1. What is Simple Interest?

Simple interest is a method of calculating interest on a principal amount based on a fixed rate over a specific time period. It's commonly used for Indian savings accounts and short-term loans.

2. How Does the Calculator Work?

The calculator uses the simple interest formula:

Where:

• \( P \) — Principal amount (INR)
• \( r \) — Annual interest rate (percentage)
• \( t \) — Time period (years)

Explanation: The formula calculates the interest earned or paid based on the initial principal amount, without considering compounding.

3. Importance of Interest Calculation

Details: Accurate interest calculation helps individuals plan their savings, understand loan costs, and make informed financial decisions for Indian banking products.

4. Using the Calculator

Tips: Enter principal amount in INR, annual interest rate as a percentage, and time period in years. All values must be positive numbers.

5. Frequently Asked Questions (FAQ)

Q1: How is simple interest different from compound interest?
A: Simple interest is calculated only on the principal amount, while compound interest is calculated on both the principal and accumulated interest.

Q2: What are typical interest rates for Indian savings accounts?
A: Most Indian banks offer 2.5-4% interest on savings accounts, though rates may vary by bank and account type.

Q3: Can this calculator be used for loans?
A: Yes, this calculator works for both savings interest and simple interest loans, though most loans use compound interest.

Q4: Is TDS deducted from interest earned?
A: In India, TDS may be deducted if interest income exceeds ₹10,000 in a financial year for savings accounts.

Q5: How often is interest credited in savings accounts?
A: Most Indian banks credit interest quarterly, though the calculation is typically done on daily balances.