What are Gross Wages

 Gross wages is the compensation to laborers for getting their services. It may be on the basis of hours or units of production. In India, we can calculate gross wages by totaling the payment to workers. Gross salaries are calculated by totaling the payment to employees. But, in USA, both payment to worker and employees will be included in Gross wages. Only top level managerial salaries are calculated separately there. Fees for services, tips, and similar income are also included in gross wages. It is well established that income from personal services must be included in the gross income of the person who performs the services. Mere assignment of the income does not shift the liability for the tax

Accounting of Gross Wages 

  Gross Wages are the expenses for those who get services. So, after adjustments, gross wages are shown in the income statement. It also helpful to calculate cost of goods sold and gross margin because these expenses are the part of direct expenses. That is the reason, these expenses are included in prime cost.

Gross wages are the part of income for those who provide labor services. For calculating their income tax, we deduct different deductions and rebates from wages plus other source incomes.

Use of Gross Wages for Calculating GDP 

Gross wages have big role for calculating GDP of any nation. For calculating GDP with income approach, we use following formula


When we calculate compensation of employees, we include gross salary in total amount paid to employees and workers.

Laws Apply for Calculating Gross Wages in India

Following are the main laws which apply for calculating gross wages in India.

1. Indian Factory Act 1948

2. Payment of Wages Act 1936 : According to this law, laborers have right to get Rs. 6500 p.m.

3. Minimum Wages Act 1948

4. Agriculture Labor Act 1961

5. Motor Transport Labor Act 1961

6. Employees Compensation Act 1923

7. Confinement Benefit Act 1961

8. Labor Union Act 1926







Accounting Education: What are Gross Wages
What are Gross Wages
Accounting Education