Securing Hannav Ledger...
Securing Hannav Ledger...
Glossary
Principal is the original sum borrowed or invested, excluding interest, on which returns or loan charges are calculated.
Principal is the actual loan amount you borrowed — on a ₹10 lakh loan, ₹10 lakh is principal; interest is extra.
Outstanding principal reduces with each EMI payment. Investment principal is initial capital; gains are measured against it for return and tax calculations. Prepayment directly attacks outstanding principal.
Personal loan ₹5 lakh at 14%: after 12 EMIs totalling ₹1.8 lakh, perhaps ₹1.2 lakh went to interest and ₹60,000 reduced principal to ₹4.4 lakh outstanding.
Original principal is starting loan amount. Outstanding balance is remaining principal after partial repayments at any point.
Processing fee is usually separate upfront charge, not added to principal unless specifically capitalised into loan amount.
Capital gains tax computed on sale proceeds minus cost of acquisition (adjusted principal), not on entire sale value.