What is a Fixed Deposit (FD)?
A Fixed Deposit (FD) is a low-risk investment instrument offered by banks and NBFCs where you deposit a lump sum amount for a fixed tenure at a pre-determined interest rate.
Unlike stock market investments, FDs offer guaranteed returns and capital safety, making them the preferred choice for conservative investors and senior citizens.
Who is Eligible?
Almost any investor category can open an FD in India. Common eligibility includes:
- Resident Individuals: Including minors (with guardians).
- Senior Citizens: Eligible for higher interest rates (usually 0.50% extra).
- NRIs: Can open NRE (repatriable) or NRO (non-repatriable) FDs.
- Organizations: HUFs, Partnership Firms, Trusts, and Companies.
How This Calculator Helps Your Planning
Manual calculation of compound interest can be tricky. This calculator helps you verify bank quotes and understand the impact of TDS (Tax Deducted at Source).
Exact Compounding
Most Indian banks compound interest quarterly. This calculator uses the exact formula for accurate maturity values.
Tax Estimation
Understand your real returns after TDS. Estimate how much actually reaches your bank account.
Compare Tenures
Check whether a long-term FD performs better than yearly renewals.
TDS on FD Interest (2025 Rules)
Interest earned on Fixed Deposits is fully taxable as per your income tax slab. It is added to your annual income under "Income from Other Sources".
- TDS Deduction: Banks deduct 10% TDS if interest exceeds ₹40,000 in a year (₹50,000 for Senior Citizens).
- Form 15G/15H: You can submit these forms to the bank to avoid TDS if your total income is below the taxable limit.
FD Maturity Formula
For compound interest (reinvestment) fixed deposits, banks use the following formula:
- A: Maturity Amount
- P: Principal Investment
- r: Rate of Interest (in decimals)
- n: Compounding Frequency (4 for Quarterly)
- t: Time in Years
Key Advantages of Fixed Deposits
- Capital Safety: FDs up to ₹5 Lakh per bank are insured by DICGC.
- Liquidity: Premature withdrawal allowed (with small penalty).
- Tax Saving: 5-Year Tax Saver FDs qualify for Section 80C.