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 a lump-sum investment with a bank or NBFC for a fixed tenure at a fixed interest rate, agreed at the time of booking. Unlike a savings account, the rate doesn't change with the deposit's life, which is exactly what makes an FD predictable — you know the maturity amount on day one, assuming you hold it to term.
For a cumulative FD (interest reinvested and paid at maturity), Indian banks use the standard compound interest formula:
Inputs: Principal = ₹1,00,000 | Rate = 6.5% p.a. | Tenure = 1 year | Compounding = Quarterly (n = 4)
Quarterly compounding always produces a slightly higher maturity amount than annual compounding at the same quoted rate, because interest starts earning interest sooner — the difference is small on short tenures but becomes more noticeable over 5–10 years. This calculator also reports your FD's CAGR and effective post-TDS rate, which reflect the actual annualized growth and real take-home yield once tax is accounted for; the income tax calculator can help you estimate your final tax liability on that interest based on your income slab.
Directly proportional — maturity value and interest earned both scale linearly with the amount deposited, at a given rate and tenure.
The quoted annual rate offered by the bank. Even a small rate difference compounds meaningfully on longer tenures — always compare rates across a few banks before booking.
Longer tenures generally earn more total interest but lock in today's rate for longer — a risk if rates rise later, and an advantage if they fall.
How often interest is added to the principal — quarterly, half-yearly, or annually. More frequent compounding raises the effective annual yield slightly above the quoted rate.
Two separate choices shape your actual returns, and it's easy to conflate them — the payout type matters just as much as the rate:
If you're planning FD income as part of a broader retirement strategy, it's worth comparing this against a systematic withdrawal plan from market-linked investments — FDs offer certainty, SWPs offer growth potential, and many retirees use a mix of both.
Banks in India deduct TDS (Tax Deducted at Source) at 10% under Section 194A of the Income Tax Act when your total FD interest from that bank in a financial year crosses a threshold. This isn't a separate tax — it's an advance deduction against the tax you'll eventually owe on that interest, which is fully taxable as per your income slab regardless of TDS.
| Depositor Type | TDS Threshold (per FY, per bank) | TDS Rate |
|---|---|---|
| Regular (non-senior) depositor | ₹50,000 in total interest | 10% on the excess over the threshold |
| Senior citizen (60+) | ₹1,00,000 in total interest | 10% on the excess over the threshold |
If your total income for the year is below the basic taxable limit, you can submit Form 15G (non-senior citizens) or Form 15H (senior citizens) to your bank at the start of the financial year — a self-declaration instructing the bank not to deduct TDS. This only prevents deduction at source; the interest itself is still taxable if it turns out you owed tax on it.
FDs are one of several fixed-income options available to Indian savers, each suited to a different need:
| Option | Best Suited For | Liquidity |
|---|---|---|
| Fixed Deposit (FD) | A lump sum you already have and want to lock in at a fixed rate | Premature withdrawal usually possible, with a penalty rate |
| Recurring Deposit (RD) | Building savings through regular monthly deposits rather than a lump sum | Similar to FD — premature closure usually allowed with a penalty |
| PPF | Long-term, tax-free retirement savings with a mandatory 15-year lock-in | Low — partial withdrawal only allowed after a few years, full maturity at 15 years |
FD interest is fully taxable, while PPF interest is tax-free — that difference alone can matter more than a small rate gap if you're in a higher tax bracket and have a long enough horizon to use PPF's 15-year lock-in.
For a cumulative FD, maturity amount is calculated using the compound interest formula A = P × (1 + r/n)^(n×t), where P is the principal, r is the annual interest rate as a decimal, n is the number of times interest compounds per year, and t is the tenure in years. The interest is added back to the principal at each compounding interval, so subsequent interest is calculated on a growing balance rather than the original principal alone.
Yes, though the difference is usually modest. Quarterly compounding produces a slightly higher maturity amount than annual compounding at the same quoted rate, because interest starts earning interest sooner. The gap is small on short tenures of a year or two but becomes more noticeable on longer tenures of 5 to 10 years, so it's worth checking when two banks quote similar headline rates with different compounding frequencies.
A cumulative FD reinvests the interest as it accrues and pays out the full principal plus compounded interest only at maturity, which maximizes total returns. A non-cumulative FD pays out the interest at regular intervals — monthly or quarterly — as income, rather than reinvesting it. Non-cumulative suits someone who needs regular income from the deposit, but it results in a lower total payout than cumulative at the same rate and tenure, since the paid-out interest stops compounding.
Banks deduct TDS at 10% under Section 194A once your total FD interest from that bank in a financial year crosses the prescribed threshold — commonly ₹50,000 for regular depositors and ₹1,00,000 for senior citizens. This threshold applies per bank, not per FD, so multiple FDs with the same bank are aggregated for this calculation. TDS thresholds can change with Budget announcements, so always confirm the current figure with your bank.
No. TDS not being deducted does not mean the interest is tax-free — FD interest is fully taxable as per your income tax slab regardless of whether TDS was deducted. If your interest is below the TDS threshold, the bank simply doesn't deduct tax at source, but you are still required to declare the interest as income and pay any tax owed on it when filing your return.
Form 15G (for non-senior citizens) and Form 15H (for senior citizens) are self-declarations submitted to the bank stating that your total income for the year is below the taxable limit. Submitting the relevant form at the start of the financial year instructs the bank not to deduct TDS on your FD interest. These forms only prevent deduction at source — they don't exempt the interest from tax if it turns out you actually owed tax on it.
Yes, most Indian banks offer senior citizens, typically aged 60 and above, an additional 0.25% to 0.75% over the standard FD rate, commonly around 0.5%. This higher rate generally applies automatically if the FD is booked in the senior citizen's name. Senior citizens also benefit from a higher TDS threshold — usually ₹1,00,000 of annual interest compared to ₹50,000 for other depositors.
The FD rate is the quoted annual percentage rate offered by the bank, while CAGR (Compound Annual Growth Rate) reflects the actual annualized growth your principal experienced once compounding is taken into account. For a single FD held to maturity, CAGR is usually very close to the quoted rate but can differ slightly depending on the compounding frequency — CAGR becomes more useful as a comparison metric when evaluating an FD against other investment options with different compounding structures.
For money you won't need in the short term, an FD almost always earns more than a savings account, since FD rates are locked at a higher fixed rate while savings account interest floats lower and can change anytime. The trade-off is liquidity — a savings account allows unrestricted withdrawal, while an FD typically charges a penalty rate on premature withdrawal. A common approach is to keep an emergency fund in savings and move genuine surplus into an FD or a ladder of FDs.
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