FD interest in India is calculated using compound interest: Maturity = P × (1 + r/n)^(n×t), where P is the principal, r is the annual interest rate (as a decimal), n is the number of times interest is compounded per year, and t is the tenure in years. Most Indian banks compound interest quarterly (n = 4). For example, ₹1 lakh at 7.25% p.a. for 5 years with quarterly compounding yields approximately ₹1,43,550.

Yes, FD interest is fully taxable and added to your income under ‘Income from Other Sources’. It is taxed at your applicable slab rate. Banks deduct 10% TDS if total interest from the bank exceeds ₹40,000 in a financial year (₹50,000 for senior citizens). If your total income is below the taxable limit, you can submit Form 15G (or 15H for seniors) to avoid TDS. Our calculator estimates your actual tax liability based on your slab.

In a cumulative FD, interest is reinvested and compounded until maturity — you receive the principal plus all accumulated interest as a lump sum. In a non-cumulative FD, interest is paid out periodically (monthly, quarterly, half-yearly, or annually). Cumulative FDs earn more due to compounding; non-cumulative FDs are useful for regular income needs, especially for retirees. This calculator assumes a cumulative FD — the most common type.

Yes, most banks in India offer an additional 0.50% interest rate to senior citizens (aged 60+). Some banks, like SBI’s ‘WeCare’ deposit and IDFC First Bank, offer up to 0.75% extra for super senior citizens (aged 80+). This additional rate can significantly boost returns over longer tenures — a 5-year ₹10 lakh FD at 0.50% extra earns around ₹28,000 more.

Longer tenures generally offer higher rates, with the sweet spot often being 2–5 years. For example, in 2026, many banks offer 7.00–7.50% on 1-year FDs but 7.25–8.00% on 2–5 year deposits. However, longer FDs lock your money in, so balance higher rates against your liquidity needs. Always check the premature withdrawal penalty (usually 0.50–1% reduction in interest) before committing.

A 5-year tax-saving FD gives you a deduction of up to ₹1.5 lakh under Section 80C. However, the interest is still fully taxable, and the lock-in is strict — you cannot withdraw prematurely or take a loan against it. For many taxpayers in the 30% slab, ELSS mutual funds or PPF may offer better post-tax returns. Tax-saving FDs suit conservative investors who want guaranteed, risk-free returns.

Most Indian banks compound FD interest quarterly (four times a year). Some NBFCs and co-operative banks compound monthly or half-yearly. More frequent compounding slightly increases your maturity amount due to interest-on-interest. For example, ₹1 lakh at 7% p.a. for 5 years yields ₹141,478 with quarterly compounding vs ₹140,255 with annual compounding.

Yes, most banks allow loans or overdrafts against your FD, typically up to 75–90% of the deposit value. Interest rates on FD-backed loans are usually 1–2% above the FD rate — much cheaper than personal loans. This is a smart option if you need short-term liquidity without breaking the FD and losing interest.

You can break an FD prematurely, but you’ll face a penalty of 0.50–1% on the interest rate, and you’ll only earn interest for the period the money was actually held (at the rate applicable for that shorter tenure). For example, if you break a 5-year FD after 2 years, you may earn only 6% instead of the original 7.5%. Always keep an emergency fund outside of FDs to avoid breaking them.

Bank FDs are insured up to ₹5 lakh per depositor per bank by the Deposit Insurance and Credit Guarantee Corporation (DICGC), a subsidiary of RBI. This covers both principal and interest. NBFC deposits are not covered by DICGC insurance, so only invest with AAA-rated NBFCs and consider splitting amounts above ₹5 lakh across multiple banks to maximise coverage.