Transparent calculations
SmartFintool methodology and assumptions
This page documents the formulas actually used by SmartFintool. If you find a mismatch between this page and a calculator, treat it as a bug and verify the calculation before acting on it.
Important limitations
- Market-linked return assumptions are illustrative; actual returns can be negative.
- Tax rules are shown for the labelled financial year and must be rechecked before filing.
- Default interest rates for PPF, FD and RD are editable assumptions unless explicitly cited as an official rate.
- Calculators do not include every product charge, lock-in, exit load, TDS rule or individual circumstance.
SIP / step-up SIP
FV = P × [((1 + r)^n − 1) / r] × (1 + r)
P is the monthly investment, r is the monthly expected return and n is the number of months. Contributions are assumed at the beginning of each month, matching the usual SIP mandate model. A step-up SIP increases the monthly amount every year and compounds each year’s higher contribution.
SWP
Balance_t = (Balance_{t−1} − Withdrawal) × (1 + r_monthly)
Each month the withdrawal is removed first and the remaining balance earns the assumed monthly return. If the balance would fall below zero, the corpus is shown as exhausted.
Lumpsum future value
A = P × (1 + r)^t
P is the one-time investment, r is the annual expected return and t is time in years. Inflation-adjusted value is A / (1 + inflation)^t.
Compound interest
A = P × (1 + r/n)^(nt)
n is the compounding frequency per year. For Indian bank FDs the default is quarterly compounding (n = 4), but always verify the actual product terms.
Simple interest
SI = (P × R × T) / 100
P is principal, R is the annual percentage rate and T is time in years. Total amount equals principal plus simple interest.
EMI / reducing balance loan
EMI = P × r × (1 + r)^n / ((1 + r)^n − 1)
r is the monthly interest rate and n is the number of months. Each EMI first covers interest on the outstanding principal; the remainder reduces principal.
Income tax
Tax = slab tax − Section 87A rebate + surcharge + 4% cess
The calculator separates the calculation engine from the current FY rule data. Standard deduction, rebate limits, slabs, surcharge and cess are applied in the order shown. The rules displayed apply only to the labelled financial year.
PPF
Closing balance = Opening balance + deposit + interest
Yearly mode assumes a deposit before 5 April so it earns interest for the full year. Monthly mode spreads the annual deposit over twelve months. The rate field is an assumption; the official small-savings rate can change each quarter.
FD and RD
FD: A = P(1 + r/4)^(4t); RD: sum of each instalment compounded for its remaining term
The FD model uses quarterly compounding. Each RD instalment is treated as a separate deposit that compounds until maturity. Tax and TDS are explained but not deducted from the maturity number unless explicitly shown elsewhere.
CTC to take-home salary
Take-home = gross salary − employee PF − professional tax − income tax − other deductions
Employer PF, employer NPS and gratuity accrual are treated as CTC components rather than monthly gross salary. HRA exemption is included only for the old-regime estimate, while the new regime uses its standard deduction and slab structure.
HRA exemption
Minimum(HRA received, 40%/50% of basic, rent paid − 10% of basic)
Metro city uses 50% and non-metro uses 40% of qualifying basic salary. This is generally an old-regime salary deduction.
EPF projection
Monthly EPF deposit = employee 12% + employer EPF portion; balance compounds monthly at the assumed rate
The employer 12% is split into EPS/pension and EPF portions, with the EPS cap shown separately. The interest rate is an editable assumption and must be verified against the latest EPFO notification.
Gratuity
Gratuity = last drawn basic × 15/26 × completed years
Eligibility generally requires continuous service under applicable law, subject to exceptions. The statutory cap is shown separately and tax treatment is not computed automatically.
Step-up SIP
FV_year = Σ 12 × P × (1+g)^(y−1) × (1+r_monthly)^remaining months
The initial monthly SIP grows by the annual step-up percentage at the start of each year. The fixed-SIP comparison repeats the same calculation with a zero step-up.
Inflation and purchasing power
Future cost = amount × (1 + inflation)^years; Real value = amount ÷ (1 + inflation)^years
The calculator shows how much future money is needed to preserve today’s purchasing power and how much a fixed future amount is worth in today’s rupees.
Retirement corpus
Corpus = inflated monthly expense × (1 + monthly real return) × [1 − (1 + monthly real return)^−months] / monthly real return
Expenses are inflated until retirement, then capitalised using a post-retirement real return. Existing savings and SIPs are projected to retirement, and the remaining gap determines the required monthly investment.
Home-loan prepayment
Outstanding after m EMIs = P(1+r)^m − EMI[((1+r)^m − 1)/r]; reduce by lump sum and recompute EMI/tenure
The calculator applies a lump sum after a chosen number of EMIs and compares tenure reduction with EMI reduction using the same reducing-balance loan method.
Goal SIP / retirement target
Required SIP = (target − FV of existing corpus) / SIP future-value factor
The goal amount can first be adjusted for inflation. Step-up SIP is solved by calculating how much corpus one unit of starting SIP produces, then scaling it to the target gap.
Rounding and display
Calculations use JavaScript floating-point arithmetic and are rounded only for display. Loan final instalments absorb small rounding drift so the closing balance reaches zero. Banks, AMCs and tax authorities may use their own day-count conventions and rounding rules.
Use the relevant calculator
Use the formula descriptions with the live tools to test your own assumptions.
Last methodology review: 2026-08-24