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Interest Formula:
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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.
The calculator uses the simple interest formula:
Where:
Explanation: The formula calculates the interest earned or paid based on the initial amount, the annual interest rate, and the time period in years.
Details: Calculating interest is essential for financial planning, understanding loan costs, estimating savings growth, and making informed investment decisions in the Indian banking context.
Tips: Enter the principal amount in INR, annual interest rate as a percentage, and time period in years. All values must be positive numbers.
Q1: Is this calculator specific to Indian banks?
A: Yes, this calculator is designed for Indian savings bank interest calculations using the simple interest formula commonly used for basic savings accounts.
Q2: Do Indian banks use simple or compound interest?
A: Most Indian savings accounts use compound interest, but this calculator provides simple interest calculation which is useful for certain financial products and educational purposes.
Q3: How often do Indian banks credit interest?
A: Typically, Indian banks credit savings account interest quarterly, but this may vary by bank and account type.
Q4: Are there tax implications on interest earned?
A: Yes, interest earned on savings accounts in India is taxable under the Income Tax Act, 1961, though some exemptions may apply.
Q5: What is the current interest rate range for Indian savings accounts?
A: As of 2025, most Indian banks offer savings account interest rates between 2.5% to 7% per annum, depending on the bank and account balance.