Calculate Compound Interest Calculator India

Compound Interest Formula:

\[ A = P \times (1 + R / n)^{(n \times T)} \]

Principal Amount (P):

INR

Annual Interest Rate (R):

Compounding Frequency (n):

Time Period (T):

years

Maturity Amount (A):

Total Interest Earned:

Unit Converter ▲

Unit Converter ▼

From:	To:

1. What is Compound Interest?

Compound interest is the interest calculated on the initial principal and also on the accumulated interest of previous periods. It allows investments to grow exponentially over time, making it a powerful tool for wealth creation in Indian financial planning.

2. How Does the Calculator Work?

The calculator uses the compound interest formula:

\[ A = P \times (1 + R / n)^{(n \times T)} \]

Where:

\( A \) — Maturity amount (INR)
\( P \) — Principal amount (INR)
\( R \) — Annual interest rate (decimal)
\( n \) — Compounding frequency per year
\( T \) — Time period in years

Explanation: The formula calculates how much your investment will grow when interest is compounded at regular intervals, accounting for both the principal and accumulated interest.

3. Importance of Compound Interest Calculation

Details: Understanding compound interest is crucial for financial planning, retirement savings, and investment decisions. It helps investors see the long-term growth potential of their money and make informed choices about savings instruments.

4. Using the Calculator

Tips: Enter principal amount in INR, annual interest rate as a percentage, select compounding frequency, and time period in years. All values must be positive numbers.

5. Frequently Asked Questions (FAQ)

Q1: 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 both principal and accumulated interest, leading to exponential growth.

Q2: How does compounding frequency affect returns?
A: More frequent compounding (monthly vs annually) results in higher returns due to interest being calculated and added more often.

Q3: What are common compounding frequencies in India?
A: Indian financial institutions typically offer annual, semi-annual, quarterly, and monthly compounding options for various investment products.

Q4: Is compound interest taxable in India?
A: Yes, interest earned through compound interest is taxable under the Income Tax Act, 1961, depending on the investment instrument and investor's tax slab.

Q5: Which Indian investments use compound interest?
A: Fixed deposits, recurring deposits, PPF, NSC, mutual funds, and various other savings instruments in India utilize compound interest principles.