Type of Revenue income and what is net income
This query is : Resolved
09 February 2025
what is net income and type of revenue as per schedule III of Balance sheet.
12 August 2025
Sure! Here's a clear explanation of Net Income and Types of Revenue Income as per Schedule III of the Companies Act, 2013 (which governs financial statement presentation in India):
1. What is Net Income?
Definition:
Net Income (also called Net Profit or Net Earnings) is the bottom line profit of a company after deducting all expenses, including operating expenses, interest, taxes, depreciation, and any other expenses from total revenue.
Formula:
Net Income
=
Total Revenue
−
Total Expenses
Net Income=Total Revenue−Total Expenses
It shows how much profit the company has made during an accounting period.
2. Types of Revenue Income as per Schedule III
Schedule III classifies revenue into two main types for presentation in financial statements:
A) Revenue from Operations
Income earned from the core business activities of the company.
Includes:
Sale of goods (net of returns, discounts)
Revenue from services rendered
Other operating revenues like processing fees, commission, royalty (related to core business)
Shown as “Revenue from Operations” in the Statement of Profit and Loss.
B) Other Income (or Income from Other Sources)
Income not related to core operations, non-recurring or incidental in nature.
Includes:
Interest income
Dividend income
Profit on sale of assets/investments
Rent received
Miscellaneous income
Summary Table
Type of Revenue Income Description Examples
Revenue from Operations Income from primary business activities Sale of goods, services, royalties
Other Income Income from incidental or non-core activities Interest, dividends, rent, asset sale profit
3. Net Income in Schedule III Format
Schedule III requires companies to prepare the Statement of Profit and Loss showing:
Revenue from operations (Gross)
Less: Excise duty (if applicable)
Net Revenue from operations
Other income
Total revenue
Expenses
Profit before tax
Tax expenses
Profit for the period (Net Income)
Example:
Particulars Amount (₹)
Revenue from operations 1,00,00,000
Other income 5,00,000
Total Revenue 1,05,00,000
Expenses (COGS + Operating) 90,00,000
Profit before tax 15,00,000
Tax expense 4,50,000
Net Income (Profit after tax) 10,50,000
1. What is Net Income?
Definition:
Net Income (also called Net Profit or Net Earnings) is the bottom line profit of a company after deducting all expenses, including operating expenses, interest, taxes, depreciation, and any other expenses from total revenue.
Formula:
Net Income
=
Total Revenue
−
Total Expenses
Net Income=Total Revenue−Total Expenses
It shows how much profit the company has made during an accounting period.
2. Types of Revenue Income as per Schedule III
Schedule III classifies revenue into two main types for presentation in financial statements:
A) Revenue from Operations
Income earned from the core business activities of the company.
Includes:
Sale of goods (net of returns, discounts)
Revenue from services rendered
Other operating revenues like processing fees, commission, royalty (related to core business)
Shown as “Revenue from Operations” in the Statement of Profit and Loss.
B) Other Income (or Income from Other Sources)
Income not related to core operations, non-recurring or incidental in nature.
Includes:
Interest income
Dividend income
Profit on sale of assets/investments
Rent received
Miscellaneous income
Summary Table
Type of Revenue Income Description Examples
Revenue from Operations Income from primary business activities Sale of goods, services, royalties
Other Income Income from incidental or non-core activities Interest, dividends, rent, asset sale profit
3. Net Income in Schedule III Format
Schedule III requires companies to prepare the Statement of Profit and Loss showing:
Revenue from operations (Gross)
Less: Excise duty (if applicable)
Net Revenue from operations
Other income
Total revenue
Expenses
Profit before tax
Tax expenses
Profit for the period (Net Income)
Example:
Particulars Amount (₹)
Revenue from operations 1,00,00,000
Other income 5,00,000
Total Revenue 1,05,00,000
Expenses (COGS + Operating) 90,00,000
Profit before tax 15,00,000
Tax expense 4,50,000
Net Income (Profit after tax) 10,50,000
You need to be the querist or approved CAclub expert to take part in this query .
Click here to login now
Click here to login now
Similar Resolved Queries
Unanswered Queries
- GST REFUND ISSUE ON PURCHASE OF PLANT AND MACHINERY
- WRONG GSTR7 ENTRIES ACCEPTED ERRONEOUSLY
- Expert Help Required for TDS Refund 100000 Through TRACES – AY 2022–23
- IMPORT PURCHASE ENTRY PASSED IN BOOKS OF ACCOUNT
- FAST DS 26 Undisclosed Foreign Asset Disclosure Scheme 2026
- Regime change
- Tally: Imported bank entries do not show up in manual reconciliation
- Sales of goods of amount Rs97 lakhs to a party
- Confused About My Career After 12th — Cyber Security, AI or Finance? Need Guidance
- FAST-DS 2026 Under Tax Law - No recourse or support for person declaring via this scheme?
Trending Online Classes
-
DT & Audit (Exam Oriented Fastrack Batch) - For May 26 Exams and onwards Full English
CA Bhanwar Borana & CA Shubham Keswani
Subscribe to Pro
Join an elite circle of professionals
CAclubindia
