Gross vs Net - Difference and Comparison

Gross vs Net

Gross refers to the total and Net refers to the part of the total that really matters.

Comparison chart

Improve this chart	Gross	Net
Taxation:	Salaried people now pay income-tax on their gross income as per Income-Tax Act of 1961	Businesses and self-employed persons pay tax on their net income as per Income-Tax Act of 1961
Used in:	The terms gross is commonly used in the fields of accounting and mathematics & also frequently used in everyday life	The term Net is commonly used in the fields of accounting and mathematics & also frequently used in everyday life
Represents:	Gross represents the whole	Net represents a part of the whole
Meaning:	The term gross refers to the total amount made as a result of some activity. It can refer to things such as total profit or total sales.	Net (or Nett) refers to the amount left over after all deductions are made. Once the net value is attained, nothing further is subtracted. The net value is not allowed to be made lower.

edit Differences in Everyday Usage

In everyday usage, Gross Weight refers to the total weight of the goods + the container and packaging. On the other hand, Net weight refers to only the weight of the goods in question.

edit Gross vs. Net in Economics

In economics, gross means before deductions (brutto), e.g. Gross Domestic Product (GDP) refers to the total market value of all final goods and services produced within a country in a given period of time (usually a calendar year). Net Domestic Product (NDP) refers to the Gross Domestic Product (GDP) minus depreciation on a country's Capital (economics) goods. (The NDP is thus, in effect, an estimate of how much the country has to spend to maintain the current GDP.)

edit Gross vs. Net in Accounting

See Income vs Revenue

edit Gross vs Net Income

In accounting, for a P&L (Profit and Loss) statement, Gross profit, or Gross income, or Gross operating profit is the difference between revenue and the cost of making a product or providing a service, before deducting overheads, payroll, taxation, and interest payments. Net profit is equal to the gross profit minus overheads minus interest payable plus one off items for a given time period.

In relation to UK Value Added Tax (VAT, Sales Tax) the Net is the amount before tax, the gross is the amount including tax. Note that "net" may also be spelt "nett".

edit Gross Margin vs Net Margin

Gross margin is the ratio of gross profit to revenue. Net margin is the ratio of net profit to revenue.

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Comments: Gross vs Net

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Anonymous comments

As a quick way to remember that Gross comes before Net..just remember 'G' comes before 'N'
70.24.53.51 on 2011-10-28 15:02:33

That's right. It's simple algebra. Tax rate is 25%. Tax is applied to gross income and what's left after tax is net income. So net income is 75% (100% - 25%) of gross income. Let's say gross income is X. So Net income = 0.75 * X. We know that net income is $100. So 0.75 * X = 100. So X = 100 / (0.75)
24.16.24.203 on 2011-07-07 15:28:31

Thanks for a very clear and informative article. Just to expand on the below comments; it's simply a question of algebra, to decrease a value by 25% one could multiply the value by 0.75 (1 - 0.25), so to get back to the original, just divide by 0.75. Took two years before that correction was made, hopefully no one used the first incorrect method...
85.133.32.70 on 2011-07-07 10:44:13

no you would divide by .75. Dont listen to the uneducated person below
208.68.193.3 on 2011-02-24 00:43:24

Multiply 100 by .25, then add.
63.167.255.155 on 2009-12-21 19:32:57

Ive got this question on a job quiz sheet i have to complete while it seems simple im not certain of the terms so im not sure wether im adding or subtracting 25% 1.If you are paid £100.00 net of tax, and the tax rate is 25%, what is your gross pay? any help would be much appreciated thanks
188.220.32.104 on 2009-11-03 14:22:42

This was very helpful and informative! Much Appreciated!
76.173.35.226 on 2009-07-17 07:26:11