FD calculator

How an FD earns interest

A fixed deposit (FD) locks your money with a bank for a set time at a fixed rate. Indian banks add interest every quarter, so in a cumulative FD the interest itself earns interest. That is why an FD at 6.4% gives an effective yearly rate of about 6.56%. Deposits for less than six months usually earn simple interest, paid at maturity.

You can also take the interest out as you go. With monthly or quarterly payout, interest is paid to your savings account and does not compound, so the total is a little lower, but you get a steady income. Monthly payouts are worked out at a slightly discounted rate, because you get the money earlier.

Lakshmi's monthly income

Lakshmi is a retired teacher in Kallakurichi. In October 2026 she puts ₹10 lakh in a 5-year FD. Her bank pays 6.4%, plus 0.50% for senior citizens, so 6.9%. She picks monthly payout and gets about ₹5,717 every month for five years, then her ₹10 lakh back.

Her yearly interest is about ₹68,600, under the ₹1 lakh TDS limit for seniors, so the bank deducts no TDS. Had she been under 60, the limit would be ₹50,000 and the bank would deduct 10%.

Her son Arun puts ₹1 lakh in a 2-year FD at 6.4% with interest at maturity. It grows to about ₹1,13,500.

How to use this tool

1. Type the deposit, or pick Reach a goal to find the deposit a target needs.
2. Enter your bank's rate for that tenure. Post Office rates are one tap away.
3. Set the tenure in years, months and days; special tenures like 444 days work too.
4. The tool assumes the FD starts today with interest added every quarter and paid at maturity. Turn on More options to change the deposit date or take the interest monthly or quarterly.
5. Turn on Senior citizen for the extra rate and the higher TDS limit.
6. Turn on After tax, Inflation or Break it early for the full picture.

The table splits the interest into financial years (April to March), because that is how both TDS and your income tax work.

Tax and TDS

FD interest is added to your income and taxed at your slab every year, even in a cumulative FD where you get nothing until maturity. Banks deduct TDS at 10% (20% without PAN) once your interest at that bank passes ₹50,000 in a financial year, or ₹1 lakh for senior citizens. All your deposits at the same bank count together.

If your total income is below the taxable limit, you can give the bank Form 121, which replaced Forms 15G and 15H from the 2026-27 tax year, so it does not deduct TDS. Any TDS deducted is credited against your tax when you file your return.

Is my FD safe?

Deposits in Indian banks are insured by DICGC up to ₹5 lakh per depositor per bank, deposit and interest together. If you have more, splitting it across banks keeps it all covered. Small finance banks often pay higher rates; they are covered by the same insurance, but check before you deposit.

Common mistakes

• Comparing rates without the tenure. Banks pay different rates for 1, 2, 3 and 5 years. Compare the same tenure.
• Breaking early. Most banks cut 0.5–1% from the rate for the time the money stayed in.
• Ignoring tax. At the 30% slab plus cess, a 6.4% FD earns under 4.5% after tax.
• One big FD. A ladder (say, three FDs of 1, 2 and 3 years) gives you money every year and new rates as they change.

Rates and rules here were checked in October 2026. This tool is a guide, not financial advice.