Precautions that are taken while estimating national income by value added method are :
(i) Imputed rent of owner-occupied houses be included because all houses have rental value irrespective of its use by self or tenant.
(ii) Imputed value of goods and services produced for self-consumption or for free distribution should be included.
(iii) Only value added and not value of output by production units should be included.
(iv) Value of own-account production of fixed assets by enterprises, government and the households should be included.
(v) The value of sale and purchase of secondhand goods should be excluded.
(vi) Sale of bonds by a company should also be excluded since it is merely a financial transaction which does not contribute directly to the flow of goods and services.