Monetary correction and interest: the official indices (SELIC, IPCA, IGP-M, Legal Rate)

Monetary correction and default interest are different things

Monetary correction is not a gain: it merely returns to the amount the purchasing power that inflation took away between the date the debt arose and the date of payment. One hundred reais from two years ago are not worth one hundred reais today, and correction measures exactly that loss through a price index. Default interest is something else, it compensates the creditor for going without the money on time, acting as the price of the delay. That is why, in a well-built calculation, you first correct the amount and then apply interest on the already-corrected base; reversing the order, or stacking two rates that both already carry inflation, distorts the result.

Monetary correction

Restatement of the amount by a price index (IPCA, INPC, IGP-M…) to preserve purchasing power. It is not remuneration; it is an update.

Default interest

A percentage compensating the time of delay, generally counted from service of process, the due date or the harmful event, depending on the case.

SELIC rate

The economy base interest rate. In legal and tax contexts it is used as a single rate that already bundles correction and interest in one number.

This distinction is not academic: it decides which index enters the calculation and avoids charging the same period twice. The judicial monetary correction calculator splits the two steps by time segments precisely so it never mixes inflation restoration with delay remuneration, and the counting of the default period, in turn, follows the CPC business-day deadline rules.

The official indices and how they behave

There is no single index for everything. The main price indices are computed by IBGE (IPCA, IPCA-E and INPC) and by FGV (IGP-M); SELIC and the Legal Rate are measured and published by the Central Bank. They do not track the same basket nor the same population, which is why they diverge so much within a single month. In legal calculations these values are read month by month from the official series and accumulated over the period, never estimated from memory.

The chart below shows the monthly change of SELIC, IPCA and IGP-M across twelve recent months, with the real figures from the official series. Note the contrast: SELIC stays glued around 1% a month, predictable; the IPCA oscillates within a narrow band; the IGP-M jumps from sharp drop to sharp spike, it went from −1.67% to +2.73% in the same window. That is not noise: it is the nature of the index.

Which index for which subject (the practical map)

The choice of index is not free: it depends on the nature of the credit and, often, on a binding ruling by the Supreme Court (STF), the Superior Court (STJ) or the Labour Court (TST). The table below is the practical heart of this guide, it crosses the subject with the correction index, the interest regime and the legal basis. Keep one cross-cutting rule: where the correction column says SELIC, the interest column repeats SELIC because it is the same rate playing both roles, not a sum.

1. 1991The TR era

   Law 8,177/1991 establishes the Reference Rate (TR) as the update index for many debts, including labour ones. As inflation falls, the TR sits almost always below prices, correcting by it becomes, in practice, not correcting.

2. Dec 2020STF strikes down TR in labour (ADC 58/59)

   In the joint judgment of ADC 58/59 and ADI 5867/6021, the STF declares the TR unconstitutional and sets: IPCA-E in the pre-suit phase and SELIC from the filing of the claim, barring cumulation of SELIC with another index (bis in idem).

3. Dec 2021EC 113: SELIC for the Treasury

   Constitutional Amendment 113/2021 (art. 3) sets SELIC as the single correction-and-interest index for Public Treasury debts, unifying what used to vary across courts.

4. Jun 2024STF: FGTS must yield at least inflation (ADI 5090)

   The STF keeps FGTS correction at TR + 3% per year but rules that the yield must guarantee at least the IPCA each year, with compensation by the Fund Council in years it falls short.

5. 30 Aug 2024Law 14.905/2024 takes effect

   Published on 1 Jul 2024 and in force 60 days later, the law rewrites arts. 389 and 406 of the Civil Code: IPCA for correction and the Legal Rate (SELIC − IPCA, zero floor) for civil interest when not agreed.

Why SELIC is not added on top of interest

SELIC is where people go wrong most often. It is not a price index: it is a rate that already contains, in a single number, both the restoration of inflation and the remuneration of capital. So when a calculation applies SELIC in full, it must not add default interest on top of the same period, that would compensate the delay twice. The STF itself named the flaw when deciding ADC 58/59: cumulating SELIC with another update index is bis in idem.

Charging default interest based on the SELIC variation cannot be cumulated with the application of other monetary-update indices, a cumulation that would amount to bis in idem.

STF, ADC 58/59 (2020)

The clearest case is federal taxes. Law 9,430/1996 (arts. 61 and 66) orders accumulating SELIC from the month after the due date until the month before payment, adding only 1% in the month payment is actually made. There is no separate correction index: SELIC itself plays the double role. The symmetry also works for the taxpayer, on refunds or offsets of overpaid tax, Law 9,250/1995 (art. 39, § 4) uses exactly the same accumulated SELIC plus 1% in the refund month. The federal-tax calculator reproduces this rule, and the late-payment penalty (0.33% per day, capped at 20%) and the ex-officio penalty enter as separate amounts, not as interest on interest.

The new Legal Rate of art. 406 (Law 14.905/2024)

Law 14.905/2024 rewrote articles 389 and 406 of the Civil Code and created an express legal interest rate. The rule split in two: monetary correction of civil obligations now references the IPCA (art. 389, sole paragraph), and default interest, when not agreed, became the so-called Legal Rate (art. 406). Art. 406 § 1 defines it as SELIC minus the art. 389 update index, that is, SELIC minus IPCA. And § 3 puts the zero floor into the statute itself: if the result is negative, it is taken as zero for computing that month interest.

In practice this unbundles what SELIC did alone: for civil obligations from 30 Aug 2024, you correct by the IPCA and charge interest by the Legal Rate, instead of applying full SELIC. The Central Bank measures and publishes the Legal Rate monthly in series SGS 29543, with simple interest and a zero floor, and the Legal Rate calculator reads that series month by month. The zero floor is not theoretical: in March 2025 the IPCA-15 outran the month SELIC and the published Legal Rate was exactly 0.000000%, zero interest that month, but never negative.

Two examples with the arithmetic on the table

Example 1, a late federal tax. A R$ 10,000.00 debt falls due in January 2025 and is paid in July 2025. Here there is a single index: SELIC accumulated from the month after the due date (February) to the month before payment (June), plus 1% in the payment month. Multiplying the real SELIC figures from Feb to Jun 2025, 0.99%, 0.96%, 1.06%, 1.14% and 1.10%, the factor is 1.053613; with July 1%, 1.053613 × 1.01 = 1.064149. Interest is 6.4149% of the principal, or R$ 641.49, and the total without penalty is R$ 10,641.49. If you also added "1% a month" on the side, you would be charging the delay twice.

Example 2, a civil debt, new regime versus old. Suppose R$ 20,000.00 to be updated from September 2024 to August 2025, twelve months. Under the new regime (Law 14.905) there are two steps. First the correction: the accumulated IPCA for the period is 5.1305%, so R$ 20,000.00 becomes R$ 21,026.10. Then the interest: the official Legal Rate (SGS 29543) summed month by month, simple interest with a zero floor, including March 2025 at 0%, accumulates 6.9286%; on the already-corrected base, that is R$ 1,456.80. The total under the new regime is R$ 22,482.90.

Now the same amount under the old regime, in which art. 406 pointed to full SELIC (a reading confirmed by the STJ in Theme 1,368 for the period up to 29 Aug 2024). Compound SELIC over the same twelve months accumulates 12.8935%, and R$ 20,000.00 becomes R$ 22,578.69, no separate correction or interest, because SELIC does both. The gap between the regimes is only R$ 95.79, with the old one slightly higher. It is no accident: since the Legal Rate is SELIC minus IPCA, correcting by the IPCA and adding the Legal Rate almost rebuilds full SELIC. What changes is not the size of the pie, but its transparency, you now see how much is inflation restoration and how much is interest, plus the behaviour in zero-floor and deflation months.

Run these numbers in the judicial monetary correction calculator below: pick the preset (civil, Treasury, labour), enter the dates and the amount, and it segments the period applying the right index to each stretch. Remember that default interest should not be confused with compound investment interest, if your topic is growth over time, see compound interest, contributions and inflation; and when the debt involves attorney fees, the fee base has its own rules, covered in attorney fees and the OAB table.