(a) Problem of double counting: The greatest difficulty in calculating the national income is that of double counting, which arises from the failure to distinguish properly between a final and an intermediate product. There always exists the fear of a good or a service being included more than once. If it so happens, the national income would work out to be many times the actual.

(b) Illegal activities: Income earned through illegal activities such as gambling, illegal extraction of wine, hoarding and black marketing is not included in national income. While calculating national income, such earnings are left out, so the national income works out to less than the actual.

(c) Change in price: Another difficulty in calculating national income is that of price changes which fail to keep stable the measuring rod of money for national income. When the price level in the country rises, the national income also shows an increase even though the production might have fallen and vice versa. Thus due to price-changes the national income cannot be adequately measured.

(d) Illiteracy: In developing countries, we find crores of people as illiterates. They do not keep proper accounts about the production and sales of their products. Under such circumstances, the estimates of production and earned incomes are simply a guess work.

(e) Non-availability of Data: Adequate and correct production and cost data are not available. The data relating to crops, forestry, fisheries, animal husbandry and the activities of petty shop keepers, small enterprises, etc., are not counted. For estimating national income by the income method, data on unearned incomes and on persons employed in the service sector are not available.