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GST Credit Card EMI Calculator

EMI Formula:

\[ EMI = \frac{P \times R \times (1+R)^N}{(1+R)^N - 1} \]

GST on Interest Formula:

\[ GST = I \times \text{Tax Rate} \]

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1. What is EMI Calculation?

EMI (Equated Monthly Installment) is the fixed payment amount a borrower makes to a lender at a specified date each calendar month. For credit cards, EMI options convert high-interest revolving credit into fixed monthly payments.

2. How Does the Calculator Work?

The calculator uses the standard EMI formula:

\[ EMI = \frac{P \times R \times (1+R)^N}{(1+R)^N - 1} \]

And calculates GST on interest:

\[ GST = I \times \text{Tax Rate} \]

Where:

3. Understanding GST on Credit Card Interest

Details: In many countries like India, GST is applicable on the interest portion of credit card EMI payments. This tax is calculated on the total interest amount and added to the overall payment.

4. Using the Calculator

Tips: Enter the principal amount (purchase value), annual interest rate (APR), loan tenure in months, and applicable GST rate. The calculator will show EMI amount, total interest, GST on interest, and total payment.

5. Frequently Asked Questions (FAQ)

Q1: Is GST applicable on all credit card EMIs?
A: Yes, in countries where financial services attract GST, it's typically applied to the interest component of EMIs.

Q2: How is monthly interest rate calculated?
A: Annual Percentage Rate (APR) is divided by 12 to get the monthly rate (as a decimal).

Q3: Does longer tenure mean lower EMI?
A: Yes, but total interest paid will be higher due to the longer repayment period.

Q4: Can I prepay my credit card EMI?
A: Most banks allow prepayment, often with a prepayment penalty (usually 2-5% of outstanding amount).

Q5: Is GST rate same for all credit cards?
A: Yes, the GST rate is determined by government policy and applies uniformly (currently 18% in India).

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