1). Exclusion of Real Transactions:
Only those products that are acquired and sold through the market are included when evaluating national income from the output side.
To put it another way, GDP comprises the monetary value of goods sold on the open market at current prices.
All direct sales of various goods and services, on the other hand, are prohibited
Barter transactions and numerous free services provided on a personal level are examples.
Because these services are not purchased through market transactions, the value of these services is not included in GDP.
2). The Worth of Leisure
We all place a monetary value on our time. We sell part of our time to employers in exchange for money, but we keep a lot of it for ourselves.
Some of this leisure is spent on domestic services that aren't counted as part of GDP.
The pleasure we derive from recreational pursuits and other leisure activities is not accounted for in GDP.
3). Environmental Damage Expenses:
A country's citizens may be able to enjoy more and better goods and services each year, but they must also endure greater traffic, bad air, polluted water, and other environmental costs that lower their quality of life.
Pollution and other characteristics of industrial activities that harm the environment are related to costs.
When calculating GDP, the costs of environmental degradation are not deducted from the market value of final items.
4). Measuring National Income:
India has a large hidden economy.
This economy is made up of transactions that are never disclosed to taxing authorities or other government agencies.
It comprises unlawful products and services transactions such as the sale of hazardous narcotics, gambling, smuggling, and prostitution.
These unlawful goods and services are finished things that are not counted as part of the GDP.
People who do not comply with tax rules, immigration laws, or government restrictions, and who do not report their income to tax authorities, are also part of the underground economy.
5). Transfer Payments and Capital Gains: All domestic transfer payments (personal, private, and government) are not included in a country's national income.
If a person receives a monetary present from his father, who is also an Indian resident, it will not be counted as part of India's national income.
If a student wins a Tata Foundation Scholarship for higher education, the same rationale applies.
This is an example of a payment made by a company to another company