Question

Distinguish between personal income and personal disposable income.

How does personal income differ from disposable income?

Answer 1

Sr. No.	Basis of Difference	Personal income	Personal disposable income
1.	Definition	Total income was actually received by individuals from all sources.	Part of personal income left after paying personal taxes and government dues.
2.	Includes	Wages, rent, interest, dividends, transfer payments, etc.	Only the amount available for spending or saving after taxes and other deductions.
3.	Excludes	There are undistributed profits, corporate taxes, retained earnings from foreign companies, and social security contributions.	Personal taxes (like income tax and wealth tax) and miscellaneous receipts paid to the government.
4.	Nature	Gross income received by households.	Households can utilize their net income.
5.	Relative value	There is always more than personal disposable income.	There is always less than personal income.