Net income is the profit of a business after all expenses are deducted from revenue, often referred to as net profit or bottom line profit. It is crucial for understanding profitability, setting product pricing, tax calculations, and attracting investors. The document also touches on the components of personal net income and its relevance for taxation.

1. NET INCOME

2. What is Net Income?
Net income is defined as excess of Income or
Revenue of a business over all the expenditures of
the business for the specified period, say an
accounting year.
Net Income is also termed as Net Profit or Net
Earnings or bottom line profit.

3. Levels of Profit in P&L Statement
Revenue/Sales
Gross Income/Profit
Profit/Income before Interest, Tax,
Depreciation & Amortisation (EBIDTA)
Profit/Income before Tax,
Depreciation & Amortisation
Profit/ Income before Tax (PBT)
Profit/ Earning after Tax (PAT)

4. Net Income is important?
 To know exact profitability of business
 To decide the pricing of products
 To calculate taxes to be paid
 To compare with peer industries
 To borrow funds from lenders
 Useful for government to frame taxation policies
 To attract investors to invest in business

5. Aggregate of income of following sources is termed as Personal
Net Income
Tax is calculated on personal Net Income which is also termed as Net
Taxable Income
Income from Salary
/ Business &
Profession
Income from other
sources
Income from House
Property
Income from Capital
Gain
Personal
Net Income

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