Loan EMI Calculator: How Much Will You Save With Lower EMIs and New Income Tax Slabs?

During the Monetary Policy Committee's meeting on Friday, February 7, the Reserve Bank of India (RBI) governor Sanjay Malhotra announced the cut of the key repo rate by 25 basis points from 6.5% to 6.25% for the first time after five years. What is repo rate: the repo rate, which is also known as RR in short form, is a rate at which banks and other financial institutes borrow money from the Central bank.

The news from the RBI governor is a big relief to the middle class, particularly individuals who are paying home loan EMIs. On the other hand, Union Finance Minister Nirmala Sitharaman had already announced a major bonanza for salaried people and the middle class by charging '0' income tax up to Rs 12 lakh income levels in the recently presented Budget 2025-26. This will be the cherry on the cake for the lower-income group.

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According to the experts, from April 2025, the common man will enjoy the double benefit of changes in income tax slabs and a lower repo rate, which means less EMIs.

After these announcements, several questions rose in individuals who are earning salary and paying loans. Common questions include: How much can I save on EMIs? How much money will I save after income tax relief and lower EMIs? Last but not least, when will my loan EMIs start coming down?

Let's take each question separately:

1. How Much EMI Will Be Deducted After Repo Rate Cut?

According to the loan EMI calculation by BASIC Home Loan, reported by the Times of India (TOI), a home loan amounting to Rs 50 lakh and paying current EMIs with an interest rate of 8.75% for a 30-year loan will see a reduction of around Rs 889/—per month. The EMI amount will go down from Rs 39,335 to Rs 35,446.

According to the BASIC Home Loan, the EMI for a Rs 1 crore loan at the current interest rate of 8.75% will be Rs 78,670/—to Rs 76,891. For a Rs 50 lakh loan at the current interest rate of 9.55%, the EMI will be Rs 42,225/—to Rs 41,315. For a Rs 1 crore loan at the current interest rate of 9.55%, the EMI will be Rs 84,450/—to Rs 82,630.

2. What Much Money Will Be Saved After Income Tax Relief and Lower EMIs?

There is a big relief for middle-class and salaried individuals after new income tax slabs and lower repo rates. According to the BankBazaar, the person who is earning a gross annual salary of Rs 25 lakh and paying a home loan of Rs 50 lakh for 20 years at a rate of 9% and 12 EMIs already paid by the month of March 2025 can save the latest Rs 1.37 lakh in the financial year 2025-26. This is calculated on interest savings on the home loan and the tax savings from higher tax slabs from April 1, 2025.

Also Read | RBI Cuts Repo Rate by 25 Basis Points From 6.5% to 6.25%, First Reduction in 5 Years.

According to the TOI analysis, an individual under the new income tax regime with a gross income of Rs 25 lakh can now save up to Rs 11,461 per month with the changes in income tax slabs, rates, and the reduced interest rate on loans. This benefit could go up to Rs 13.389/—per month for an individual earning a gross salary of Rs 50 lakh.

3. When Will Loan EMIs Start Coming Down?

Usually, the RBI's repo rate cut transmission will take at least four months. The banks will transmit fully to those borrowers whose credit standing is good, and hence, on an overall portfolio basis, it may vary from bank to bank. Financial institutes and banks may take some time to fully transmit the benefits of this rate cut, depending on their policies and rate cycle.

However, fixed-rate loan borrowers will see unchanged EMIs despite the repo rate cut as it was taken on a fixed interest rate.