Gross income

Meaning & Definition

Gross income represents an individual’s entire income earned from different sources, before deductions (such as, tax, pension). Gross income includes salary, bonuses, allowance, and other income sources. Gross income is generally a basis for tax calculations and net pay (take-home pay) in terms of HR and payroll administrative practices.

Important Features of Gross Income 

• Establishes a foundation from which you calculate income taxes. 
• Provides net (take-home) salary information. 
• Establishes transparency in your salary. 
• Required for determining payroll compliance. 
• Essential for benefit plan calculations and financial planning.

Compliance & Policy Considerations 

The Income Tax Act, 1961, defines and governs tax liability for individuals and corporations that generate gross income. It is also used to determine the amount of taxable income after all deductions and exemptions have been considered.

Employers have a responsibility to properly calculate the amount of tax deducted at source (TDS) from the gross income of their employees.