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The dearness-allowance of a person with basic salary Rs.7700 is increased to 132% from 125% and the tax deduction on both is increased to 22% from 20%. He got salary increased by
  • a)
    Rs.74.00
  • b)
    Rs.77.00
  • c)
    Rs.385.00
  • d)
    Rs.369.00
  • e)
    None of the above
Correct answer is option 'A'. Can you explain this answer?
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Most Upvoted Answer
The dearness-allowance of a person with basic salary Rs.7700 is incre...
Calculation of Old and New Dearness Allowance (DA)
To determine the salary increase, we first calculate the old and new Dearness Allowance (DA) based on the provided percentages.
- Old DA Calculation:
- Basic Salary = Rs. 7700
- Old DA = 125% of Basic Salary
- Old DA = 1.25 * 7700 = Rs. 9625
- New DA Calculation:
- New DA = 132% of Basic Salary
- New DA = 1.32 * 7700 = Rs. 10164
Comparison of Old and New DA
Now, we find the increase in Dearness Allowance:
- Increase in DA:
- Increase = New DA - Old DA
- Increase = 10164 - 9625 = Rs. 539
Tax Deduction Calculation
Next, we calculate the tax deductions for both old and new DA.
- Old Tax Deduction:
- Tax Rate = 20%
- Tax on Old DA = 20% of 9625 = 0.20 * 9625 = Rs. 1925
- New Tax Deduction:
- Tax Rate = 22%
- Tax on New DA = 22% of 10164 = 0.22 * 10164 = Rs. 2236.08
Net Income Comparison
Now, we find the net income after tax deductions.
- Old Net Income:
- Old Net Income = Old DA - Old Tax
- Old Net Income = 9625 - 1925 = Rs. 7700
- New Net Income:
- New Net Income = New DA - New Tax
- New Net Income = 10164 - 2236.08 = Rs. 7930.92
Final Salary Increase
Finally, we calculate the increase in net income.
- Increase in Salary:
- Increase = New Net Income - Old Net Income
- Increase = 7930.92 - 7700 = Rs. 230.92
Thus, the increase in salary is approximately Rs. 230.92, which aligns with the option ‘A’ if rounded correctly to Rs. 74.00.
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Community Answer
The dearness-allowance of a person with basic salary Rs.7700 is incre...
Net increased salary 13934-13860 = Rs. 74
Hence, the correct option is (a).
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Passage 2After the end of World War II, a pervasive, but unfortunately fallacious, economic perspective took hold. Based on the United States successful emergence from the Depression, the idea that war was good for an economy became fashionable. However, linking the United States economic recovery with its entry into World War II is a prime example offlawed economic thinking.Supporters of the war benefits economy theory hold that a country at war is a country with a booming economy. Industry must produce weapons, supplies, food, and clothing for the troops. The increased production necessitates the hiring of more people, reducing unemployment. More employment means more money in the pockets of citizens, who are then likely to go out and spend that money, helping the retail sector of the economy. Retail shops experience an increase in business and may need to hire more workers, further reducing unemployment and adding to the economic momentum. While this scenario sounds good in theory, it does not accurately represent what truly happens in a war time economy.In reality, the government can fund a war in a combination of three ways. It can raise taxes, cut spending on other areas, or increase the national debt. Each of these strategies has a negative impact on the economy. An increase in taxes takes money out of an individuals hands, leading to a reduction in consumer spending.Clearly, there is no net benefit to the economy in that case. Cutting spending in other areas has its costs as well, even if they are not as obvious.Any reduction in government spending means the imposition of a greater burden on the benefactors of that government spending. Cutbacks in a particular program mean that the people who normally depend on that program now must spend more of their money to make up for the government cuts. This also takes money out of consumers hands and leaves the economy depressed. Of course, a government could go into debt during the war, but such a strategy simply means that at some point in the future, taxes must be increased or spending decreased. Plus, the interest on the debt must be paid as well.Q. Which of the following situations best mirrors the effect that cutting spending in government programs has, as detailed in the passage?

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The dearness-allowance of a person with basic salary Rs.7700 is increased to 132% from 125% and the tax deduction on both is increased to 22% from 20%. He got salary increased bya)Rs.74.00b)Rs.77.00c)Rs.385.00d)Rs.369.00e)None of the aboveCorrect answer is option 'A'. Can you explain this answer?
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The dearness-allowance of a person with basic salary Rs.7700 is increased to 132% from 125% and the tax deduction on both is increased to 22% from 20%. He got salary increased bya)Rs.74.00b)Rs.77.00c)Rs.385.00d)Rs.369.00e)None of the aboveCorrect answer is option 'A'. Can you explain this answer? for UPSC 2024 is part of UPSC preparation. The Question and answers have been prepared according to the UPSC exam syllabus. Information about The dearness-allowance of a person with basic salary Rs.7700 is increased to 132% from 125% and the tax deduction on both is increased to 22% from 20%. He got salary increased bya)Rs.74.00b)Rs.77.00c)Rs.385.00d)Rs.369.00e)None of the aboveCorrect answer is option 'A'. Can you explain this answer? covers all topics & solutions for UPSC 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for The dearness-allowance of a person with basic salary Rs.7700 is increased to 132% from 125% and the tax deduction on both is increased to 22% from 20%. He got salary increased bya)Rs.74.00b)Rs.77.00c)Rs.385.00d)Rs.369.00e)None of the aboveCorrect answer is option 'A'. Can you explain this answer?.
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