## \$show=home

 Science ClassesBasic SciencesComputer Science

 Personal Finance Money MakingInvestment  Finance Data AnalysisCorporate Finance Finance ServicesPublic FinanceTaxation

## \$show=home

"Thank you sir you did a good job for students through Svtuition. I have learn many things"

S.U. Rahman

"First time I have so happy to find Svtuition I spent a lot of time searching for my problem now I have finally understood the concept at Svtuition"

Anonymous

"All doubts clear sir.Svtuition is a very good teacher.thanks"

Sathyam Guha

"Sir I am learning through your website and I am really grateful to you for taking out your time to teach us in Svtuition."

Himansh

"Svtuition is very usefull to me ....today i have learn great things at Svtuition....very usefull tips provide for me.....today i have to start my own learning experience through this website.......Thanks bro....God Bless U. "

Jeevan Kumar

"Nice👌 and informative Site, Keep doing the good work "

Divyanshu

# Learn Financial Freedom Step by Step

In daily life, you listen the words penalty and interest. It may be you also which pay both but some time, you may confuse to learn the difference between penalty and interest.

Meaning

Penalty : If you did not follow the order of Govt or its department or your private owner, you may get penalty. It may be in money form or physical imprisonment. Physical jail penalty will be done if you do any illegal work.

Interest : If you took loan, you have to pay interest of taken loan. It is just rent of money.

Example

Penalty : You have to pay electricity bill of Rs. 5000. Your state govt. has made the rule. If you do not pay it on its maturity, you have to pay penalty of Rs. 100 per day, you went end of 2nd month from maturity, you will pay Rs. 5000 + penalty of two months which is Rs. 6000 = Total payable amount is Rs. 11,000

Interest : Sometime, you have pay interest of your outstanding bill of electricity.

If it is 2% per month

Then you have to pay interest on Rs. 11,000

= 11000 X 2% X 2 = Rs. 440

Total payable amount to electricity department = RS. 11440

Time Value of Money

Penalty

Penalty does not connected with time value of money. It is just punishment for doing wrong or unlawful or breaking any official rule.

Interest

It is totally connected time value of money. You are responsible to pay something on the time when you have received the service. If not pay, you are responsible to pay its value of time which you will keep it in your pocket.

If you have to pay Rs. 100 on ist jan but you are paying Rs. 100 on 31st dec. It means, you are also responsible to pay its time value, if it is 6.75% pa, it means, you have to pay Rs. 6.75 also with rs. 100

## Ashok Kumar's Contents\$type=blogging\$show=https://www.svtuition.com/p/ashok-kumar.html\$hide=author

Name

ltr
item
Svtuition: Penalty Vs Interest
Penalty Vs Interest