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Compensation
This is the total payment received in exchange for a service as well as a reward for outstanding performance. It is usually used in reference to a person’s salary or wages. Compensation includes the following:
- Basic pay
- Dearness allowance
- House rent allowance
- Leave travel allowance
- Overtime pay
- Bonus
- Perks, incentives, or commission
- Stock options or profit sharing
Compensation or salary is an important consideration for lenders as it defines a person’s ability to repay debt. For instance, if A gets a fixed income of ₹15,000 and variable pay of ₹10,000 based on job execution in an organisation, then A’s total compensation will be ₹25,000.
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