Maturity amount · Interest earned · TDS impact · Compounding effect · Smart Insights
Disclaimer: TDS thresholds are as per FY 2026-27 rules: ₹50,000 for regular citizens and ₹1,00,000 for senior citizens (Section 194A). TDS is deducted at 10% on interest exceeding the threshold. Results are estimates — actual returns may vary by bank and prevailing rates. Consult your bank or tax advisor for exact figures.
A Fixed Deposit is one of the safest and most popular savings instruments in India, used by over 500 million depositors. Unlike savings accounts (which offer variable, usually lower rates), FDs lock in a specific interest rate for the entire chosen tenure — from 7 days to 10 years. At maturity, you receive your principal plus accumulated interest.
Banks calculate FD interest in two ways: simple interest (interest on principal only, usually for short tenures) and compound interest (interest on principal plus previously accumulated interest, standard for most FDs). Most bank FDs compound quarterly, meaning interest is calculated every 3 months and added to the principal for the next quarter’s calculation. This compounding frequency matters significantly over longer tenures.
| Type | Principal | Rate | Tenure | Interest Earned | Maturity Value |
|---|---|---|---|---|---|
| Simple Interest | ₹1,00,000 | 7% p.a. | 3 years | ₹21,000 | ₹1,21,000 |
| Compound (Quarterly) | ₹1,00,000 | 7% p.a. | 3 years | ₹23,144 | ₹1,23,144 |
| Compound (Monthly) | ₹1,00,000 | 7% p.a. | 3 years | ₹23,295 | ₹1,23,295 |
Banks offer two primary payout structures. Cumulative FD: interest is compounded and paid along with principal at maturity. Ideal for long-term wealth building — all interest stays invested. Non-cumulative FD: interest is paid out monthly, quarterly, half-yearly, or annually. Useful for retired individuals or anyone needing regular income. Note: non-cumulative FDs have a slightly lower effective yield than cumulative FDs at the same stated rate because interest is not reinvested.
This calculator uses the standard compound interest formula, which is how virtually all Indian banks calculate FD maturity values for cumulative deposits:
| Variable | Meaning | Example |
|---|---|---|
| A | Maturity value (principal + interest) | Output — what the calculator shows |
| P | Principal amount deposited | ₹1,00,000 |
| r | Annual interest rate (as a decimal) | 7% = 0.07 |
| n | Compounding frequency per year | 4 (quarterly) or 12 (monthly) |
| t | Tenure in years | 3 years |
Given: P = ₹1,00,000 | Rate = 7.5% p.a. | Tenure = 3 years | Compounding = Quarterly (n = 4)
Some banks apply simple interest for FDs under 6 months or 1 year. The formula is straightforward:
FD rates vary significantly across bank categories. Understanding the rate landscape helps you make the most of your deposits without taking unnecessary risk.
FD interest is fully taxable as income in the year it accrues (not just when paid), regardless of whether you withdraw it or keep it in a cumulative FD. This is the most important tax concept FD investors often miss.
| Category | TDS Rate | TDS Threshold | Effective Tax Rate |
|---|---|---|---|
| General Public | 10% TDS (if PAN provided) | ₹40,000/year per bank | 5%–30% (as per income slab) |
| Senior Citizens | 10% TDS (if PAN provided) | ₹50,000/year per bank | 0%–30% (as per income slab) |
| No PAN provided | 20% TDS | Any interest amount | Slab rate + possible penalty |
| Form 15G submitted | Nil TDS | Income below taxable limit (non-senior) | 0% (if total income under ₹2.5L/₹3L) |
| Form 15H submitted | Nil TDS | Income below taxable limit (senior citizen) | 0% (if total income under ₹3L/₹5L) |
| Income Slab | Tax Rate | Tax on Interest | Net Post-Tax Return | Effective Yield |
|---|---|---|---|---|
| Up to ₹3L (zero) | 0% | ₹0 | ₹2,51,440 | 7.73% p.a. |
| ₹3L–₹7L (5% new regime) | 5% | ₹12,572 | ₹2,38,868 | 7.34% p.a. |
| ₹7L–₹10L (10% new regime) | 10% | ₹25,144 | ₹2,26,296 | 6.96% p.a. |
| ₹10L–₹12L (15% new regime) | 15% | ₹37,716 | ₹2,13,724 | 6.57% p.a. |
| Above ₹15L (30% old/new) | 30% | ₹75,432 | ₹1,76,008 | 5.41% p.a. |
A common mistake: investors in cumulative FDs assume tax is due only at maturity when they receive the money. This is incorrect. Under the income tax accrual principle, FD interest is taxable in the year it accrues (i.e., every year), even if it is reinvested in a cumulative FD and not paid out. Form 26AS (from Income Tax portal) shows TDS deducted by your bank each year — this is the proof of how much interest accrued that year. You must include FD interest in your ITR each year, not just the maturity year.
Tax-saver FDs have a mandatory 5-year lock-in and qualify for Section 80C deduction up to ₹1.5 lakh per year under the old tax regime. Key points: premature withdrawal is not permitted; interest earned is fully taxable even though the principal qualifies for 80C; available at most banks and post offices; not available under the new default tax regime. For taxpayers in the 30% slab who choose the old regime, the 80C deduction saves ₹46,800 per year in tax on the ₹1.5 lakh invested.
If your total income is below the basic exemption limit, submit Form 15G (for individuals under 60) or Form 15H (for senior citizens) at the start of every financial year to your bank. This instructs the bank not to deduct TDS on your FD interest. Submit at every bank where you have FDs. Even if TDS is deducted, you can claim a refund in your ITR if your income falls below the taxable threshold.
FDs compete with several other savings and investment options. Here is an honest comparison to help you choose based on your goal, tax slab, and risk tolerance:
| Parameter | Bank FD | Debt Mutual Fund SIP | PPF | RD |
|---|---|---|---|---|
| Returns | 6.5%–9.5% (fixed, guaranteed) | 5%–8% (variable, not guaranteed) | 7.1% (govt. fixed, reviewed quarterly) | Same as FD rate at time of booking |
| Tax on returns | Slab rate — no LTCG benefit | Slab rate (post Apr 2023 — no indexation) | Tax-free (EEE — exempt at all stages) | Slab rate — same as FD |
| Lock-in / Liquidity | Premature withdrawal allowed (0.5%–1% penalty); 5-yr for Tax-Saver FD | No lock-in (except ELSS); fully liquid | 15-year lock-in; partial withdrawal from Year 7 | Premature closure allowed with penalty |
| Capital safety | DICGC-insured up to ₹5L; uninsured above | Not insured; NAV can fall | Sovereign guarantee — 100% safe | DICGC-insured same as FD |
| Best for | Short-to-medium goals (1–5 yr), emergency reserves, retirees | Slightly higher post-tax yield for sophisticated investors | Long-term (15+ yr) tax-free compounding; retirement | Monthly surplus; building short-term corpus |
| After-tax yield at 30% slab | ~5.25%–6.65% (on 7.5%–9.5%) | Similar to FD post Apr 2023 change | 7.1% fully tax-free | ~5.25%–6.65% (same as FD) |
FDs are best suited for short-to-medium term goals where capital protection matters more than maximising returns. Here are common use cases with indicative deposit amounts required, at an illustrative 7.5% p.a. quarterly compounding rate:
| Goal | Target Amount | Tenure | FD Deposit Needed | Interest Earned |
|---|---|---|---|---|
| Emergency Fund (6 months ₹50K expenses) | ₹3,00,000 | 1 year | ₹2,79,350 | ₹20,650 |
| Vacation / Travel Fund | ₹5,00,000 | 2 years | ₹4,31,480 | ₹68,520 |
| Home Down Payment (20%) | ₹15,00,000 | 3 years | ₹11,98,810 | ₹3,01,190 |
| Child’s School Fees (1 year) | ₹2,00,000 | 1 year | ₹1,86,240 | ₹13,760 |
| Retirement Reserve (liquid buffer) | ₹25,00,000 | 5 years | ₹17,30,275 | ₹7,69,725 |
All figures are illustrative estimates at 7.5% p.a. quarterly compounding. Actual FD rates vary by bank and tenure. Use the FD calculator above to enter the current rate offered by your bank for precise figures.
FD rates change frequently, so always check the current rate card on the bank’s official website. As a general pattern in 2026: Small Finance Banks (SFBs) like Unity SFB, Suryoday SFB, and ESAF SFB consistently offer the highest rates (8.5%–9.5% p.a.) for retail FDs. Large private banks (HDFC, ICICI, Axis) typically offer 7%–7.75%. PSU banks like SBI offer 6.5%–7.25%. Post Office Time Deposits offer 6.9%–7.5% with sovereign guarantee. For DICGC-insured deposits under ₹5 lakh, SFBs offer the best rates. For amounts above ₹5 lakh, consider splitting across multiple banks.
Yes. FD interest is taxable on an accrual basis under Indian income tax law, not just when it is paid. For a 3-year cumulative FD, you must declare the interest earned in each of the 3 years in your ITR — even though you receive the money only at maturity. Your bank’s Form 26AS or AIS (Annual Information Statement) will show the TDS deducted each year, confirming the annual accrual. Many people discover a tax notice years later because they failed to declare cumulative FD interest annually. Use this calculator’s yearly breakdown to see exactly how much interest accrues in each financial year.
Most banks charge a premature withdrawal penalty of 0.5%–1% below the applicable rate for the actual period held. For example: if you booked a 3-year FD at 7.5% p.a. but broke it after 1 year, you would receive the 1-year FD rate (say 7%) minus the penalty (0.5%) = 6.5%, not the 7.5% rate you expected. Tax-saver FDs (5-year lock-in) cannot be broken before maturity at all — no premature withdrawal is permitted. Post Office Time Deposits have a 6-month lock-in; premature closure after that attracts a 1% penalty. Always check your specific bank’s current premature withdrawal policy as it varies. Loan against FD is usually a better option than premature withdrawal if you need short-term funds.
Deposits at all DICGC-member banks (all RBI-scheduled commercial banks, small finance banks, and regional rural banks) are insured up to ₹5 lakh per depositor per bank — this ₹5 lakh covers principal plus interest combined. If a bank fails (rare but not impossible — as seen with Yes Bank restructuring and PMC Bank), DICGC pays out up to ₹5 lakh within 90 days. Key point: ₹5 lakh is per bank, not per FD or per account. If you have ₹3 lakh in FD and ₹2.5 lakh in savings at the same bank, only ₹5 lakh is insured; the remaining ₹0.5 lakh is uninsured. NBFC fixed deposits are not DICGC-insured. To protect large amounts: spread across multiple banks in ₹5 lakh chunks.
A cumulative FD reinvests interest every compounding period (usually quarterly), so your interest earns interest. You receive the entire principal plus accumulated interest at maturity. This is the classic FD structure and gives you the highest total return because of compounding. A non-cumulative FD pays out interest at regular intervals — monthly, quarterly, half-yearly, or annually — and your principal is returned at maturity. The stated interest rate is the same, but because interest is not reinvested, you miss out on compounding — the effective yield is slightly lower than cumulative. Non-cumulative FDs are ideal for retirees or anyone needing regular cash flow. This calculator’s payout frequency selector lets you model both options and see the difference in total interest earned.
Submit Form 15G if you are under 60 years old and your total income (including FD interest) for the financial year is below the basic exemption limit of ₹2.5 lakh (or ₹3 lakh under the new regime with rebate). Submit Form 15H if you are a senior citizen (60+) and your tax liability for the year is nil. Both forms instruct the bank not to deduct TDS on your FD interest. Submit at the beginning of each financial year (April) at every bank where you have FDs. If you miss submitting in time and TDS is deducted anyway, you can claim a full refund in your ITR if your income is below the taxable limit. Do not submit 15G/15H if your income is above the taxable limit — it is a declaration under penalty and filing a false one is an offence.
This calculator uses the standard compound interest formula: A = P × (1 + r/n)n×t, where P is principal, r is annual rate as a decimal, n is compounding frequency per year, and t is tenure in years. For quarterly compounding (the most common for Indian banks), n = 4. The formula is the same one used by SBI, HDFC, ICICI, and most other Indian banks for retail FD maturity calculations. For short-tenure FDs where banks apply simple interest, the calculator uses SI = P × r × t. The result is mathematically accurate for the inputs you enter. It does not account for any changes in applicable rates (relevant for floating-rate FDs, if any), TDS computation across multiple financial years (shown separately in the tax section), or the bank-specific nuances of how they round partial-period interest.
There is no regulatory upper limit on FD deposit amounts — you can deposit as much as you want. However, the DICGC insurance covers only ₹5 lakh per depositor per bank (principal + interest). Any amount above ₹5 lakh is uninsured and depends entirely on the bank’s solvency. For large deposits: spread across multiple banks to stay within ₹5 lakh per bank. Consider sovereign-backed options (Post Office Time Deposit, RBI Floating Rate Savings Bonds) for amounts where full safety is required above the insurance limit. For Tax-Saver FDs specifically, the maximum that qualifies for Section 80C deduction is ₹1.5 lakh per financial year — but you can deposit more; only ₹1.5L gets the 80C benefit.
FD and RD serve different purposes. An FD is for deploying a lump sum — a bonus, maturity proceeds, or inheritance — and earns interest from Day 1 on the full amount. An RD is for regular monthly savings — you invest a fixed amount each month, and each instalment earns interest for its remaining tenure. If you have a lump sum ready, FD is better: the entire amount compounds for the full duration. If you are building savings from monthly income, RD is the right instrument. The interest rates are typically similar for the same tenure. Both are taxed identically — interest at your income slab rate, with the same TDS thresholds. This FD calculator cannot compute RD returns; use the ClariMoney RD Calculator for that comparison.
Yes, NRIs can book FDs in India via two routes. NRE (Non-Resident External) FD: held in Indian rupees; both principal and interest are fully repatriable; interest is exempt from Indian income tax; rates are set by individual banks (typically similar to resident FD rates). NRO (Non-Resident Ordinary) FD: used for India-sourced income (rent, dividends); repatriation capped at USD 1 million/year; interest is taxable in India with TDS at 30% (plus surcharge and cess) — reducible under DTAA with your resident country. For NRIs earning in foreign currency, NRE FDs offer the dual benefit of guaranteed Indian rupee returns plus full tax exemption. Currency risk exists if the rupee depreciates against your earning currency. Check current NRE FD rates directly with your bank as they differ from resident rates.
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