What all is included in national income and what are the exceptions?
Dear Student,
1) By Value added Method - National Income includes-total of Gross value added in primary, secondary and tertiary sectors i.e. total sales less depreciation, less net indirect taxes, plus Net Factor income from abroad.
Exceptions- a)Sale of second goods is not included.
b) Domestic services aren't included, however, production of such services are included.
2) Income Method- National income includes- compensation of employees, rent, royalty, interest, profit, mixed income and net factor income from abroad.
Exceptions- a) Transfer income isn't included.
b) Capital gains aren't included.
c) Self Consumed domestic services aren't included.
d) Income from illegal activities and windfall gains aren't included.
e) Income from sale of second hand goods isn't included.
f) Death duty, gift tax, wealth tax aren't included.
3) By Expenditure Method- National Income includes- Private final consumption expenditure, government final consumption expenditure, gross domestic capital formation and net exports less depreciation and net indirect taxes and add net factor income from abroad.
Exceptions- a) Expenditure on intermediate goods isn't included.
b) Expenditure on second hand goods isn't included.
c) Transfer expenditure isn't included.
d) Expenditure on shares and bonds ( both new and old) isn't included.
Regards
1) By Value added Method - National Income includes-total of Gross value added in primary, secondary and tertiary sectors i.e. total sales less depreciation, less net indirect taxes, plus Net Factor income from abroad.
Exceptions- a)Sale of second goods is not included.
b) Domestic services aren't included, however, production of such services are included.
2) Income Method- National income includes- compensation of employees, rent, royalty, interest, profit, mixed income and net factor income from abroad.
Exceptions- a) Transfer income isn't included.
b) Capital gains aren't included.
c) Self Consumed domestic services aren't included.
d) Income from illegal activities and windfall gains aren't included.
e) Income from sale of second hand goods isn't included.
f) Death duty, gift tax, wealth tax aren't included.
3) By Expenditure Method- National Income includes- Private final consumption expenditure, government final consumption expenditure, gross domestic capital formation and net exports less depreciation and net indirect taxes and add net factor income from abroad.
Exceptions- a) Expenditure on intermediate goods isn't included.
b) Expenditure on second hand goods isn't included.
c) Transfer expenditure isn't included.
d) Expenditure on shares and bonds ( both new and old) isn't included.
Regards