Income Tax Glossary G: Gift Tax, GST, Gross Salary, Gross Profit
Several important taxation concepts begin with the letter G. This section of the income tax glossary explains commonly used terms such as Gross Total Income, Gift Tax, Global Income and GAAR in simple language for Indian taxpayers.
Gift Tax
Gift tax refers to the tax implications that arise when a person receives money or assets as a gift.
Explanation
Under income tax laws, gifts exceeding a specified value may become taxable in the hands of the recipient if received from a non-relative.
Examples include:
Cash gifts
Property received without payment
Shares or securities gifted
However, gifts from specified relatives are generally exempt.
Gross Total Income (GTI)
Gross Total Income refers to the total income earned by a taxpayer from all sources before claiming deductions under the income tax laws.
Explanation
Income from all heads is added together to arrive at Gross Total Income.
These heads include:
Income from salary
Income from house property
Profits from business or profession
Capital gains
Income from other sources
Deductions are applied to Gross Total Income to calculate taxable income.
General Deduction
General deduction refers to deductions allowed under income tax provisions that reduce taxable income.
Explanation
These deductions are provided to encourage savings and investments.
Examples include deductions related to:
insurance premiums
retirement savings
eligible investments
Such deductions reduce taxable income and therefore reduce tax liability.
Global Income
Global income refers to the total income earned by a taxpayer from sources both within and outside India.
Explanation
If a person qualifies as a resident under tax laws, their global income may be taxable in India.
Examples include:
salary earned abroad
foreign investment income
rental income from overseas property
international business income
Government Revenue
Government revenue refers to the income collected by the government through various taxes and non-tax sources.
Explanation
Income tax forms a significant part of government revenue and is used to fund public services such as:
infrastructure development
education
healthcare
welfare schemes
Goods and Services Tax (GST)
GST is an indirect tax applied on the supply of goods and services in India.
Explanation
While GST is different from income tax, businesses often deal with both.
GST applies to sales of goods or services
Income tax applies to profits earned by the business
General Anti-Avoidance Rule (GAAR)
GAAR is a rule designed to prevent tax avoidance through artificial or complex financial arrangements.
Explanation
Tax authorities may deny tax benefits if a transaction is structured mainly to avoid paying taxes rather than for genuine business purposes.
Gross Receipts
Gross receipts refer to the total amount of money received by a business before deducting expenses.
Explanation
Gross receipts include income from:
sales
services
commissions
fees
They represent the total inflow of revenue before calculating profit.
Gross Salary
Gross salary refers to the total salary earned by an employee before deductions such as taxes and provident fund contributions.
Explanation
Gross salary generally includes:
basic salary
allowances
bonuses
incentives
other benefits
After deductions, the remaining amount becomes net salary.
Gross Profit
Gross profit refers to the profit a business earns after deducting the direct cost of producing goods or services.
Explanation
It is calculated by subtracting the cost of goods sold from total revenue.
Gross profit helps businesses understand their operational efficiency.
