The term National Income represents

National Income is defined as Net National Product at factor cost. Net National Product at market prices is obtained by subtracting depreciation from Gross National Product at market prices; to convert this market-price measure to factor cost we must remove net indirect taxes (indirect taxes minus subsidies). Algebraically this is: National Income = GNP at market prices − depreciation − indirect taxes + subsidies, which is exactly option (3). The textbooks state that NNP at factor cost ≡ National Income and give the formula as NNP at market prices less net indirect taxes [2], and list the relevant aggregates showing GNPmp and depreciation relationships [3].

Sources

1. [1] Macroeconomics (NCERT class XII 2025 ed.) > Chapter 2: National Income Accounting > NNP ≡ GNP – Depreciation > p. 25
2. [2] Macroeconomics (NCERT class XII 2025 ed.) > Chapter 6: Open Economy Macroeconomics > National Income Identity for an Open Economy > p. 103
3. [3] Indian Economy, Nitin Singhania .(ed 2nd 2021-22) > Chapter 1: National Income > Eight (08) Measures or Aggregates of National Income: 1. GDP extsubscript{MP} = Gross Domestic Product at Market Price. 2. GDP_ extsubscript{FC} = Gross Domestic Product at Factor Cost = GDP_ extsubscript{MP} – Indirect taxes + Subsidies 3. NDP extsubscript{MP} = Net Domestic Product at Market Price = GDP_ extsubscript{MP} – Depreciation 4. NDP_ extsubscript{FC} = Net Domestic Product at Factor Cost = NDP_ extsubscript{MP} – Indirect taxes + Subsidies 5. GNP extsubscript{MP} = Gross National Product at Market Price = GDP_ extsubscript{MP} + NFIA 6 > p. 9