Incocme method

In this method,national income measured form the distribution side.The goods and services are produced by the joint efforts of various factors.Hence,national income is calculated by adding the income of all individuals or factors in a country.The adding of salary,wages,allowance of individuals
and households,income earned from self-employment,personal income like rent,interest profit,undistributed corporate profit,corporate tax,depreciation fund gives gross domestic income (GDI or GDP).The addition of net income from abroad (export-imports ) to GDI gives gross nationals income (GNP).The subtract of depreciation fund from GNI gives net national income (NNI). It can be expressed as;
Net national income =gross domestic income+net income from abroad -depreciation fund
These things are no included in income ;

1. The income earned from the sale of car,house ,property produced in the past
   
2. The income earned from the sale of stocks,bonds
3. The income received by individuals as transfer payment from government
   
4. The inter-person transfer payments received from other individuals.

These income are not received from the production of final goods and services of an economics can be accurately measured.
It is obvious that according to this method,GNP aggregated is the following elements :

• Wages and salaries :The wages,salary,allowance received by labourers and employment from production works and t he social security contribution made by employer are included under the heading wages and salaries.
• Rent :The income received as rent from agricultural and non-agricultural property such as land,building,factory are included in this heading.Similarly,the estimated rent of such properties used by owner himself is also included in it.
• Interest :The income earned as interest by national is included in this heading.The estimated interest of the capital used by the owner himself is also included in it.But the interest earned from government debt is not included.Because,the interest earned from government dept is only a transfer of national income.
• Corporates profit :This heading includes the dividend received by the shareholders,profit tax and undistributed profit.
• Income of self-employed person :This heading includes the income of derived by self-employed.
• Indirect taxes :The income generated fro indirect taxes like excise,sales tax is also included is also included in national income.
• Depreciation or capital consumption allowance :The depreciation made by each firm for the repair and maintenance of machines,equipments is also included in national income.
• It income from abroad :The net national income from abroad is the different between the value of the goods and service exported and imported.If this different is positive,it is added in GNP,if negative it is subtracted from GNP,or only net income is added.

Then main advantage of income method is that it shows the distribution of national income among different classes of people like landlord,labour,capitalists,employees etc.Hence,this method is called national income by distributive share.The efforts should be made to avoid double while using this method.