Business Loan EMI Calculator
SME BankingEstimate monthly installments, total interest costs, and amortization schedules for MSME, equipment, or working capital business loans.
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Tax Deductibility of Business Loan Interest
In India, 100% of the interest paid on a legitimate business loan is tax-deductible as an allowable business expenditure under Section 36(1)(iii) of the Income Tax Act. The principal repayment, however, is not tax-deductible.
Additionally, GST paid on processing fees and documentation charges is fully eligible for Input Tax Credit (ITC) if you hold a valid GST invoice.
Related Business & Tax Tools
View All ToolsHow to Use This Tool
Simple steps to calculate and verify
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1
Enter Loan Amount Input the total borrowing amount for machinery, working capital, or business expansion.
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2
Enter Annual Interest Rate Input the lending rate quoted by your bank or NBFC (e.g. 9.5% to 14%).
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3
Select Loan Tenure Choose repayment duration in months or years.
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Analyze Monthly EMI & Interest View your fixed monthly installment, total interest over the loan life, and loan amortization schedule.
Pro Tips & Statutory Advice
Practical business & compliance advice
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Reducing Balance vs Flat Rate Ensure the interest rate is on a 'Reducing Balance' basis. A 10% flat interest rate equates to roughly 18% reducing interest!
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Early Prepayment Drastically Cuts Interest In the first third of your loan tenure, the majority of your EMI goes towards interest. Early partial prepayments save substantial money.
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CGTMSE Collateral-Free Loans Eligible MSMEs in India can secure collateral-free business loans up to ₹5 Crore under the Government's CGTMSE scheme.
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Maintain Healthy DSCR Banks look for a Debt Service Coverage Ratio (DSCR) above 1.5 (`Net Operating Income / Debt Obligation`) when evaluating business loans.
Frequently Asked Questions
Key information about business and MSME loan borrowing in India.
What is the formula for calculating loan EMI?
EMI = [P × R × (1+R)^N] ÷ [(1+R)^N − 1], where P is Principal amount, R is monthly interest rate (Annual Rate ÷ 1200), and N is the total number of monthly payments.
Can I claim GST Input Tax Credit on business loan processing fees?
Yes. Commercial banks and NBFCs charge 18% GST on processing fees, loan documentation, and prepayment penalties. If your GSTIN is provided during loan application, you can claim 100% of this GST as ITC in GSTR-3B.