How this calculator works
Simple interest is calculated only on the original principal for the entire time period — it never compounds. The formula is:
Simple Interest = Principal × Rate × Time ÷ 100
Total Amount = Principal + Simple Interest
Unlike compound interest, the interest amount stays the same every year — it's a flat percentage of the original principal, not the growing balance.
Example
On a principal of ₹1,00,000 at 8% per annum for 3 years: Simple Interest = 1,00,000 × 8 × 3 ÷ 100 = ₹24,000. Total amount payable = 1,00,000 + 24,000 = ₹1,24,000.
Shunya's CA team handles registration, filings, and ongoing compliance so you don't have to.
Book a Free Consultation →What's the difference between simple and compound interest?
Simple interest is calculated only on the original principal every period; compound interest is calculated on the principal plus previously accumulated interest, so it grows faster over time. Use the Compound Interest Calculator to see how the same principal and rate compare under compounding.
Where is simple interest actually used?
Some short-term loans and certain fixed-income instruments use simple interest. Most long-term savings and loan products — like FDs, RDs, and home loans — use compound interest or reducing-balance calculations instead.
Is this the formula used for personal loans?
Most bank loans use reducing-balance EMI calculations, not flat simple interest. See the EMI Calculator for how loan EMIs are actually computed.
This tool is for quick estimation only and is not a substitute for professional financial or tax advice. For your specific situation, consult a practicing CA.
Get your compliance handled by experts
Shunya's CA team handles registration, filing, and compliance — fully online.
Get Started →