Presentation Differs
In U.S. taxation, gross income includes all sources of income such as salaries, income from house property, profits and gains from business or profession, capital gains, and income from other sources. This total, referred to as gross income, encompasses all earnings before any deductions.
In India, income is typically calculated on a net basis. For a businessman, this means that income is considered to be the net profit after deducting expenses from the gross revenue. In contrast, U.S. taxation starts with gross revenue as gross income, and then adjustments are made for expenses incurred to generate that income. This results in the Adjusted Gross Income (AGI).
The concept of AGI in the U.S. aligns closely with the gross total income in India. After determining the AGI, taxpayers in the U.S. can further reduce their taxable income through standard and itemized deductions, and additional deductions such as the QBI deduction. These deductions are subtracted from the AGI to arrive at the taxable income for Individuals.
By CA L.Muralidharan and CPA L.Mukundan
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