How we calculate interest on dues

Simple interest is P × R × T / 100 with T in years (days ÷ 365). Compound interest is P × (1 + r/n)^(n×t) with monthly compounding as the default. EMI uses the standard reducing-balance formula. These tools are for planning. They are not a court document and they are not tax advice. The signed-in app uses the same arithmetic, so a number you show on the public page should match the in-app calculator on the same inputs.

Simple interest

This is the figure most kirana credit actually uses, when it uses a rate at all. Principal times yearly percent times years, divided by 100. Days are divided by 365, not by 360, and not by “a month is 30.” On ₹10,000 at 18 percent for 365 days the interest is ₹1,800. On 30 days it is about ₹148. Quote this number unless you both wrote down compounding. A surprise compound at the door is how an overdue chat turns into a fight.

Compound interest

Monthly compounding: n = 12, r is the annual rate as a decimal. The public calculator shows the amount including interest, not only the extra. Compound on shop udhar is uncommon. Use it when you are checking a bank product or when a written agreement says so. Do not switch from simple to compound because the due is old. The rate and the method belong in the sale, not in the chase.

EMI

EMI = P × r × (1+r)^n / ((1+r)^n − 1), where r is the monthly rate and n is months. If the rate is zero, the instalment is principal divided by months. Use EMI when you have agreed a tenure (a fridge in 12 months, a pump in 6). Use simple interest when you have agreed a due date and maybe a late fee, not a schedule. The late-fee calculator is simple interest on the overdue slice only: principal × rate × days / (100 × 365).

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