Is interest received on loan given to a foreign company in India included/excluded in national income?
Is interest received on loan given to a foreign company in India included/excluded in national income?
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Yes,
It will be included in national income as it is a part of factor income from abroad.
Explanation:-
A loan given to a foreign company is used for productive services.
It will add to the current flow of goods and services.
Thus interest received in such a loan is considered a factor income from abroad. It is added to the domestic income to arrive at the national income.
National Income = Domestic Income + Factor income from abroad – Factor income to abroad.
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