Banks deduct TDS (Tax Deducted at Source) at 10% on FD interest if interest earned exceeds ₹40,000 per year (₹50,000 for senior citizens). If PAN is not provided, TDS is 20%. Submit Form 15G/15H if your total income is below the taxable limit to avoid TDS.

Which compounding frequency gives the highest return?

More frequent compounding gives higher effective returns. Monthly compounding yields more than quarterly, which yields more than half-yearly, which yields more than annual compounding — even at the same stated interest rate.

🏦 Fixed Deposit

FD Calculator

Calculate fixed deposit maturity amount, total interest earned, TDS impact and effective yield — with year-wise breakdown and compounding comparison.

Principal amount

₹

Interest rate (% per annum)

7.0%

Tenure

3 yr

Compounding frequency

FD type

Senior citizen (60+) — TDS exemption limit is ₹50,000 instead of ₹40,000

🏦 Maturity amount

— —

—Principal

—Interest earned

—Effective yield

—Est. TDS

Principal——

Interest——

Full computation breakdown

CompoundingMaturityInterest

Year-wise growth

YearOpeningInterestClosing

💡

Smart FD tip

—

Results are indicative and assume the stated interest rate throughout the tenure. TDS is estimated at 10% on interest exceeding the annual threshold. Actual TDS depends on total bank-wise interest. Consult your bank for exact maturity values.

How is FD interest calculated?

Fixed deposit interest is calculated using compound interest. Most banks compound quarterly, meaning interest earned in each quarter is added to the principal for the next quarter's calculation.

Maturity (M) = P × (1 + r/n)^n×t
P = Principal · r = Annual rate (decimal) · n = Compounding frequency/year · t = Tenure (years)

Example: ₹1,00,000 × (1 + 0.07/4)^4×3 = ₹1,23,144 (3 yrs @ 7% quarterly)

🏦 Safe investment

FDs are insured up to ₹5 lakh per depositor per bank by DICGC. They offer guaranteed returns regardless of market conditions.

💰 Tax-saving FD

5-year tax-saving FDs qualify for deduction under Section 80C up to ₹1.5 lakh. However, interest earned is still taxable.

📋 Form 15G/15H

If your total income is below the taxable limit, submit Form 15G (below 60) or Form 15H (above 60) to avoid TDS deduction on FD interest.

🔄 FD laddering

Split your FD across multiple tenures (1yr, 2yr, 3yr) to benefit from different rates and have regular liquidity without breaking all FDs.

Frequently asked questions

How is FD interest calculated?

FD interest uses compound interest: M = P × (1 + r/n)^(n×t). For a ₹1 lakh FD at 7% for 3 years compounded quarterly: M = 1,00,000 × (1 + 0.07/4)^(12) = ₹1,23,144. The calculator does this automatically for any inputs.

What is TDS on FD interest?

Banks deduct TDS at 10% if interest earned in a financial year exceeds ₹40,000 (₹50,000 for senior citizens). If PAN is not provided, TDS is 20%. Submit Form 15G (non-senior) or 15H (senior citizen) if your income is below the taxable limit to avoid TDS.

What is the difference between cumulative and non-cumulative FD?

Cumulative FD: interest compounds and is paid with principal at maturity — best for wealth building. Non-cumulative FD: interest is paid out monthly, quarterly, or half-yearly — best for regular income like retired persons.

Which compounding frequency gives the best return?

More frequent compounding = higher returns. Monthly > Quarterly > Half-yearly > Annually for the same stated rate. The compounding comparison table in the results shows the exact difference for your inputs.

Can I break an FD before maturity?

Yes, but most banks apply a premature withdrawal penalty of 0.5–1% reduction in the applicable interest rate. Tax-saving FDs (80C) have a mandatory 5-year lock-in and cannot be broken prematurely.