What is Gross profit and Net income
This query is : Resolved
09 February 2025
what is Gross profit , Net income and Net Loss as per schedule III also.
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
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