Calculator Methodology

Formula

Assumptions

• Interest rate is applied as a reducing balance (standard for all Indian home, car and personal loans per RBI guidelines).
• EMI payments are made at the end of each month (ordinary annuity).
• No processing fees, prepayment charges, or insurance costs are included unless explicitly entered.

Data Sources & Statutory Basis

• Reducing balance method: RBI Master Direction on Interest Rate on Advances (RBI/2015-16/101)
• Current benchmark rates: RBI Policy Repo Rate communications

Formula

Assumptions

• Returns are compounded monthly. This is standard for SIP return projections per AMFI guidelines.
• The assumed rate of return is a hypothetical forward-looking estimate — not a guarantee. Historical Nifty 50 20-year CAGR has ranged from 12–15%; default uses 12%.
• No exit load, expense ratio or tax drag is deducted (illustrative purposes).
• SIP instalments assumed at the beginning of each month.

Tax Treatment Note

LTCG on equity mutual funds above ₹1.25 lakh/year is taxable at 12.5% (post Budget 2024). Our calculator shows gross corpus — tax liability depends on individual withdrawal pattern.

New Tax Regime Slabs (FY 2025-26)

Old Tax Regime Slabs (FY 2025-26)

Surcharge & Cess

• Health & Education Cess: 4% on (Tax + Surcharge)
• Surcharge: 10% for income 50L–1Cr; 15% for 1Cr–2Cr; 25% for 2Cr–5Cr; 37% above 5Cr (capped at 25% under new regime per Finance Act 2023)

Standard Deduction

• New Regime: ₹75,000 (salaried/pensioners, Budget 2024)
• Old Regime: ₹50,000

Statutory Basis

Income Tax Act 1961, Finance Act 2025, CBDT Circular No. 1/2025.

Tax Rates Applied (Post Budget 2024)

Note on Indexation

Indexation benefit has been removed for property acquired after 23 July 2024 per Finance Act 2024. For property acquired before this date, taxpayers may opt for either 20% with indexation (old) or 12.5% without indexation (new) — whichever is lower.

Statutory Basis

Sections 45, 48, 111A, 112, 112A of the Income Tax Act; Finance Act 2024; CBDT FAQs on Capital Gains (July 2024).

Methodology

We use a Net Present Value (NPV) framework to compare the total 10-year cost of buying vs renting, discounted at the opportunity cost rate (typically 10–12%).

Buying Cost Components

• Down payment (opportunity cost of locking capital)
• Home loan EMI (principal + interest)
• Property tax (~0.1–0.5% of property value annually, varies by city)
• Maintenance charges
• Stamp duty and registration (5–7% of property value, varies by state)
• Property appreciation (assumed CAGR, user-adjustable)

Renting Cost Components

• Annual rent (with assumed annual increase, default 5%)
• Investment return on saved down payment

Price-to-Rent Ratio

Methodology

Compares 5-year Total Cost of Ownership (TCO) of an operating lease vs outright purchase (with/without auto loan), on an after-tax basis.

Lease Cost Components

• Monthly lease rental × tenure
• Tax deductibility: for salaried employees and businesses, lease rentals are typically deductible as business expense (subject to conditions)
• Residual value / buyback obligation (if applicable)

Buy Cost Components

• On-road price (ex-showroom + registration + insurance + accessories)
• Depreciation: WDV method at 15%/year for individual; 30% for business vehicles per Income Tax Act Schedule II
• Running & maintenance costs
• Resale value at end of period

Methodology

5-year Total Cost of Ownership comparison between EV and petrol equivalent. Inputs: vehicle price, fuel/electricity cost, efficiency, insurance, maintenance, battery replacement probability.

Key Assumptions

• Average electricity cost: ₹7–9/unit (home charging); ₹14–18/unit (public fast charging)
• Petrol price: user-adjustable, default ₹105/litre
• EV efficiency default: 6–7 km/kWh (varies by vehicle class)
• Battery replacement: not assumed within 5 years for vehicles with 8-year warranty; flagged as scenario for older vehicles
• FAME II subsidy: included where applicable (currently phased out for personal vehicles, retained for commercial)

Formula

Minimum Payment Trap Calculation

Assumptions

• Interest compounds daily on revolving balances (standard Indian card practice)
• Minimum payment default: higher of ₹200 or 5% of outstanding balance (industry standard)
• Interest-free period (45 days) does not apply if any balance is revolved

Regulatory Reference

RBI Master Direction on Credit Card and Debit Card (July 2022), which mandates interest rate disclosure in annualised form.