Security deposit interest calculator
Enter the deposit, the agreed rate and the length of the tenancy. Useful at refund time, and useful before signing when you are deciding whether to negotiate interest into the agreement.
Simple interest is the usual assumption unless the agreement says otherwise.
Interest on a residential security deposit is generally payable only where the agreement provides for it or applicable state legislation requires it. Check your agreement before relying on this figure.
Interest on a security deposit is calculated as deposit × annual rate × years. In most Indian residential tenancies no interest is payable unless the agreement provides for it or applicable state legislation requires it — so the first question is whether it applies at all.
How the calculation works
Simple arithmetic, but it only matters once you have established that interest is actually due.
The formula: Interest = Deposit × Rate × Years
A ₹1,00,000 deposit at 6% for 22 months is 1,00,000 × 0.06 × (22 ÷ 12) = ₹11,000. Simple interest is the usual assumption; compounding annually on the same figures gives ₹11,268, which is a small difference over a short tenancy and a larger one over several years.
Where a tenancy runs across several renewals with the deposit topped up on each rent escalation, compute each tranche from the date it was received rather than treating the whole deposit as having been held for the full period.
Inputs you will need
The deposit actually received, the rate the agreement specifies, and the period from receipt to refund. If your agreement does not state a rate, there is generally no interest to compute — which is itself the answer.
Interest is calculated on the deposit, and any lawful deductions for unpaid rent, utilities or damage are applied separately to the refundable total rather than reducing the base the interest accrued on.
- The deposit as received. With each top-up dated separately if the deposit was increased.
- The rate from the agreement. If it is silent, interest is generally not payable.
- Receipt to refund. Not the nominal tenancy term if they differ.
Worked example: ₹1,00,000 deposit at 6 per cent for 22 months
The example gives ₹11,000. The larger figures matter in cities where deposits of six to ten months’ rent are conventional.
| Deposit | 12 months at 6% | 22 months at 6% | 36 months at 6% |
|---|---|---|---|
| ₹50,000 | ₹3,000 | ₹5,500 | ₹9,000 |
| ₹1,00,000 | ₹6,000 | ₹11,000 | ₹18,000 |
| ₹2,00,000 | ₹12,000 | ₹22,000 | ₹36,000 |
| ₹5,00,000 | ₹30,000 | ₹55,000 | ₹90,000 |
| ₹10,00,000 | ₹60,000 | ₹1,10,000 | ₹1,80,000 |
When is interest on deposits actually payable?
In most ordinary residential tenancies in India, no interest is paid on a security deposit and none is expected. There is no generally applicable statutory requirement, and the position is contractual.
The exceptions are worth knowing. Some state rent control legislation provides for interest on deposits in the tenancies it covers. Where a state has adopted the Model Tenancy Act 2021, its provisions apply to tenancies under that framework. And where a landlord wrongfully withholds a refund, a tribunal or court may award interest for the period of the delay as compensation — which is a different thing from contractual interest.
If interest matters to you as a tenant, the time to secure it is before signing, with a stated rate and payment terms in the agreement. Raising it at the end of a tenancy where the agreement is silent is a weak position, and in practice the negotiation that actually works in high-deposit markets is over the size of the deposit rather than over interest on it.
- Generally not payable unless agreed. Or required by applicable state legislation.
- Rent control and the MTA are the exceptions. Where in force and where the tenancy falls under them.
- Delay interest is different. A remedy for wrongful withholding, not a contractual entitlement.
- Negotiate it before signing. With a rate and payment terms stated.