No cost EMI calculator: the real cost with GST and fee

In a no cost EMI the price is split into equal EMIs, but the bank still lends at its normal EMI rate. To make the EMIs add up to the price, the seller or the brand gives an upfront discount equal to the interest. Here is a ₹30,000 phone over 6 months, at a card EMI rate of 15%:

1. The seller takes ₹1,269.95 off, so the bank lends you ₹28,730.05.
2. The bank charges 15% a year on that. The interest comes to exactly ₹1,269.95, so 6 EMIs of ₹5,000 add up to ₹30,000.
3. On top, each month's interest carries GST (₹228.58 in all at 18%), and the ₹199 processing fee carries GST of ₹35.82.

That is ₹463.40 more than paying ₹30,000 today. Spread over the months you keep your money, it works out to 5.33% a year, or ₹0.44 sekda a month.

Usually not completely. The seller pays the interest, but the GST on that interest and the processing fee are yours to pay. If paying in full would have got you a discount, giving it up is a cost too.

The RBI has made the same point. In a 2013 circular to banks it said that in zero percent EMI schemes the interest is often "camouflaged" in a processing fee, and that the very concept of zero percent interest does not exist (RBI, 17 September 2013). Its 2022 credit card directions told card issuers to show the principal, the interest and the upfront discount before turning a purchase into EMIs, to show the same on the bill, and not to pass off an EMI with interest as no cost (RBI Master Direction on cards, para 6(b)(iii)).

On a credit card, yes: GST is charged on every month's interest, even though the seller's discount covers that interest, and on the processing fee. GST law exempts interest on loans, but the exemption leaves out interest on credit card services (Notification 12/2017-Central Tax (Rate), entry 27). A processing fee is a charge for a service, and the CBIC has said such fees are liable to GST (Circular 218/12/2024-GST).

The calculator starts at 18% GST, the rate usually quoted for these charges. We have not confirmed it from the tax schedule, so check your bank's terms and change it if your bill shows a different rate.

If the no cost EMI is a consumer loan from a finance company rather than a credit card EMI, the interest is loan interest, which is exempt, so GST falls only on the fee. Choose Fee only in the calculator: the ₹30,000 example then costs ₹234.82 extra instead of ₹463.40.

A longer period spreads the fixed fee over more months, so the yearly rate falls, while the GST on interest grows in rupees: ₹649.12 over 12 months against ₹463.40 over 6. A small purchase works the other way. ₹10,000 over 6 months costs ₹311.01 extra, 10.86% a year, because the same ₹199 fee is a bigger share of a smaller price.

Some shops give a discount for paying in full, by cash, UPI or a one-time card payment. Choosing EMIs means giving that discount up, so it is part of the cost. Enter it in Discount if you paid in full.

Compare that yearly rate with what the money earns while it stays with you, or with what other credit costs you. The calculator shows the numbers; the choice is yours.

Choose Card EMI with interest for an ordinary EMI on a credit card, with no seller discount. ₹30,000 at 15% for 6 months: EMI ₹5,221.01, interest ₹1,326.08, GST on it ₹238.70, and the fee with GST ₹234.82. That is ₹1,799.60 more than paying in full, 20.48% a year: GST and the fee lift a 15% card rate well above 15%.

• EMI: the price ÷ the months for no cost EMI, and the usual EMI formula at the bank’s rate for a card EMI. The first EMI is billed a month after the purchase, and the last one takes up the paise.
• Interest: each month, what you still owe × the bank’s yearly rate ÷ 12, as on any reducing-rate loan. For no cost EMI the bank lends what the EMIs are worth at its rate, and the seller’s discount is the rest, so the discount and the interest are equal.
• GST: the rate you enter, on each month’s interest (billed with that EMI) and on the fee.
• Fee: paid with its GST at the purchase. If your bank bills it with the first EMI, the real rate is a little lower.
• Yearly rate: the monthly rate at which your bills (EMI + GST) repay what paying in full would cost, less the fee, × 12. It is the method our EMI to interest rate calculator uses. Sekda is that rate ÷ 12.

Banks differ in small details: some charge interest for the days before the first bill, and each rounds in its own way. Your card statement is the final word; this page shows how the offer is built and what it costs in a year. See how we calculate.