₹20 lakh Business Loan EMI for 10 Years
A ₹20 lakh business loan over 10 years at 15% interest (typical for unsecured MSME loans) produces a monthly EMI of roughly ₹32,267. Business loan interest is fully tax-deductible under Section 37, reducing your effective post-tax cost to about 10–11%. For collateral-backed loans (LAP), you could secure rates as low as 10–12% — a significant saving over 10 years.
Rate Comparison for ₹20 lakh / 10 Years
| Rate | Monthly EMI | Total Interest | Total Payment |
|---|---|---|---|
| 8% | ₹24,266 | ₹9,11,862 | ₹29,11,862 |
| 10% | ₹26,430 | ₹11,71,618 | ₹31,71,618 |
| 12% | ₹28,694 | ₹14,43,303 | ₹34,43,303 |
| 15% | ₹32,267 | ₹18,72,039 | ₹38,72,039 |
About This Scenario
A ₹20 lakh business loan over 10 years at 15% interest (typical for unsecured MSME loans) produces a monthly EMI of roughly ₹32,267. Business loan interest is fully tax-deductible under Section 37, reducing your effective post-tax cost to about 10–11%. For collateral-backed loans (LAP), you could secure rates as low as 10–12% — a significant saving over 10 years.
Frequently Asked Questions
What is the maturity of ₹20 lakh monthly RD for 10 years?
At 7% quarterly-compounded, a ₹20 lakh monthly RD for 10 years matures at ₹32,267. Of this, ₹18.7 lakh is interest earned.
Is RD interest taxable?
Yes. Treated exactly like FD interest — taxable under 'Income from Other Sources' at your slab rate. TDS applies if annual interest from the bank exceeds ₹40,000 (₹50,000 for senior citizens).
RD vs SIP — which is better?
RD gives guaranteed but lower returns (6–7.5%) with sovereign-level safety. SIP in equity mutual funds targets 11–14% historically with market risk. For 5+ year horizons, SIP typically creates 2–3x more wealth.
Can I skip an RD instalment?
Most banks allow 2–4 missed instalments without penalty, but later missed instalments can lead to account closure. Set up auto-debit to avoid the issue.