How the FD Calculator Works
A Fixed Deposit (FD) is a savings instrument offered by banks where you deposit a lump sum for a fixed tenure at a guaranteed interest rate. The interest is compounded at regular intervals, and the maturity amount is paid at the end of the tenure.
The FD Formula
A = P × (1 + r/n)n×t
Where:
- P = Principal (deposit amount)
- r = Annual interest rate (as decimal)
- n = Compounding frequency (4 for quarterly, 12 for monthly)
- t = Tenure in years
- A = Maturity amount
TDS on Fixed Deposits
- Banks deduct 10% TDS if your total FD interest from that bank exceeds ₹40,000 in a financial year
- For senior citizens (60+), the threshold is ₹50,000
- If you don't provide PAN, TDS is deducted at 20%
- TDS is just an advance — you must still declare the full interest in your ITR
Frequently Asked Questions
How is FD interest calculated?
FD interest is calculated using compound interest: A = P × (1 + r/n)^(n×t). Most Indian banks compound quarterly. Monthly compounding gives slightly higher returns. The effective annual yield is always higher than the stated rate due to compounding.
Is FD interest taxable?
Yes, FD interest is fully taxable at your applicable income tax slab rate. Banks deduct TDS at 10% if annual interest exceeds ₹40,000 (₹50,000 for seniors). You must declare the full interest in your ITR regardless of TDS.
What is the difference between cumulative and non-cumulative FD?
Cumulative FDs reinvest the interest, which compounds and is paid along with principal at maturity. Non-cumulative FDs pay interest periodically (monthly/quarterly). This calculator shows cumulative FD returns, which give higher effective returns.
Do senior citizens get higher FD rates?
Yes. Most banks offer 0.25% to 0.50% extra interest for senior citizens (60+). Some offer up to 0.75% for super senior citizens (80+). Check your bank's specific rate card.
Can I break an FD before maturity?
Yes, most banks allow premature withdrawal, but they typically charge a penalty of 0.5% to 1% on the interest rate. The interest is recalculated at the rate applicable for the actual period the FD was held, minus the penalty.
