Chapter Based Questions: What is Income ? | Introduction to Financial Markets for Class 9 PDF Download

Q.1. Choose the correct answer. 

(i) _____________is the life blood of any business.
(a) Cash
(b) Labour
(c) Material 

Correct Answer is Option (a)

(ii) Income may be defined as the true ________ in the amount of wealth.
(a) Decrease
(b) Increase
(c) Static value 

Correct Answer is Option (b)

(iii) What we receive in our pay cheque for the work we did in office is called
(a) Gross pay
(b) Net pay
(c) Deductions 

Correct Answer is Option (b)

(iv) For most working people,______ are the biggest deduction.
(a) taxes
(b) incomes
(c) allowances 

Correct Answer is Option (a)

(v) Indirect tax is the tax imposed by the government on one person and paid by
(a) The same person
(b) Another person
(c) The government

Correct Answer is Option (b)

Q.2. Fill in the blanks.

(i) __________ income is the amount you earn for working at the office.
(ii) Income tax is a fee or levy charged by the government on the _______ earned by an individual.
(iii) Taxes can be classified in to two namely _______ and  _______.
(iv)   _______ is the subtraction from the gross pay.
(v)  _______ means ‘money coming in’.

(i) Salary
(ii) Income
(iii) Direct and Indirect
(iv) Deductions
(v) Income

Q.3. Match the following.

(i) Income - Fees charged on income by the government.
(ii) Tax - Take home pay
(iii) Net Pay - Life blood of business
(iv) Gross deduction - Increase in wealth
(v) Cash - Subtraction from salary income

(i) Income - Increase in wealth
(ii) Tax - Fees charged on income by the government
(iii) Net Pay - Take home Pay
(iv) Gross deduction - Subtraction from Salary income
(v) Cash - Life blood of Business

Q.4. True or False.

(i) A budget is a plan for managing money during a given period of time.
(ii) Income can be received in cash only.
(iii) When you get money on your birth day from your friend, it is an income.
(iv) Direct tax is the tax imposed by the government on one person and paid by another person
(v) Winning from lotteries, card games etc. are to be treated as income.

(i) True
(ii) False
(iii) True
(iv) False
(v) True

Q.5. Answer the following briefly.

1. What do you mean by income?

Ans: Income is the true increase in the amount of wealth that comes to a person during a fixed period. It includes money received from various sources such as salary, business profits, rents, interests, or other earnings. Income is essentially the money that is coming in, which individuals use for their expenses, savings, and investments.

2. What do you mean by gross income?

Ans: Gross income is the total amount of income earned before any deductions are made. It includes all forms of earnings such as salaries, business profits, rental income, and other sources of income before taxes, provident fund contributions, or other deductions are subtracted.

3. What is disposable income?

Ans: Disposable income is the net income that remains after all deductions, such as taxes and provident fund contributions, are subtracted from the gross income. It is the amount of money that an individual actually takes home and can use for spending, saving, and investing. It represents the money available to meet personal and household expenses.

4. Short Note on 'Net Pay'

Ans: Net pay is the amount of income that an employee takes home after all deductions have been subtracted from the gross pay. These deductions typically include income tax, provident fund contributions, professional tax, and other specific deductions made by the employer. Net pay represents the actual earnings available to the employee for personal use, spending, and savings.

5. What is a Tax?

Ans: A tax is a mandatory financial charge or levy imposed by a government on individuals, businesses, or other entities to fund various public expenditures. Taxes are used to finance essential services such as education, healthcare, infrastructure, defense, and welfare programs. There are different types of taxes, including income tax, sales tax, property tax, and corporate tax. Taxes are a crucial source of revenue for governments to maintain and develop the economy and society.

Q.6. Answer in detail.

Ans: Taxes and other deductions significantly impact an individual's income by reducing the gross income to arrive at the net income, which is the actual amount available for spending and saving. Here is a detailed explanation:

• Income Tax: This is a mandatory deduction levied by the government on an individual's earnings. It is calculated based on the income tax rates applicable to different income brackets. The deducted amount is used to fund public services such as education, healthcare, and infrastructure.
• Provident Fund: A portion of an employee’s salary is deducted and contributed to a provident fund, which is a retirement savings scheme. The employer also contributes an equivalent amount to this fund. This ensures that employees have financial security after retirement.
• Professional Tax: This is a state-level tax levied on professionals and salaried individuals. It is a nominal deduction that varies from state to state.
• Other Deductions: These can include health insurance premiums, loan repayments, lunch recovery, and other company-specific deductions. These deductions are typically agreed upon between the employer and employee and are meant to cover various benefits or repayments.