1. What is EMI with GST on Interest?

EMI (Equated Monthly Installment) with GST on interest is the monthly payment for a loan that includes Goods and Services Tax on the interest component. In India, GST is applicable on the interest charged by lenders at the current rate of 18%.

2. How Does the Calculator Work?

The calculator uses the following formula:

Where:

• \( P \) — Principal loan amount (₹)
• \( R \) — Monthly interest rate (annual rate / 12)
• \( N \) — Loan tenure in months
• \( I \) — Monthly interest portion of EMI (₹)
• \( GST\ Rate \) — Current GST rate (18% typically)

Explanation: The formula calculates standard EMI first, then adds GST on the interest component of each installment.

3. Importance of GST on Loan Interest

Details: GST on loan interest affects the total cost of borrowing. Understanding this helps borrowers budget accurately and compare loan offers effectively.

4. Using the Calculator

Tips: Enter principal amount in ₹, annual interest rate in %, loan tenure in months, and GST rate (default 18%). All values must be positive numbers.

5. Frequently Asked Questions (FAQ)

Q1: Why is GST charged on loan interest?
A: As per Indian tax laws, financial services including loan interest are subject to GST as they're considered services provided by lenders.

Q2: Is GST charged on the entire EMI?
A: No, GST is only applicable on the interest component of the EMI, not on the principal repayment portion.

Q3: Can GST rate change?
A: Yes, the government may revise GST rates. The calculator allows you to adjust the GST rate accordingly.

Q4: Does this apply to all loans?
A: GST applies to most loan types including personal loans, home loans, car loans, but some exceptions may exist.

Q5: How is monthly interest portion calculated?
A: The calculator determines total interest over loan tenure, then divides by months to get average monthly interest for GST calculation.