1. What is Simple Interest?

Simple interest is a method of calculating the interest charge on a loan or savings based on the original principal amount. It does not compound, meaning interest is not added to the principal for subsequent calculations.

2. How Does the Calculator Work?

The calculator uses the simple interest formula:

Where:

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

Explanation: The formula calculates how much interest you will earn on a savings account based on the principal amount, interest rate, and time period.

3. Importance of Interest Calculation

Details: Calculating interest helps you understand how much your savings will grow over time, allowing for better financial planning and investment decisions.

4. Using the Calculator

Tips: Enter the 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: Is this calculator specific to Indian savings accounts?
A: Yes, this calculator is designed for Indian savings accounts where interest is typically calculated using simple interest.

Q2: How often is interest typically paid on savings accounts in India?
A: Most Indian banks pay interest quarterly on savings accounts, but this calculator provides annual interest for simplicity.

Q3: Are there taxes on interest earned from savings accounts?
A: Yes, interest earned from savings accounts is taxable under the Income Tax Act, 1961. TDS may be deducted if interest exceeds certain limits.

Q4: Do all Indian banks use simple interest for savings accounts?
A: Most traditional savings accounts in India use simple interest calculation, though some specialized accounts may use compound interest.

Q5: What's the difference between simple and compound interest?
A: Simple interest is calculated only on the principal amount, while compound interest is calculated on the principal plus accumulated interest.