The three real options at the counter
Every EMI conversation in India collapses into three variants: standard EMI (customer pays interest), no-cost / zero-cost EMI (merchant absorbs interest as a discount) and full subvention (brand or lender absorbs part of the cost). Confusing the three is the single biggest reason for post-sale disputes.
- Standard EMI — customer pays product price + interest across tenure
- No-Cost EMI — merchant offers upfront discount equal to interest; customer pays only the product price across tenure
- Subvention EMI — brand/OEM funds part of the discount so merchant margin stays intact
A worked example on a ₹40,000 phone
Product price: ₹40,000. Tenure: 6 months. Lender interest: 13% p.a. flat. Processing fee: 2% + GST.
- Standard EMI: EMI ₹7,100/mo × 6 = ₹42,600 paid by customer. Merchant receives ₹40,000 − processing fee.
- No-Cost EMI: Merchant gives ₹2,600 as an instant discount. Customer pays 6 × ₹6,667 = ₹40,000. Merchant receives ₹40,000 − discount − processing fee.
- Subvention: OEM funds ₹1,500 of the ₹2,600, merchant absorbs ₹1,100. Everyone else sees no change.
GST treatment you must get right
GST is levied on the full invoice value, not the discounted EMI amount. The no-cost discount is treated as a trade discount if it appears on the invoice, otherwise as an expense. Processing fee attracts 18% GST and is either recovered from the customer or absorbed by the merchant — the KFS on ZepCart makes the split explicit so accounting stays clean.
How to explain it in 30 seconds
Train the counter team on one script: 'The price stays ₹40,000. On no-cost EMI you pay ₹40,000 across 6 months, we absorb the interest. On standard EMI you pay ₹2,600 extra to the bank across 6 months.' Clarity at the counter is worth more than any marketing spend — it is also an RBI fair-practice requirement.
Where BNPL fits
Buy Now Pay Later is a short-tenure (typically 15–45 day) instrument, not an EMI. It is best for accessory attachments and repeat customers; not a substitute for a 6/9/12-month loan on high-ticket products.
Frequently asked questions
Is no-cost EMI legal?
Yes. The RBI has clarified that no-cost EMI is permissible provided the total amount charged to the customer equals the product price and the discount/absorption is transparently disclosed on the invoice and KFS.
Who bears the interest in no-cost EMI?
Usually the merchant, sometimes shared with the brand under a subvention arrangement. The lender always receives its full interest — the only question is who funds it.
Does ZepCart auto-calculate my payout for both variants?
Yes. When you create a lead, choose No-Cost or Standard and the platform displays gross value, discount, processing fee, GST and net settlement side by side before submission.
Can I offer no-cost EMI on every product?
Only on SKUs where your margin covers the interest absorption or a subvention scheme exists. ZepCart lets you flag SKUs as no-cost eligible so the counter team never over-promises.
Want ZepCart at your store?
ZepCart onboards merchants by invitation. Talk to our team to activate no‑cost EMI, EV finance and consumer‑durable loans at your counter.
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