Quick answer
Most Indian banks compound FD interest quarterly: A = P × (1 + r/4)4t. ₹5 lakh at 7% for 3 years grows to about ₹6.16 lakh, an effective yield of 7.19%. FD interest is fully taxable at your slab rate. Deposits up to ₹5 lakh per bank are insured by DICGC.
Key takeaways
- FD interest is taxed every year as it accrues, even in a cumulative FD.
- Senior citizens usually get 0.25–0.75% extra and a TDS threshold of ₹1 lakh a year.
- Split large amounts across banks to stay within the ₹5 lakh DICGC insurance limit per bank.
FD formula
A = P × (1 + r/n)n × t- n = 4 for quarterly compounding
- FDs under 6 months usually earn simple interest
FD returns table
| Rate | 1 yr | 2 yr | 3 yr | 5 yr | 10 yr |
|---|---|---|---|---|---|
| 6% | ₹1,06,136 | ₹1,12,649 | ₹1,19,562 | ₹1,34,686 | ₹1,81,402 |
| 6.5% | ₹1,06,660 | ₹1,13,764 | ₹1,21,341 | ₹1,38,042 | ₹1,90,556 |
| 7% | ₹1,07,186 | ₹1,14,888 | ₹1,23,144 | ₹1,41,478 | ₹2,00,160 |
| 7.5% | ₹1,07,714 | ₹1,16,022 | ₹1,24,972 | ₹1,44,995 | ₹2,10,235 |
| 8% | ₹1,08,243 | ₹1,17,166 | ₹1,26,824 | ₹1,48,595 | ₹2,20,804 |
Frequently asked questions
Is FD interest taxable?
Yes. FD interest is added to your income and taxed at your slab rate. Banks deduct 10% TDS if interest from one bank exceeds ₹50,000 a year (₹1 lakh for senior citizens). Submit Form 15G/15H if your total income is below the taxable limit.
Which is better, FD or RD?
At the same rate, an FD earns more because the whole amount is invested from day one. An RD suits people who save a fixed amount every month.
Is a tax-saving FD worth it?
A 5-year tax-saver FD qualifies for 80C only under the old regime and has a lock-in. In the new regime there is no benefit, so a regular FD or other options offer more flexibility.
Sources & methodology
Formulas follow the standard methods used by Indian banks, fund houses and government schemes. Rates and tax rules were checked against official sources on 1 October 2026. Read our methodology.
This calculator gives an estimate for planning purposes. Actual returns, tax and eligibility depend on your situation and on product terms. It is not financial advice.