Is value of interest foregone on loans provided by employer to employee included/excluded in National Income?
Is value of interest foregone on loans provided by employer to employee included/excluded in National Income?
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Yes,
The value of interest foregone on loans provided by employers to employees will be included in the national income as it is a part of the compensation to employees.
Explanation:-
Interest-free loans by employers to employees is just part of wages in kind.
The employees provide their factor services in return of it.
It adds to the flow of goods and services in the economy.
Compensation of Employees = Wages & Salaries (Wages in Cash + Wages in Kind) + Employer’s Contribution to Social Security Schemes.
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