ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -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-2: -Gross income includes your wages, dividends, capital gains, business income, retirement distributions as well as other income. Adjustments to Income include such items as Educator expenses, Student loan interest, Alimony payments or contributions to a retirement account.

Detailed explanation-3: -To calculate net income, take your gross income and subtract all of your business expenses-marketing or advertising costs, travel or office expenses, tax payments, etc.-as well as any deductions you may be eligible for such as a home office space, retirement plan, or legal and professional fees.

Detailed explanation-4: -It is the amount that employees take home after deducting provident funds, insurance, etc. The components of gross amount include House Rent Allowance, Conveyance Allowance, and Medical Allowance, among others. The components of net income include Income Tax, Professional Tax, Provident Fund, Pension, etc.

Detailed explanation-5: -It is basically 4.81% of the employee’s basic salary. In this case, tax is based on the employee’s gross salary and the employer is required to deduct TDS from an employee’s salary. However, the basic salary of an employee should be at least 50-60% of their gross salary.