Question

Calculate compensation of employees from the data given below :

S. No.	Particulars	Amount (in ₹ crore)
(i)	Interest	45
(ii)	Profits after tax	20
(iii)	Consumption of fixed capital	50
(iv)	Gross Domestic Product at market price (GDPMP)	200
(v)	Rent	25
(vi)	Corporate tax	5
(vii)	Goods and Services tax	10

Hint:

NDP at factor cost = 200 - 50 - 10 = 140. Subtract rent 25, interest 45, corporate tax 5 and profits after tax 20. Compensation of employees = Rs. 45 crore.

Answer 1

Step 1: Choose the method:
Compensation of employees is one of the factor incomes in NDP at factor cost. NDP at factor cost = Compensation of employees + Rent + Interest + Profit.
Profit = Corporate tax + Profits after tax (dividends and undistributed profits). So we first find NDP at factor cost.

Step 2: Find NDP at factor cost:
\[ NDP_{FC} = GDP_{MP} - \text{Consumption of fixed capital} - \text{Net indirect taxes} \]
Goods and Services tax is an indirect tax, and no subsidy is given, so net indirect tax is Rs. 10 crore.
\[ NDP_{FC} = 200 - 50 - 10 = 140 \]

Step 3: Find profit:
\[ \text{Profit} = 5 + 20 = 25 \]

Step 4: Find compensation of employees:
\[ NDP_{FC} = \text{Compensation of employees} + \text{Rent} + \text{Interest} + \text{Profit} \]
\[ 140 = CE + 25 + 45 + 25 \]
\[ CE = 140 - 95 = 45 \]

Final Answer:
Compensation of employees is Rs. 45 crore.\[ \boxed{\text{Rs. 45 crore}} \]