FD maturity formula
Maturity = P × (1 + r ÷ n)^(n × t)
P = deposit, r = annual rate (7% = 0.07), n = compounding periods a year (4 for quarterly), t = years.
Example: ₹1,00,000 at 7% for 5 years, compounded quarterly → 1,00,000 × (1.0175)^20 = ₹1,41,478. Interest earned is ₹41,478. The effective yearly yield is 7.19%, slightly more than 7% because of quarterly compounding.
Cumulative vs non-cumulative FDs
| Type | How interest is paid | Good for |
|---|---|---|
| Cumulative | Compounded and paid with the deposit at maturity | Growing savings |
| Non-cumulative (quarterly payout) | Paid out every quarter: P × r ÷ 4, so no compounding | Regular income, e.g. retirees |
| Non-cumulative (monthly payout) | Paid monthly at a slightly discounted rate | Monthly expenses |
Tax and TDS on FD interest
- FD interest is added to your income and taxed at your slab rate, every year, even on cumulative FDs where you receive it only at maturity.
- Banks deduct 10% TDS when your interest at that bank is more than ₹50,000 a year (₹1,00,000 for senior citizens). Without a PAN, it's 20%.
- If your total income is below the taxable limit, submit Form 15G (below 60) or 15H (seniors) to stop TDS.
- Senior citizens usually get an extra 0.25–0.50% from banks; enter the rate your bank offers.
Safety
Bank deposits in India are insured by DICGC up to ₹5 lakh per depositor per bank, including interest. Spreading large sums across banks keeps all of it covered. Small finance banks often pay higher rates and are covered by the same insurance.
To compare with a monthly savings plan, use the RD calculator. For tax-free, long-term savings, see the PPF calculator.
Frequently asked questions
How is FD interest calculated?
Most Indian banks compound FD interest quarterly: Maturity = P × (1 + r/4)^(4 × years). For tenures under about 6 months, banks usually pay simple interest instead.
How much will ₹1 lakh FD give in 1 year?
At 7% with quarterly compounding, about ₹1,07,186: ₹7,186 of interest, a 7.19% effective yield.
Is FD interest taxable?
Yes, at your income-tax slab rate, and you should declare it every year as it accrues, even for cumulative FDs. TDS is only an advance; it doesn't settle the full tax if you're in a higher slab.
What is the TDS limit on FD interest?
TDS applies when interest from one bank is more than ₹50,000 in a year, or ₹1,00,000 for senior citizens. The rate is 10% with PAN and 20% without.
Are fixed deposits safe?
Bank FDs are insured by DICGC up to ₹5 lakh per depositor per bank, including interest. Corporate FDs are not covered by this insurance.
Last updated . How we check our tools.