ECONOMICS
BUDGETING
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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Gross Pay
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Net Pay
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Income
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Savings
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Detailed explanation-1: -Net salary is the total salary one gets after all the mandatory deductions such as taxes that are made from the total gross salary. This is the total amount that gets credited to the bank account of the employee after all the deductions are done.
Detailed explanation-2: -Gross pay is what employees earn before taxes, benefits and other payroll deductions are withheld from their wages. The amount remaining after all withholdings are accounted for is net pay or take-home pay.
Detailed explanation-3: -Net pay is the amount after various deductions like PF, Income Tax, etc. We have mentioned the sum total of gross salary is to be deducted from eligible deductions to get the net pay. The components that get deducted from the gross salary include: Employee’s PF Contribution. Professional Tax (state-specific)
Detailed explanation-4: -Take-home Salary = Gross Salary – Income Tax – Employee’s PF contribution (PF) – Professional Tax. Gross Salary = CTC – Employer’s PF contribution (EPF) – Gratuity.