There is a need to make a distinction between final and intermediate goods because of following:
1. Final goods are those goods which are meant for final use by consumers or producers. And National Income includes the value of final goods only.
2. Intermediate goods are those goods which are used as raw material or for resale purpose. And National Income does not include the value of intermediate goods.
3. If value of intermediate goods is included in National Income, it will cause double counting.