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Question

how to calculate national income from income method ?

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Solution

The formula for calculating National Income (NNPFC) using income method is as follows.

NNPFC = Compensation of employees + Operating surplus + Mixed income of self-employed + Net factor income from abroad

Here, compensation of employees comprises of the following items.

  • Wages and salaries
  • Compensation paid in kind
  • Employer's contribution to social security schemes

Operating surplus comprises of the following items.

  • Rent
  • Interest
  • Royalty
  • Profit

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