What is the formula for simple interest?

Simple interest = Principal × Rate × Time ÷ 100, with the rate per year and time in years. On ₹2,00,000 at 9% for 3 years the interest is ₹54,000 and the total repayable is ₹2,54,000. For a period in months, divide the months by 12 before multiplying.

How do I calculate simple interest for months?

Convert the months to a fraction of a year. For ₹50,000 at 12% per annum for 8 months, the time is 8 ÷ 12 = 0.6667 years, and the interest is 50,000 × 12 × 0.6667 ÷ 100 = ₹4,000. The calculator does this conversion when you select 'Months'.

What is the difference between simple and compound interest?

Simple interest is charged only on the original principal, so it grows by the same amount every period. Compound interest is charged on principal plus interest already accrued, so it grows faster over time. ₹1,00,000 at 8% for 5 years earns ₹40,000 as simple interest but about ₹46,933 when compounded yearly.

How is interest on late GST payment calculated?

At 18% per annum simple interest on the net tax paid late, from the day after the due date to the actual payment date, calculated on a daily basis. For ₹1,00,000 paid 30 days late the interest is 1,00,000 × 18 × 30 ÷ 365 ÷ 100 = ₹1,479.45. Late fees are separate from interest.

Can I charge interest on delayed payments from customers?

Yes, if your invoice or contract states the rate and the grace period. Many businesses print 'Interest at 18% per annum on invoices unpaid after 30 days'. Registered MSME suppliers are entitled by law to interest on payments delayed beyond 45 days at three times the RBI bank rate, compounded monthly.

Simple Interest Calculator

Calculate simple interest and total amount on a principal for any period in days, months or years. Free calculator in rupees, no login needed.

Free · no login neededMade for India · ₹, GST, UPI, WhatsApp

In short

A simple interest calculator finds the interest on a principal at a fixed annual rate for a period in years or months, without compounding. VyaparKit's free simple interest calculator applies the formula P × R × T ÷ 100, shows the interest amount and the total to be repaid, and handles month-based periods for short-term lending and delayed payments.

Principal

₹

Rate (p.a.)

Time (years)

Simple interest

₹20,000.00

Total amount ₹1,20,000.00

Formula

SI = P × R × T ÷ 100, with T in years.

Where is simple interest used?

Short-term trade credit, udhaar, informal loans and some FDs quote simple interest.

About the simple interest calculator tool

Simple interest is interest charged only on the original principal, never on accumulated interest. It is the usual basis for informal business lending in India, gold loans at many lenders, short-term dealer credit, interest on delayed customer payments, and statutory interest such as the 18% per annum on late GST payment. It is also the method most people use to check what a moneylender or a friend is really charging.

Errors come from mixing time units: a rate quoted per month applied to years, or eight months entered as 0.8 years instead of 8 ÷ 12. Another is compounding by accident when a loan is renewed. The simple interest calculator lets you enter the time in years or months, converts correctly, and shows the interest and total separately so you can write the figure straight into a receipt or ledger note.

For interest on overdue invoices, pair this with VyaparKit's outstanding statement and payment reminder tools, which show how many days each invoice has been unpaid.

How to calculate simple interest

1
Enter the principal
In 'Principal' type the amount lent, borrowed or overdue, for example 2,00,000.
2
Enter the annual rate
In 'Rate (p.a.)' type the yearly percentage. If the rate is quoted per month, such as 2% a month, multiply by 12 and enter 24.
3
Enter the period
In 'Time' type the duration and choose 'Years' or 'Months' with the switch. Eight months is entered as 8 with 'Months' selected, not 0.8 years.
4
Read the interest and total
The large figure is the simple interest for the period, with the total amount (principal plus interest) shown beneath it.

The formula, with a worked example

Simple interest = P × R × T ÷ 100, where P is principal, R the annual rate and T the time in years.
Worked example: ₹2,00,000 at 9% for 3 years. 2,00,000 × 9 × 3 ÷ 100 = ₹54,000 interest; total repayable ₹2,54,000.
For months, use T = months ÷ 12. ₹50,000 at 12% for 8 months: 50,000 × 12 × (8 ÷ 12) ÷ 100 = ₹4,000.
For days, use T = days ÷ 365. ₹1,00,000 at 18% for 45 days: 1,00,000 × 18 × 45 ÷ 365 ÷ 100 = ₹2,219.18.
Monthly rates: 2% per month is 24% per annum. Enter the annual figure in the calculator; ₹1,00,000 at 2% a month for 6 months is ₹12,000.
Interest on late GST payment is simple interest at 18% per annum on the net tax liability, counted from the due date to the date of payment.
Under the MSMED Act, buyers who pay a registered MSME supplier after 45 days owe compound interest at three times the RBI bank rate, so simple interest does not apply there.
Simple interest grows in a straight line: at 9% the interest for 6 years is exactly twice that for 3 years, unlike compound interest.

Who uses the simple interest calculator

Traders extending dealer credit

A cement dealer in Bhopal charging 1.5% a month on balances unpaid after 30 days works out the interest to add to a retailer's outstanding statement.

Borrowers checking gold or informal loans

A family in Madurai compares a gold loan at 12% per annum against a local lender's 3% per month on the same ₹1 lakh.

Accountants computing statutory interest

A CA calculates 18% per annum on ₹2,40,000 of GST paid 45 days late before filing GSTR-3B.

Friends and family lending

Two partners agree on 9% per annum on a ₹5 lakh loan for 18 months and record the interest figure in a signed note.