ECONOMICS
MONEY MANAGEMENT
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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Gross income
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Net income
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Either A or B
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None of the above
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Detailed explanation-1: -What is Gross Income? Gross income refers to the total income earned by an individual on a paycheck before taxes and other deductions. It comprises all incomes received by an individual from all sources – including wages, rental income, interest income, and dividends.
Detailed explanation-2: -Income Tax, in this case, is deducted at source by the employer and is based on the gross pay of the employee. Also, basic salary of an employee should be at least 50%-60% of his/her gross salary.
Detailed explanation-3: -Earned income consists of the following types of payments: (a) Wages-(1) Wages paid in cash-general. Wages are what you receive (before any deductions) for working as someone else’s employee. Wages are the same for SSI purposes as for the social security retirement program’s earnings test.
Detailed explanation-4: -An individual’s gross salary is inclusive of benefits such as HRA, conveyance allowance, medical allowance etc. Net Salary = Gross salary-All deductions like income tax, pension, professional tax, etc. Net salary is also referred to as Take Home Salary.
Detailed explanation-5: -Your employer deducts a portion of your salary every month and pays it to the income tax department on your behalf. Based on your total salary for the whole year and your investments in tax-saving products, your employer determines how much TDS has to be deducted from your salary each month.