Two precautions to be taken while calculating national income by income method are as follows:
(a) Transfer incomes such as pension and unemployment remittances should not be considered as income and should not be included in the calculation of national income. Only income earned by providing productive services must be included in the calculation of national income.
(b) The sale and purchase of second-hand goods should not be included in the calculation of national income by income method. This is because such goods are not a part of production in the current year. However, the commission earned through a trade of such goods is included in national income as the commission is income earned through productive services rendered in the current year.
