ECONOMICS (CBSE/UGC NET)

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: -Gross salary is calculated by adding an employee’s basic salary and allowances prior to making deductions, including taxes. Here, a basic salary is the base income of an employee or the fixed part of one’s compensation package. Provident Fund is not taken into account while deriving the gross salary.

Detailed explanation-3: -Taxable income or gross income or adjusted gross income includes salaries, wages, bonuses, etc. along with unearned income and investment income. It is the amount that will be used to determine your tax liability.

Detailed explanation-4: -Gross salary is the monthly or yearly salary of an individual before any deductions are made from it. Components such as basic salary, house rent allowance, provident fund, leave travel allowance, medical allowance, Professional Tax etc. are some of the most prominent components of gross salary.

Detailed explanation-5: -Alternatively, you can calculate your gross income as (1) your monthly salary before taxes or (2) the number of hours you will work in a given month multiplied by your hourly pay rate.