck before the taxes and others are deducted. It involves all the incomes of an individual from all the sources – including wages, interest income, rental income, and dividends.

Question 2.
How do I calculate the gross income from net income?

Revenue – Cost of the Goods Sold – Expenses = Net Income

The first part of the formula, revenue subtracted from the cost of goods sold, is also the formula for gross income.

Question 3.
Is total gross income yearly or monthly?

Gross income refers to the total amount earned by an individual before the taxes and other deductions, just like the annual salary. In order to determine gross monthly income, divide the full salary by 12 for the months in the year.

Categories GST

GST Payment Due Dates And Interest On Late Payment | Late Fees Payment

GST Payment Due Dates And Interest On Late Payment

GST Late Payment: The government will charge interest on any GST late payment made by the taxpayer. Normally, a taxpayer’s GST liability must be paid before the 20th of the month, along with the filing of the GSTR-3 return. If the taxpayer fails to pay the liability due on that date, the late payment will be subject to interest. In this article, let’s understand everything about interest on late payment of GST in detail.

GST Late Fees Payment

The maximum late fee charged in the case of nil GSTR-1 and GSTR-3B filing is Rs.500 per return (i.e Rs. 250 each for CGST & SGST). Other than zero filings, the maximum late charge in GSTR-1 and GSTR-3B is set based on the yearly turnover slab, as follows:

  • If the previous financial year’s annual turnover was less than Rs.1.5 crore, a late fee of up to Rs.2,000 per report can be levied (i.e Rs.1000 each for CGST and SGST).
  • Only a maximum late fee of Rs.5,000 per return can be levied if the turnover is between Rs.1.5 crore and Rs.5 crore (i.e Rs. 2500 each for CGST and SGST).
  • A late fee of up to Rs.10,000 (i.e. Rs. 5000 per CGST and SGST) might be levied if the turnover exceeds Rs.5 crore.

Late Fees Under GST

Details GST Late Fees
GSTR 3B, GSTR 1 and GSTR 4 (If there are Sales) Rs 50 per day up – maximum of Rs 10,000
GSR 3B, GSTR 1 and GSTR 4 (Nil Return) Rs 20 per day – a maximum of Rs 10,000
GSTR 9 & GSTR 9A Rs 200 per day – a maximum of 0.5% of turnover
GSTR 10 (Final Return) Rs 200 per day

GST Late Fees Waiver Notification

  • CGST notification 21/2021 dated 1st June 2021: The late cost for delayed submission of GSTR-4 from FY 2021-22 has been rationalised. For nil filing, the maximum late charge will be Rs. 500 per return, and for other than nil filing, it would be Rs. 2000.
  • CGST announcement 22/2021 dated 1st June 2021: The maximum late cost chargeable for GSTR-7 i.e. TDS filing under GST is Rs. 2,000, but the late fee per day levied is decreased from Rs.200 to Rs.50 per act, per return.

GST Late Fee Calculation for GSTR-3B And GSTR-1

According to the GST Acts, the late charge for intrastate supplies should be paid under both the CGST and SGST Acts as follows:

Act Name For each day that you are late, you will be charged a cost
Central Goods and Services Act, 2017 Rs 25
Respective State Goods and Services Act, 2017 (or) Union territory Goods and Services Act, 2017 Rs 25
The total amount of late fees that must be paid per day Rs 50

Filers of Nil returns must pay the following late fee:

Act Name Late Fees Per Day
CGST Act Rs 10
SGST Act Rs 10
Total late fees to be paid per day Rs 20

GST Late Fee Calculator Online: While uploading GST returns, the GST website will automatically determine the amount of late fee that applies.

GST Interest Rate for Late Payment Of Tax

Interest is charged on late GST payments based on the net tax liability after deducting input tax credit claims. Every taxpayer must pay interest if he or she:

  • Makes a late GST payment, i.e., after the due date, pays CGST, SGST, or IGST.
  • The excess input tax credit is claimed.
  • Excess output tax liability is reduced.

If GST is not paid by the due date for filing a return, interest will be charged at the following rates:

Details Interest
GST Late Payment of Taxes 18%
Excess ITC Claimed Or Excess Output Tax Reduction 24%

GST late payments will be subject to interest at the rate of 18% per year. If it is proven that the taxpayer misrepresented his or her output tax liability on the GST return, interest at the rate of 24% will be charged.

Note: In addition to interest, the taxpayer may face a penalty under GST if he or she files an incorrect return, makes a deliberate misstatement or commits fraud.

GST Penalty for Late Filing

A notice will be issued by the Tax Officer for the amount due, plus interest and penalty, if the STG is not paid or is underpaid, or if credit is wrongfully obtained, utilised, or erroneously refunded as a result of fraud, intentional deception, or suppression of facts to escape tax.

The amount of interest that will be charged if you pay your GST late is listed below. When there is an intent to evade tax, a penalty at the rate listed below may be imposed in addition to the interest:

Tax, Interest, and Penalty Payment Time limits  Penalty Amount
Before issuance of show cause notice 15% of the tax amount due
Within 30 days of the show cause notice being issued  25% of the tax amount due
Within 30 days from the communication of the order  50% of the tax amount due
In any other circumstance  100% of the tax amount

FAQ’s on GST Late Payment

Question 1.
What is the late fee for GSTR 3B?

For those taxpayers who did not have any tax burden, the late fine for non-furnishing of GSTR-3B from July 2017 to April 2021 has been fixed at Rs 500 per return. Taxpayers who owe money will be penalised a maximum of Rs 1,000 in late fines if their returns are not filed by August 31, 2021.

Question 2.
What is the late fees for GSTR-9 and GSTR-9A?

For GSTR-9 and GSTR-9A late fees are Rs. 200 per day (CGST Rs. 100 and SGST Rs. 100) up to 0.0% of the turnover (0.25% for CGST and 0.25% for SGST).

Question 3.
Is interest on late payment of GST allowed as a deduction?

Yes, when GST is paid, any tax, duty, cessation, or fee paid under any laws that are in force, includes GST and customs duties or any other taxes, or cessations paid, shall be allowed as deduction. Interest paid in respect of these taxes may also be deducted.

Categories GST

GST on Purchase and Sale of Second-hand goods Margin Scheme

GST on Purchase and Sale of Second-hand goods Margin Scheme

GST on Purchase & Sale of Second-hand goods Margin: In our daily day-to-day life, we all either can sell our product which we bought years ago or purchase second-hand products purchased by their owner years before. When we are purchasing any product, we have to pay taxes on them like GST, and when we sell the goods, the buyer will have to pay the tax again for that same good; this is called double taxation.

Let’s understand with the help of an example:-

Suppose person A buys a car for rupees 8 lakhs, including the GST amount of 1.2 lakhs, and after five years, person A sold that car for Rs. 4 lakhs to person B then GST is imposed on such four lakhs rupees, it leads to the double taxation.

Therefore the Indian Government declares some rules for the purchase and sale of second-hand goods, and thus Margin scheme is made available.

There are two conditions:-

  1. There is no relation between the recipient and the related person.
  2. The only sole purpose for the consideration of the supplier is for the value of the products.

In the Marginal Scheme, there is some exception about above validation mechanism. The Marginal Scheme avoids the double taxation on the goods that are already borne the prevalence of tax.

Table of Content

What is a Margin Scheme?

It directly deals with the person who is involved in purchasing and selling second-hand goods. In the Margin scheme, the GST is paid related to the margin difference between second-hand goods’ purchase and sale price.

  • If you purchase second-hand goods from an unauthorised or unregistered dealer, you do not have to pay any GST for that second-hand product. This rule is established in Notification No. 10/2017 – Central Tax (Rate)). However, in standard cases, GST is payable if some reserve charges are affiliated with the product. These products sold, and GST is expected based on the difference between the sale and purchase amount.
  • The marginal Scheme is applicable only when there is no change or minor processing in the goods. If we change the nature of the second-hand goods, then this marginal scheme is not applicable for transactions and GST. If it causes any change in the nature of the product, then the GST will be applicable for the whole amount. Taking an example of it:
    • Suppose a jewellery shop owner purchase the gold ring and sold it to the customer with minor modification, like polishing etc. In that case, a marginal scheme will be applied to the product, but if the owner meets the gold ring and forms a necklace, then the GST is applicable for the whole amount, not for the marginal amount.
  • If we bought the second-hand products on negative as their sale price is low, then the marginal scheme will be ignored for the transaction. Again understanding with an example:-
    • If person A can sell a bike at Rs. 5000 profit and a second bike with Rs. 2000 loss, then person A has to pay the marginal tax only for the first bike and not for the second.
  • If we add some features to the purchased item like repair, refurbishing, reconditioning, etc., the same can also be added to the value of goods and be a part of the margin scheme.

What Is The Purchase Value If We Deal With The Defaulting Borrower And Repossession Your Money From The Defaulting Borrower?

If the defaulting borrowers captured your goods, then the purchase price (of second-hand goods dealer) will be calculated as the original purchase price of the good less than five percentage points for every quarter.

What is GST Rates Applicable for the Second-hand Product?

According to the GST law, there is no discrimination between new products and second-hand products. That means the GST Rates are identical for second-hand goods as if they were for the latest new goods.

If we give 28 % GST for a new car or a new car has 28 % GST Rates, then 28 % of GST Rates are applicable to the second-hand car sale. So there will be no difference in GST Rates for such new and used products.

Are Dealers Acting as an Agent?

Suppose a person is not related to purchasing and selling the products, but he acts as an agent between the buyer and seller. In that case, he or she ( the agent) needs to pay 18 % of the commission received from either the buyer’s side or the seller’s side as the GST. This 18 % is applicable under the GST law of 2017, that if a middle agent gets any commission during the deal between two parties, he or she has to pay 18 % GST from his commission.

What if we Purchase Second-hand Goods from the Registered Dealer?

If two registered dealers deal among them for a product, then the GST will be paid by the dealer who collects the selling item or the product. The dealer who sold the goods does not need to pay GST for their products. The GST produced by the purchasing dealer will count towards their Income Tax credit under the standard ITC Rule.

The marginal amount will be paid by the selling dealer, not the total amount as the GST.

There are still some points which you need to remember.

The person who is the sealer (sells second-hand goods) has to pay the GST only on his marginal tax. All the GST rates and the amount will be shown in the invoice of the GST payable. That is why the margin amount of the seller is determined by the purchase of goods; this is why no seller wants the purchaser to know the marginal for apparent reasons.

Is It Mandatory for Second-Hand Goods Purchasing?

You can choose for Marginal Scheme at your convenience; it is not necessary to opt for the Marginal scheme if you can opt for the marginal scheme once; that does not mean that you need to carry these scheme for the whole financial year. You can choose a Marginal scheme for any single good as per your needs.

Categories GST