Question

• Why is income-in-kind often excluded from income in implementing an income tax?

Answer 1

Answer : Income tax is a tax amount which have to be paid by tax-payers based on their income level. But income-in-kind is not earned money income. This is an income like gifts to people, benefits for employees or to others etc. Gross income does not include such gifts and benefits. As income-in-kind is not earned money income and income tax is paid by the tax-payer only based on tax-payer's earned money income, hence often income-in-kind is not included in income to implement the income tax.