FD Calculator

How FD interest is calculated

Indian banks calculate FD interest using compound interest: your principal earns interest, and then that interest earns interest too. The formula is A = P × (1 + r/k)^(k × t), where P is the principal, r is the annual rate, k is the number of times interest compounds per year, and t is the tenure in years.

Most Indian banks compound FDs quarterly (k = 4). A few small-finance banks compound monthly (k = 12), which gives a small but real boost to your effective yield.

FD vs SIP — which is better?

An FD guarantees the maturity amount; a SIP does not. But SIPs in large-cap equity mutual funds have historically returned 10–12% annualised over 15+ years, versus 6–8% on FDs. The right mix for most Indians: 20–30% of savings in FDs (emergency fund, short-term goals), 70–80% in SIPs (long-term wealth).

Tax on FD interest in India

FD interest is fully taxable at your income-tax slab rate. Banks deduct TDS at 10% once interest crosses ₹40,000 a year (₹50,000 for senior citizens). Submit Form 15G (below 60) or 15H (60+) to stop TDS if your total income is below the taxable limit.

Disclaimer: Calculations are indicative. Premature withdrawal may attract a penalty that reduces the effective yield. Verify the exact terms with your bank before opening an FD.