Fixed Deposit (FD) Calculator

What Is a Fixed Deposit — and Is It Still Worth It in 2025?

A Fixed Deposit (FD) is a financial instrument offered by banks, post offices, and NBFCs where you deposit a lump sum for a fixed tenure at a pre-agreed interest rate. Unlike a savings account where rates float, your FD rate is locked on the day of booking — making it one of the most predictable investment options available.

In 2025, FDs are having something of a renaissance. After a prolonged low-rate era, the RBI's rate hike cycle pushed bank FD rates to decade-highs in 2023–24, and while rates have softened slightly since then, small finance banks and NBFCs are still offering 8–9.5% for select tenures. For a risk-averse investor or anyone keeping a portion of their portfolio in safe, liquid instruments, FDs remain highly relevant.

The catch, of course, is tax. FD interest is fully taxable as "Income from Other Sources." For a 30% bracket taxpayer, an 8% FD yields an effective post-tax return of about 5.6% — which may or may not beat a comparable debt mutual fund after indexation. Understanding your actual post-tax return (which our calculator computes) is the only honest way to evaluate an FD.

How FD Interest Is Calculated — The Formula Explained

Banks calculate FD interest using the compound interest formula. The frequency of compounding (quarterly, monthly, etc.) affects the final maturity amount — more frequent compounding means slightly higher returns.

A worked example — quarterly compounding

Does compounding frequency matter?

Yes, but the difference is smaller than most people think. On a ₹5 lakh FD at 7.5% for 3 years: quarterly compounding gives ₹6,25,718, while annual compounding gives ₹6,23,406 — a difference of about ₹2,300. Monthly compounding gives ₹6,26,277, which is about ₹560 more than quarterly. The differences grow with larger principals and longer tenures, but the impact is modest compared to the rate itself.

What matters far more is the interest rate you negotiate and how much of the gross interest you keep after TDS and income tax.

Best FD Interest Rates in India — FY 2025–26

Rates vary by tenure, institution type, and whether you are a regular or senior citizen depositor. Senior citizens get an additional 0.25–0.75% (typically 0.5%) over regular rates at most banks. Here are indicative rates for the most popular tenures:

⚠️ Rates are indicative for FY 2025–26 and change frequently. Always verify current rates on the institution's official website before booking. Rates differ by tenure, amount slab (under/over ₹2 crore), and customer category.

TDS on FD Interest — Fully Updated for FY 2025–26

TDS (Tax Deducted at Source) on FD interest is one of the most misunderstood aspects of fixed deposits. Here is the complete picture after the Union Budget 2025 changes:

New TDS threshold from FY 2025–26 (Budget 2025)

TDS is not your final tax — it is an advance

TDS deducted by the bank is a tax advance, not the full and final tax. Your actual tax liability on FD interest is determined by your income tax slab:

If you are in the 30% bracket, the bank deducts 10% TDS but you owe 30% tax — you will need to pay the remaining 20% when filing your ITR. If you are in the 0% bracket (income below the basic exemption limit), you can claim a full refund of the TDS deducted by filing Form 15G (regular citizens) or Form 15H (senior citizens) at the start of the financial year.

How to save TDS on FD legally

TDS vs actual tax — important distinction

TDS is deducted by the bank at the source. But your actual tax obligation is based on your slab rate, which could be higher or lower:

FD vs Other Safe Investments — When Does FD Win?

FDs are not the only safe investment. Here is a clear-eyed comparison with the alternatives most Indian investors consider:

The honest verdict: For a 30% bracket investor, a PPF at 7.1% is often better than an FD at 8% after tax, because PPF interest is fully exempt. The post-tax FD return at 8% is about 5.6%, while PPF returns 7.1% tax-free. The tradeoff is liquidity — PPF locks your money for 15 years. FDs remain the superior choice when you need predictable returns, full flexibility on tenure (7 days to 10 years), and the ability to pledge for loans.

Frequently Asked Questions

• What is the new TDS limit on FD interest from FY 2025–26? ▼
  Budget 2025 raised the TDS threshold on FD interest as follows:
  
  • Regular citizens: TDS applicable only if interest from a single bank exceeds ₹50,000 per financial year (raised from ₹40,000).
  • Senior citizens (60+): TDS applicable only if interest exceeds ₹1,00,000 per financial year (raised from ₹50,000).
  
  The TDS rate remains 10% if PAN is provided, and 20% if PAN is not provided. This limit is per bank — not cumulative across all your FDs. If you have FDs in multiple banks, each bank applies the threshold independently.
• Is FD interest taxable under the new tax regime in FY 2025–26? ▼
  Yes — FD interest is taxable as "Income from Other Sources" under both the old and new tax regimes. The new regime (default from AY 2025–26) does not exempt FD interest.
  
  What changes under the new regime is that you cannot claim deductions like Section 80C (even for 5-year tax-saving FDs) or Section 80TTB (the ₹50,000 deduction on interest income for senior citizens under the old regime). The interest is added to your total income and taxed at the applicable slab rate.
  
  For most investors in the new regime, this means the effective post-tax return on an FD is purely slab-rate driven — there is no deduction to offset it.
• What is the difference between cumulative and non-cumulative FDs? ▼
  Cumulative FD: Interest is reinvested at the same rate every compounding period (monthly, quarterly, etc.) and paid out together with the principal at maturity. This gives the highest total return because of the compounding effect. Best for investors who do not need regular income from the FD.
  
  Non-cumulative FD (monthly/quarterly payout): Interest is paid out to your linked savings account at fixed intervals — monthly or quarterly. The principal is returned at maturity. Total payout is lower than the cumulative version because the interest is not reinvested. Best for retirees or others who need regular cash flow from their savings.
• What happens if I break an FD prematurely? ▼
  If you close an FD before its maturity date, banks apply a premature withdrawal penalty — typically 0.5% to 1% reduction from the rate applicable for the period you actually held the deposit.
  
  For example: you booked a 3-year FD at 7.5%. You withdraw after 18 months. The bank pays you the 18-month rate (say 7.0%) minus 0.5% penalty = 6.5%, instead of 7.5%. Most banks do not allow premature withdrawal before 7 days.
  
  Some banks offer a loan against FD instead — you can borrow 70–90% of the FD value at 1–2% above the FD rate. This is usually cheaper than breaking the FD, especially for short-term cash needs.
• What is the DICGC insurance limit and does it cover FDs? ▼
  The Deposit Insurance and Credit Guarantee Corporation (DICGC) insures deposits — including FDs, savings accounts, and recurring deposits — held at all scheduled commercial banks, small finance banks, and cooperative banks in India. The insurance limit is ₹5 lakh per depositor per bank (covering principal + interest combined).
  
  This means if a bank fails, you are guaranteed to receive up to ₹5 lakh. Amounts above ₹5 lakh are at risk. NBFC FDs are NOT covered by DICGC — they carry higher risk regardless of the credit rating.
  
  Post Office FDs (Time Deposits) carry a full sovereign guarantee with no upper limit, making them the safest option for large deposits.
• Can I get a loan against my FD? ▼
  Yes — most banks offer a loan against FD (also called overdraft against FD or FD-backed credit). You can typically borrow 70–90% of the FD value at an interest rate 1–2% above your FD rate.
  
  For example, if your FD earns 7.5%, the loan against it costs about 8.5–9.5%. Since your FD continues to earn 7.5%, the net cost of the loan is only about 1–2% — far cheaper than a personal loan at 12–20%.
  
  The FD remains intact and continues to earn interest. Repayment can be done at your convenience within the FD tenure. This is one of the most underused and cost-effective short-term borrowing options in India.
• Does a 5-year tax-saving FD save tax in FY 2025–26? ▼
  A 5-year tax-saving FD qualifies for a deduction of up to ₹1.5 lakh under Section 80C, but only under the old tax regime. Under the new tax regime (default from AY 2025–26), Section 80C deductions are not available — so a tax-saving FD offers no principal deduction benefit.
  
  Additionally, regardless of which regime you use, the interest earned on a 5-year tax-saving FD is fully taxable. This is unlike PPF or SCSS where the interest has specific tax treatments. There is a 5-year lock-in with no premature withdrawal allowed.
  
  For an investor choosing between the old and new tax regime purely for FD benefits, it is rarely worth switching to the old regime just for the 80C FD deduction — the math often favors the lower slab rates of the new regime. Consult a CA for your specific situation.