₹20 lakh Business Loan EMI for 3 Years
A ₹20 lakh business loan over 3 years at 15% interest (typical for unsecured MSME loans) produces a monthly EMI of roughly ₹69,331. 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 3 years.
Rate Comparison for ₹20 lakh / 3 Years
| Rate | Monthly EMI | Total Interest | Total Payment |
|---|---|---|---|
| 8% | ₹62,673 | ₹2,56,218 | ₹22,56,218 |
| 10% | ₹64,534 | ₹3,23,237 | ₹23,23,237 |
| 12% | ₹66,429 | ₹3,91,430 | ₹23,91,430 |
| 15% | ₹69,331 | ₹4,95,904 | ₹24,95,904 |
About This Scenario
A ₹20 lakh business loan over 3 years at 15% interest (typical for unsecured MSME loans) produces a monthly EMI of roughly ₹69,331. 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 3 years.
Frequently Asked Questions
What is the maturity of ₹20 lakh monthly RD for 3 years?
At 7% quarterly-compounded, a ₹20 lakh monthly RD for 3 years matures at ₹69,331. Of this, ₹5.0 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.