Reviewed October 2026
How the FD calculator works
A fixed deposit (FD) locks a lumpsum with a bank or NBFC for a fixed tenure at a fixed rate. Most Indian banks compound cumulative FD interest every quarter, which is why the effective yield is a little higher than the quoted rate.
FD formula
A = P × (1 + r/n)^(n × t) P = deposit amount r = annual interest rate n = compounding periods a year (4 for quarterly) t = tenure in years
Like most banks, deposits of less than 6 months earn simple interest, and months that don't complete a full quarter earn simple interest for that part. With a payout FD, interest is paid out every quarter and you get the principal back at maturity.
Worked example
₹1,00,000 at 7% for 1 year, compounded quarterly, matures at ₹1,07,186 — an effective yield of 7.19%.
₹5,00,000 at 7% for 3 years matures at about ₹6,15,720.
Tax on FD interest
- FD interest is added to your income and taxed at your slab rate, every year, even if it's paid only at maturity.
- Banks deduct TDS at 10% when interest crosses ₹50,000 a year (₹1,00,000 for senior citizens). Submit Form 15G/15H if your total income is below the taxable limit.
- A 5-year tax-saver FD qualifies for the old-regime 80C deduction but can't be withdrawn early.
Frequently asked questions
Is FD interest compounded monthly or quarterly?
Most Indian banks compound cumulative FDs quarterly. Some NBFCs and small finance banks offer monthly or yearly compounding — pick the option that matches your bank's terms.
What is the effective yield of an FD?
It's the annual return after compounding. At 7% compounded quarterly, the effective yield is about 7.19%.
Are FDs safe?
Deposits in a bank are insured by DICGC up to ₹5 lakh per depositor per bank, including interest. Corporate and NBFC FDs aren't covered.