ECONOMICS
FISCAL POLICY
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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____ reduce the incentive to work.
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____ make work more attractive.
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____ only work if unemployment is high.
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____ not redistribute wealth.
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Detailed explanation-1: -By influencing incentives, taxes can affect both supply and demand factors. Reducing marginal tax rates on wages and salaries, for example, can induce people to work more. Expanding the earned income tax credit can bring more low-skilled workers into the labor force.
Detailed explanation-2: -Incentives in Cash or Kind given to Dealers, Distributors, Channel Partners based on Target Completion would be subject to deduction of TDS 10% on Fair Market Value of such incentives in cash or kind, or on Purchase Value, if acquired.
Detailed explanation-3: -According to the Income Tax authority, if blue-collar workers are officially the employees of the organization, then their income tax on incentive pay/gift would only be taxable if the amount goes over Rs. 5, 000 P/A.
Detailed explanation-4: -When the income tax is increased, people have less money to spend. This reduces the demand for goods and services. Lower demand tends to decrease the general price level. Thus, inflation can be reduced by increasing income tax.