Identify and explain the concept from given illustration.Prachi can sp

1.	Identify and explain the concept from given illustration.Prachi can spend only ₹ 80,000/- though her income is one lakh per month.
Answer» Concept: Disposable Income Explanation : Disposable income refers to income which remains with a person after deducting income tax from total personal income. So, Disposable Income = Total Personal Income – Direct Taxes (income tax) It indicates actual spending capacity of a person. Every person is legally bound to pay income tax because it is compulsory to the government.

Identify and explain the concept from given illustration.Prachi can spend only ₹ 80,000/- though her income is one lakh per month.

Answer»

Concept: Disposable Income

Explanation : Disposable income refers to income which remains with a person after deducting income tax from total personal income.

So, Disposable Income = Total Personal Income – Direct Taxes (income tax) It indicates actual spending capacity of a person.

Every person is legally bound to pay income tax because it is compulsory to the government.