Simple Interest
Plain interest math
Reviewed by the PaisaTools Editorial Team · Last reviewed September 2026
How to use: Enter the principal, the yearly rate, and the number of years.
Example₹1 lakh at 10% for 5 years → ₹50,000 interest (₹1.5 lakh total)
Total amount after 5 years
₹1,50,000
Principal
₹1,00,000
Interest
₹50,000
Growth over time
Simple interest is charged only on the principal — it doesn't compound. Formula: SI = P × R × T ÷ 100.
For the same rate and time, compound interest always yields more — compare with the Compound Interest calculator.
Simple interest is the most basic interest calculation — SI = P × R × T ÷ 100. The interest is the same every year because only the principal earns.
Simple interest = P × r × t (no compounding) — the Indian Contract Act-era convention still used for many informal loans, deposits and penalty computations.
- No compounding — most real deposits and loans compound.
- Ignores tax on interest and any fees.
- What is simple interest?
- Interest charged only on the original principal, not on accumulated interest. Common for some short-term loans and fixed-period deposits.
- How is it different from compound interest?
- Simple interest stays flat each period (only principal earns). Compound interest grows because earned interest also earns interest. Over time, compound always pulls ahead.
- What's the formula?
- SI = P × R × T ÷ 100, where P is principal, R is annual rate, and T is time in years. Total = P + SI.
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