A Fixed Deposit (FD) remains India's most trusted investment instrument — over 45 crore FD accounts exist across Indian banks, with deposits exceeding ₹200 lakh crore. Yet most investors simply walk into a bank and accept whatever rate is offered, unaware that the difference between banks can be as much as 1.5% per year — worth ₹75,000 in extra interest on a ₹10 lakh FD over 5 years. The FD calculator lets you instantly compare maturity amounts across rates and tenures so you never leave money on the table.
This guide covers the FD interest calculation formula (with quarterly compounding), a real comparison of 2026 bank rates, the TDS rules on FD interest (₹40,000 annual threshold), senior citizen rate benefits, and the tax-saver FD under Section 80C.
Calculate Your FD Maturity Amount Instantly
Enter your deposit amount, interest rate, and tenure to see exact maturity value with quarterly compounding — no signup required.
FD Interest Calculation: Simple Interest vs Compound Quarterly
Most bank FDs in India use quarterly compounding, not annual compounding. This means interest is calculated and added to your principal every 3 months, so you earn interest on interest within the same year. Here's the formula:
Compound Interest Formula (Quarterly Compounding)
Maturity Amount = P × (1 + R/4)^(4×T)Where P = Principal, R = Annual interest rate (decimal), T = Tenure in years.
Example: ₹5 Lakh FD at 7% for 2 Years
- P = ₹5,00,000 | R = 0.07 | T = 2
- Maturity = 5,00,000 × (1 + 0.07/4)^(4×2)
- = 5,00,000 × (1.0175)^8
- = 5,00,000 × 1.1489
- Maturity Amount = ₹5,74,460
- Total Interest Earned = ₹74,460
Simple Interest vs Compound Quarterly (₹5 Lakh, 7%, 2 Years)
| Method | Maturity | Interest Earned |
|---|---|---|
| Simple Interest | ₹5,70,000 | ₹70,000 |
| Quarterly Compounding | ₹5,74,460 | ₹74,460 |
| Monthly Compounding (some small banks) | ₹5,74,980 | ₹74,980 |
The difference seems small over 2 years, but on a ₹50 lakh FD over 5 years at 7%, quarterly compounding gives you ₹2,07,000 more than simple interest. Always ask your bank whether interest is compounded quarterly or monthly.
Best FD Interest Rates in India 2026: Bank-by-Bank Comparison
As of early 2026, here are the indicative FD rates for 1–5 year tenures from major Indian banks and the Post Office (National Savings Certificate / Term Deposits):
| Bank / Institution | 1 Year | 2 Years | 3 Years | 5 Years | Senior Citizen (Extra) |
|---|---|---|---|---|---|
| SBI | 6.80% | 7.00% | 6.75% | 6.50% | +0.50% |
| HDFC Bank | 6.60% | 7.25% | 7.00% | 7.00% | +0.50% |
| ICICI Bank | 6.70% | 7.20% | 7.10% | 7.00% | +0.50% |
| Axis Bank | 6.70% | 7.26% | 7.10% | 7.00% | +0.75% |
| Post Office (SCSS) | 6.90% | 7.00% | 7.10% | 7.50% | N/A (already higher) |
| Small Finance Banks | 7.50–8.50% | 7.75–9.00% | 8.00–9.00% | 7.50–8.75% | +0.25–0.50% |
Key insight: Small Finance Banks (Utkarsh, Unity, Suryoday, Jana) offer significantly higher rates but are less well-known. They are DICGC-insured up to ₹5 lakh per depositor, same as any scheduled bank. For deposits under ₹5 lakh, the risk is identical to a nationalised bank.
Post Office 5-year Term Deposit at 7.50% is the highest guaranteed rate from a government-backed entity in 2026, beating SBI's 6.50% by a full 1% on 5-year deposits.
TDS on FD Interest: The ₹40,000 Threshold Rule Explained
This is the most confusing aspect of FDs for many depositors. Banks deduct TDS (Tax Deducted at Source) on FD interest, but only under certain conditions:
TDS Threshold (FY 2025-26)
- Regular depositors: TDS is deducted if total FD interest from a single bank exceeds ₹40,000 per financial year.
- Senior citizens (60+ years): Higher threshold of ₹50,000 per financial year.
- TDS rate: 10% of the interest earned (if PAN is linked). If PAN is not provided, TDS jumps to 20%.
Example: ₹10 Lakh FD at 7% at SBI
- Annual interest = ₹70,000
- TDS deducted (10%) = ₹7,000
- Interest credited to you = ₹63,000 (for non-cumulative FD)
- For cumulative FD: the full ₹70,000 is added to your principal but ₹7,000 is deducted and sent to the IT department on your behalf.
Important: TDS ≠ Final Tax Liability
TDS is a prepayment of your tax liability, not the final tax. If you're in the 20% or 30% slab, you owe more; if below the basic exemption limit (₹3 lakh under new regime), you get a TDS refund. Always report FD interest in your ITR under "Income from Other Sources" — even if TDS has been deducted.
How to Avoid TDS (If Below Taxable Income)
Submit Form 15G (for individuals below 60 years) or Form 15H (for senior citizens) to your bank at the beginning of every financial year, declaring that your total income is below the taxable limit. The bank then does not deduct TDS.
Tax-Saver FD Under Section 80C: The 5-Year Lock-In Explained
A Tax-Saver FD is a special fixed deposit product with a 5-year mandatory lock-in period that qualifies for deduction under Section 80C of the Income Tax Act. Here's everything you need to know:
Key Features
- Minimum investment: ₹100 (most banks)
- Maximum deduction: ₹1,50,000 per year (within the overall 80C limit)
- Lock-in: Strictly 5 years — no premature withdrawal, no loan against it
- Interest rate: Same as regular 5-year FD rates (6.50–7.50% in 2026)
- Interest taxation: Interest earned is fully taxable every year (TDS deducted)
Tax-Saver FD vs Other 80C Options
| Instrument | Rate | Lock-in | Interest Taxable? |
|---|---|---|---|
| Tax-Saver FD (SBI) | 6.50% | 5 years | Yes (TDS applies) |
| PPF | 7.10% | 15 years | No (EEE status) |
| NSC | 7.70% | 5 years | Yes (but accrued interest is 80C deductible) |
| ELSS Mutual Funds | Market-linked (~12–15% historically) | 3 years | LTCG above ₹1.25L taxable |
| Life Insurance Premium | ~4–6% equivalent | 5–20 years | Maturity taxable above threshold |
For risk-averse investors who want guaranteed returns, a tax-saver FD is a solid choice. However, PPF at 7.10% with EEE (Exempt-Exempt-Exempt) tax status is generally superior for the same lock-in philosophy over a 5-year period if you're in the 20–30% tax slab.
Cumulative vs Non-Cumulative FD: Which One to Choose?
When opening an FD, you'll be asked whether you want a cumulative or non-cumulative deposit. This choice affects when and how you receive interest:
Cumulative FD (Reinvest)
- Interest is compounded quarterly and added back to the principal.
- You receive the entire maturity amount (principal + compound interest) at the end of the term.
- Best for: People who don't need regular income — maximises the power of compounding.
- Example: ₹5 lakh at 7% for 3 years → Maturity = ₹6,14,130
Non-Cumulative FD (Payout)
- Interest is paid out periodically — monthly, quarterly, half-yearly, or annually.
- Principal is returned at maturity. Regular interest payouts are useful as income.
- Best for: Retirees or anyone needing regular cash flow (e.g., senior citizens supplementing pension).
- Example: ₹5 lakh at 7% for 3 years → Monthly payout of ~₹2,917
Which is Better?
Cumulative FDs generate more total wealth because interest compounds. Non-cumulative FDs sacrifice compounding for liquidity. For wealth building: choose cumulative. For retirement income: choose non-cumulative (monthly or quarterly payout) from a reliable bank or Post Office scheme.
Senior citizens especially benefit from non-cumulative FDs paired with Senior Citizen Savings Scheme (SCSS at 8.20% — the highest risk-free rate in India as of 2026).
How to Use the Tool (Step by Step)
- 1
Enter deposit amount
Type the fixed deposit principal amount in rupees.
- 2
Enter interest rate
Enter the annual FD interest rate offered by your bank.
- 3
Select tenure
Choose the FD duration in years and months.
- 4
Choose compounding frequency
Select quarterly, monthly, or yearly compounding.
- 5
View maturity amount
See the maturity value, total interest earned, and effective yield.
Frequently Asked Questions
What is the maturity amount for a ₹1 lakh FD at 7% for 3 years?+−
With quarterly compounding at 7% for 3 years, a ₹1 lakh FD matures to ₹1,22,987. The interest earned is ₹22,987. If the bank uses simple interest, the maturity would be only ₹1,21,000 (₹21,000 interest). Our FD calculator uses the quarterly compounding formula to give you the exact maturity amount matching what your bank will actually pay.
What is the TDS limit on FD interest in India?+−
For regular depositors (below 60 years), TDS is deducted at 10% on FD interest if the total interest from a single bank exceeds ₹40,000 in a financial year. For senior citizens (60+), the threshold is ₹50,000. If your total income is below the taxable limit, submit Form 15G (regular) or Form 15H (senior citizens) to the bank at the start of each financial year to prevent TDS deduction.
Which bank offers the best FD interest rate in India in 2026?+−
Among large banks, HDFC Bank and Axis Bank offer around 7.25–7.26% for 2-year FDs, while Post Office 5-year Term Deposits earn 7.50%. Small Finance Banks like Utkarsh, Unity, and Suryoday offer 8.50–9.00% for certain tenures, and all are DICGC-insured up to ₹5 lakh — the same as nationalised banks. For maximum safety with decent returns, the Post Office Senior Citizen Savings Scheme at 8.20% is the best option for eligible investors.
Is FD interest taxable in India?+−
Yes, FD interest is fully taxable in India as "Income from Other Sources" at your applicable income tax slab rate — regardless of whether TDS was deducted. If you're in the 30% slab, you pay 30% tax on FD interest; the 10% TDS is just a prepayment. You must declare FD interest in your annual ITR even if the bank has already deducted TDS. The exception: interest earned on Tax-Saver FDs is also taxable (only the principal investment gets the 80C deduction).
Can I get a loan against my FD?+−
Yes — most banks allow you to take an overdraft or loan against your FD, typically up to 90% of the FD value, at an interest rate 1–2% above your FD rate. For example, if your FD earns 7%, you can borrow at 8–9% against it. This is cheaper than a personal loan (12–18%) and doesn't break your FD (so your interest keeps accruing). Note: Tax-Saver FDs cannot be used as loan collateral during the 5-year lock-in period.
What is a senior citizen FD rate and who qualifies?+−
Senior citizens (individuals aged 60 years and above) receive an additional interest rate of 0.25–0.75% over the regular FD rate at most banks. SBI and HDFC offer +0.50%, while Axis Bank offers +0.75% for senior citizens. On a ₹10 lakh FD at 7.50% (vs 7.00% regular) for 5 years, senior citizens earn approximately ₹27,000 more in interest. The senior citizen benefit applies only to individuals, not to Hindu Undivided Families (HUFs) or companies.
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