Distinguish between domestic income (product) and national income (product). 

The income of a country may be stated in the context of (i) its territory, and (ii) its residents. The concept of domestic product is based on production units located within domestic (economic) territory operated by both residents and non-residents. In comparison the concept of national product is based on residents and includes their contribution to production both within and outside the domestic territory.

(a)    Domestic Income. 'It is the sum total of factor incomes generated by all the production units located within domestic (economic) territory of a country during an accounting year'. The point to be noted is that factor incomes should be generated within the domestic territory of a country irrespective of the fact whether producers are normal residents (citizens) or non-residents (i.e., foreigners). It is a territorial concept since it is defined with reference to domestic (economic) territory. For example, many non-residential companies and foreign banks operate within domestic territory of India. Income generated by them is included in India's domestic income.

(b)    National Income. 'It is the sum total of factor incomes accruing to the normal residents both from within and outside the country during an accounting year'. The point to be noted is that national income includes factor incomes earned by normal residents within and outside the country. It is an economic concept since it is defined with reference to productive efforts of normal residents.

Difference. Simply put, income generated by residents and non-residents within domestic territory of a country is called domestic income and income generated by normal residents within and outside the country is called national income. The difference between the two is net factor income from abroad which is added to domestic income to get national income. Symbolically:
National Income = Domestic Income + Net factor income from abroad
In short, domestic income or product is attributed to all the producers within domestic territory of a country whether they are resident producers or non-resident producers. National income or product is attributed to only normal residents of the country within the country or outside.