FD Calculator
Calculate fixed deposit maturity with compound interest
Is your FD actually growing your money?
An FD at 7.1% looks safe until you account for inflation and tax. At 5% inflation in the 30% bracket, your after-tax return is roughly 4.97%. Subtract inflation and your real return is negative — purchasing power is shrinking. FDs serve a purpose: emergency funds, short-term goals (1-3 years), capital you can't risk. For longer horizons, pair with equity SIPs or PPF.
How banks calculate your FD interest
Fixed deposits use compound interest, not simple interest. Most banks compound quarterly (n=4). Some online banks and credit unions compound monthly or even daily — always confirm the compounding frequency before locking in.
The FD tax trap most depositors miss
Tax withholding on interest income
Most banks withhold tax when your total FD interest exceeds a threshold — the rate and limit depend on your jurisdiction. Interest is typically taxed as ordinary income, so check with your tax authority for the exact rules.
Tax exemption forms can reduce withholding
If your total taxable income is below the filing threshold, many banks let you submit an exemption form so they skip withholding tax on your interest. You still need to report the interest on your annual return.
Tax is on accrual, not withdrawal
A 5-year cumulative FD doesn't mean tax is due only at maturity. Tax liability arises each year on accrued interest. Banks report this via Form 26AS. Failing to declare can trigger a notice.
FD vs other savings options
Senior citizen FD rates — the extra edge
Many banks offer senior customers (typically 60+) an additional 0.25% to 0.75% on FD rates. On a ₹25.0L deposit over 3 years, the senior rate can add ₹19K or more in extra interest. Always ask about preferential rates before opening a new deposit.
Compare other savings options
Results are projections based on the interest rate and compounding frequency entered. Actual maturity may differ based on bank-specific terms, tax withholding, and early withdrawal penalties. Not financial advice — verify with your bank before booking.
Frequently Asked Questions
How is FD interest calculated — simple or compound?
Banks use compound interest for fixed deposits, not simple interest. Most banks compound quarterly (4 times a year). The formula is M = P × (1 + r/n)^(n×t), where P is the deposit amount, r is the annual rate, n is the compounding frequency, and t is the tenure in years.
Which bank gives the highest FD rate in 2026?
Online banks and credit unions typically offer the highest rates — often 1–2% above traditional banks. Senior depositors usually receive an additional 0.25–0.75% at most institutions. Check your country's deposit insurance scheme to know how much of your deposit is protected if the bank fails.
Is FD interest taxable and when is tax withheld?
Yes, FD interest is generally taxable as ordinary income. Many banks withhold tax automatically when interest exceeds a threshold — the rate and limit vary by country. If your income is below the taxable limit, you may be able to submit an exemption form to avoid withholding. Consult a tax professional for rules specific to your jurisdiction.
What is the penalty for breaking an FD before maturity?
Most banks charge a 0.5-1% penalty on premature withdrawal. The bank pays interest at the rate applicable for the period the deposit was actually held, minus the penalty. For example, if you break a 5-year FD after 2 years, you get the 2-year rate minus 0.5-1%. Some banks offer no-penalty FDs with slightly lower rates.
Is PPF better than FD for long-term savings?
For a 15-year horizon, PPF typically delivers better after-tax returns because the 7.1% PPF interest is completely tax-free. A 7.25% FD taxed at the 30% slab gives an effective return of only 5.08%. However, PPF has a strict 15-year lock-in with limited withdrawal options, while FDs offer flexible tenures from 7 days to 10 years.
Key Terms
Compound Interest
Interest earned on both the principal and previously accrued interest. Indian banks typically compound FD interest quarterly, which is why maturity value exceeds the simple-interest figure.
Cumulative vs Non-Cumulative FD
Cumulative FDs reinvest interest and pay everything at maturity (higher effective yield). Non-cumulative FDs pay interest out monthly or quarterly — useful for regular income, common with retirees.
TDS on FD Interest
Banks deduct tax at source when annual FD interest crosses the threshold (₹50,000 for most depositors, higher for senior citizens under current rules). Form 15G/15H can prevent deduction if your income is below the taxable limit.
Premature Withdrawal Penalty
Breaking an FD before maturity usually costs 0.5–1% of the interest rate, applied to the rate for the period the deposit actually ran — not the originally booked rate.