For an individual, gross income (i.e. the total income that comes in hand) minus taxes, allowances, rent payments, deductions and other costs of living is called net income. An individual’s net income is used to determine income tax and loan credibility. This may also be called take home pay. The take home pay might be significantly lesser than the gross amount.
In business, the net income is what remains after subtracting all the expenditures/costs (namely, business, taxes, depreciation, interest) from a company’s income. Net income is sometimes called the bottom line/earnings / net profit.
In business net income would be the figure arrived at after expenditures like paying taxes, paying salaries of employees, paying rent or maintenance of buildings, and purchasing any needed supplies. The net income may also be considered the company’s profit as it is the amount which remains with the company after all its expenditures and payouts.
When loans are granted, be it personal loans or any other loan, the amount that a person can get (the eligibility) is decided based on gross income and net income. The monthly installment of repayment requires being lesser than 40% in case of most of the loans in most of the Indian banks.