Personal Disposable Income (PDI)

In general words, Personal Disposable Income or PDI is the income available to the households which they can dispose of or use as they like. Or, the income which can be fully utilized by a person as per his will, without any further external obligations is known as Personal Disposable Income. 

A person cannot spend all of his personal income that he has earned as he likes. They are required to pay personal taxes(like income tax, property tax etc.) and also non-tax payments like fines and fees, to the government from their own earned personal income. Thus, Personal Disposable Income always proves to be less than the personal income of an individual, as he has certain other obligations to fulfill before utilizing his income.

Therefore, there is an easy formula to calculate Personal Disposable Income from Personal Income:


Personal Disposable Income=Personal Income - Personal Taxes - Non Tax Payments 

For example, lets suppose Mr. X earns Rs. 600,000 per annum from his job. He has to pay income tax @10% to the government and also he owes Rs. 50,000 to his lawyer as his fees. Thus we can calculate his Personal Disposable Income as follows:

PDI=Personal Income - Personal Taxes - Non Tax Payments

Or. PDI=600,000 - 60,000 - 50,000

Or, PDI=490,000


Thus the Personal Disposable Income of Mr. X is Rs. 490,000.