National income is defined as the sum total of factor incomes viz. rent, wages, interest and profit accruing to the normal residents of a country for their productive services during a definite period of time i.e. one year. Income is a flow. Thus national income is the earned income by the normal residents of a country during one year. Domestic income equals national income minus net factor income from abroad. In other words,
Domestic Income = National Income – Net Factor Income From Abroad Net factor income from abroad is the difference between the income received by the residents of a country from abroad for providing factor services and the income paid for the factor services provided by the non-residents in the domestic territory of a country.
