Simple Interest Calculator India 2026

Q: What is simple interest and how is it different from compound interest?

Simple interest is calculated only on the original principal amount. You earn interest ONLY on your initial investment, not on previously earned interest. For example: ₹1,00,000 at 10% for 3 years gives you ₹10,000 interest each year total ₹30,000. Compound interest would give you ₹33,100 total. Simple interest is simpler and fair for short-term loans or investments, but compounds less wealth over long periods.

Q: What is the formula for simple interest?

The simple interest formula is: SI = (P × R × T) / 100. Where P is the principal amount, R is the annual interest rate in percentage, and T is the time in years. For total amount: A = P + SI. For example, if you invest ₹1,00,000 at 7% for 5 years: SI = (1,00,000 × 7 × 5) / 100 = ₹35,000. Total = ₹1,35,000.

Q: Which Indian bank offers the highest FD interest rate?

As of April 2026, major banks are offering FD rates: SBI offers up to 6.40% for general public, HDFC Bank up to 6.50%, ICICI Bank up to 6.60%. Smaller banks like Bandhan Bank offer up to 7.25% and some small finance banks go up to 8.10% for senior citizens. Senior citizens typically get 0.50% higher rates. Use the calculator above to see how much you will earn on any bank FD.

Q: Is PPF simple interest or compound interest?

PPF (Public Provident Fund) uses compound interest, not simple interest. However, the compounding is annual — interest earned is added to the principal at the end of each financial year. For FY 2026-27, the PPF interest rate is 7.1% per annum. The major difference from simple interest: With PPF you earn interest on previously earned interest, which increases total returns over the 15-year lock-in period.

Q: What is the TDS on FD interest in India?

TDS on FD interest is applicable at 10% if interest earned exceeds ₹40,000 per year (₹50,000 for senior citizens) from all bank deposits combined. Submit Form 15G or 15H if your total income is below taxable limit. Interest is taxable under 'Income from Other Sources' at your slab rate. The calculator shows gross returns; actual post-tax returns will be lower based on your income tax slab.

Q: How is simple interest calculated monthly?

To calculate simple interest monthly: First calculate annual interest using SI = (P × R × T) / 100. Then divide by 12 to get monthly interest. For example: ₹1,00,000 at 12% for 1 year: Annual interest = ₹12,000, Monthly interest = ₹12,000 / 12 = ₹1,000. This is different from compound interest calculations where each month's interest is added back to principal. Our calculator shows both monthly and daily breakdown automatically — just enter your numbers and scroll to the results section.

Q: Is a car loan simple or compound interest in India?

Most car loans in India use the reducing balance method (compound-like), NOT simple interest. However, some NBFCs and used car loans may use simple interest. Always read the sanction letter carefully. The simple interest method is more transparent — total interest = principal × rate × years. The reducing balance method recalculates interest after each EMI payment, which usually results in lower total interest if you prepay. Use this calculator for clarity on what simple interest would look like, but verify with your actual loan document.

Q: Do Indian banks use simple interest for fixed deposits?

For FDs with tenure less than 6 months, most banks use simple interest. For example, SBI and HDFC Bank use simple interest for 7-45 day FDs. For FDs over 6 months, banks typically use quarterly compounding which is compound interest. This calculator is perfect for short-term FDs. For longer FDs, use the FD & RD or Compound Interest calculators. Always check your FD renewal advice — it clearly states 'simple' or 'compound'.

Free tool to calculate simple interest on Indian FDs, PPF, NSC, personal loans, and car loans. See daily/monthly interest breakdown and year-by-year growth. Switch between deposit and loan modes.

I am calculating for:

Quick Presets (Indian Instruments)

Tap to load typical 2026 rates

Your Investment Details

Principal Amount (Lumpsum)

₹

₹0₹1 Cr

Interest Rate (p.a)

1% (PPF/FD)20% (Personal Loan)

Current FD rates: 6.5-8.5%, PPF: 7.1%

Time Period

years

1 year30 years

Maturity Amount

₹1.32 L

₹1,32,500

Total Invested

₹1 L

Interest Earned

+₹32.50 K

Monthly Income₹542

Daily Income₹18

Growth Over Time

Earned Interest

Balance

Year-by-Year Breakdown

See how your investment grows each year

Year	Annual Interest	Interest Till Year	Balance
1	+₹6,500	₹6,500	₹1,06,500
2	+₹6,500	₹13,000	₹1,13,000
3	+₹6,500	₹19,500	₹1,19,500
4	+₹6,500	₹26,000	₹1,26,000
5	+₹6,500	₹32,500	₹1,32,500

When is Simple Interest Used in India?

Investments

Bank Fixed Deposits (FDs) — most Indian bank FDs under 6 months use simple interest
PPF & NSC — government small savings schemes use simple interest calculation logic in specific parts, though they compound annually
Corporate FDs — interest is typically paid out periodically
Post Office Time Deposit — 1, 2, 3, 5 year accounts use simple interest payouts

Loans

Personal Loans — many use simple interest method, especially outside banks
Car Loans — interest calculated on principal for entire tenure often uses flat rate
Home Loans — in some cases, simple interest for pre-EMI period
Short-term business loans — and informal credit lines

Simple Interest = Principal × Rate × Time / 100. Unlike compound interest, you earn interest ONLY on your original principal, not on previously earned interest.

What is Simple Interest? A Plain English Explanation for Indians

Simple interest is a quick method of calculating the interest charge on a loan. Simple interest is determined by multiplying the daily interest rate by the principal by the number of days that elapse between payments. The formula is A = P(1 + rt) and SI = (P × R × T)/100.

Tenure	Simple Interest (10% on ₹1L)	Compound Interest (10% yearly)
1 Yr	₹10,000 (total ₹1,10,000)	₹10,000 (total ₹1,10,000)
3 Yr	₹30,000 (total ₹1,30,000)	₹33,100 (total ₹1,33,100)
5 Yr	₹50,000 (total ₹1,50,000)	₹61,051 (total ₹1,61,051)
10 Yr	₹1,00,000 (total ₹2,00,000)	₹1,59,374 (total ₹2,59,374)

Note: "For longer periods, compound interest creates significantly more wealth. Simple interest is fair and predictable for short-term instruments."

Why Most Simple Interest Calculators Are Wrong

Many calculators don't differentiate between deposit and loan, or fail to show daily/monthly breakdown. Our approach: accurate SI formula with Indian context — toggle between deposit and loan, see daily and monthly interest instantly, year-by-year table, presets with current 2026 Indian rates.

Manual calculation mistakes common — forgetting to convert months to years, mixing simple and compound formulas. Our calculator handles that.

Simple Interest Comparison — FD vs PPF vs NSC vs Corporate FD

Investment	Rate (April 2026)	Compounding	₹1L 5Yr Returns
SBI FD (<6mo)	6.5%	Simple	₹1,32,500
PPF	7.1%	Yearly Comp	₹1,41,000 (compound effect)
NSC	7.7%	Yearly Comp	₹1,45,000
Corporate FD	8.5%	Simple	₹1,42,500

Note: "All figures approximate. Bank FD rates vary by tenure and bank. Check current rates before investing."

Simple Interest vs Compound Interest — Which One Should You Choose?

Simple interest is better for short-term (under 2 years) and for borrowers (lower total payout). Compound interest is better for long-term investors. Recommendation for Indians: use FDs for emergency funds (3-6 months expenses), use PPF/NSC for 5-15 year goals, use mutual funds for wealth creation beyond 7 years.

Monu's Simple Interest Experience — My FD Portfolio After 14 Months

Invested ₹50,000 in SBI FD at 6.8% for 1 year, simple interest because tenure is 1 year. After 1 year: Interest ₹3,400, total ₹53,400. Also have ₹25,000 in corporate FD at 8.2% for 18 months — simple interest gives ₹3,075 total ₹28,075. The simplicity of knowing exactly what I'll get helps me plan. No market risk, no surprises. For my future goals (like buying my own car or funding a startup 5-7 years away), I use PPF and equity mutual funds — those use compound interest. Different tools for different goals. Use this calculator to see what your emergency fund can earn safely.

Read my complete portfolio strategy in Best Mutual Funds 2026 for Beginners — My Real Portfolio Results

5 Common Mistakes Indians Make With Simple Interest

Forgetting to convert months to years: Many calculate 6 months as 6 instead of 0.5 — doubling interest incorrectly.
Mixing simple and compound: Assuming bank FDs for 5+ years use simple interest — most do not.
Not accounting for TDS on FD interest: Banks deduct 10% TDS if interest exceeds ₹40,000/year.
Ignoring senior citizen benefits: Senior citizens get 0.50% higher FD rates, use the calculator with correct rate.
Using simple interest formula for loans that use reducing balance method: Car and home loans usually do NOT use simple interest.

Frequently Asked Questions

What is simple interest and how is it different from compound interest?

Simple interest is calculated only on the original principal amount. You earn interest ONLY on your initial investment, not on previously earned interest. For example: ₹1,00,000 at 10% for 3 years gives you ₹10,000 interest each year total ₹30,000. Compound interest would give you ₹33,100 total. Simple interest is simpler and fair for short-term loans or investments, but compounds less wealth over long periods.

What is the formula for simple interest?

The simple interest formula is: SI = (P × R × T) / 100. Where P is the principal amount, R is the annual interest rate in percentage, and T is the time in years. For total amount: A = P + SI. For example, if you invest ₹1,00,000 at 7% for 5 years: SI = (1,00,000 × 7 × 5) / 100 = ₹35,000. Total = ₹1,35,000.

Which Indian bank offers the highest FD interest rate?

As of April 2026, major banks are offering FD rates: SBI offers up to 6.40% for general public, HDFC Bank up to 6.50%, ICICI Bank up to 6.60%. Smaller banks like Bandhan Bank offer up to 7.25% and some small finance banks go up to 8.10% for senior citizens. Senior citizens typically get 0.50% higher rates. Use the calculator above to see how much you will earn on any bank FD.

Is PPF simple interest or compound interest?

PPF (Public Provident Fund) uses compound interest, not simple interest. However, the compounding is annual — interest earned is added to the principal at the end of each financial year. For FY 2026-27, the PPF interest rate is 7.1% per annum. The major difference from simple interest: With PPF you earn interest on previously earned interest, which increases total returns over the 15-year lock-in period.

What is the TDS on FD interest in India?

TDS on FD interest is applicable at 10% if interest earned exceeds ₹40,000 per year (₹50,000 for senior citizens) from all bank deposits combined. Submit Form 15G or 15H if your total income is below taxable limit. Interest is taxable under 'Income from Other Sources' at your slab rate. The calculator shows gross returns; actual post-tax returns will be lower based on your income tax slab.

How is simple interest calculated monthly?

To calculate simple interest monthly: First calculate annual interest using SI = (P × R × T) / 100. Then divide by 12 to get monthly interest. For example: ₹1,00,000 at 12% for 1 year: Annual interest = ₹12,000, Monthly interest = ₹12,000 / 12 = ₹1,000. This is different from compound interest calculations where each month's interest is added back to principal. Our calculator shows both monthly and daily breakdown automatically — just enter your numbers and scroll to the results section.

Is a car loan simple or compound interest in India?

Most car loans in India use the reducing balance method (compound-like), NOT simple interest. However, some NBFCs and used car loans may use simple interest. Always read the sanction letter carefully. The simple interest method is more transparent — total interest = principal × rate × years. The reducing balance method recalculates interest after each EMI payment, which usually results in lower total interest if you prepay. Use this calculator for clarity on what simple interest would look like, but verify with your actual loan document.

Do Indian banks use simple interest for fixed deposits?

For FDs with tenure less than 6 months, most banks use simple interest. For example, SBI and HDFC Bank use simple interest for 7-45 day FDs. For FDs over 6 months, banks typically use quarterly compounding which is compound interest. This calculator is perfect for short-term FDs. For longer FDs, use the FD & RD or Compound Interest calculators. Always check your FD renewal advice — it clearly states 'simple' or 'compound'.

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Disclaimer: This calculator provides estimates based on inputs. Bank FD rates, PPF rates, and NSC rates change quarterly. TDS rates as per current tax laws. Actual returns may vary. MonuMoney.in is not a SEBI-registered advisor. Consult a qualified financial advisor for personalised advice.