FD Calculator
Calculate your fixed deposit maturity value, cumulative compounding returns, senior citizen extra yield, and post-tax net income. See the real purchasing power of your maturity corpus after accounting for inflation.
💰 Deposit Parameters
Client-Side Privacy⚙️ Post-Tax Return (TDS) & Inflation Settings
📊 Maturity & Growth Summary
📅 Year-Wise Fixed Deposit Growth Schedule
Annual compounding progression, interest earned, and year-end closing balances.
| Year | Opening Balance | Interest Earned | Est. Tax (TDS) | Closing Balance |
|---|
How It Works: The Fixed Deposit Compounding Formula
For cumulative fixed deposits, interest is reinvested every quarter rather than being credited to your savings account. The standard compound interest equation is:
Where A is the final maturity amount, P is the principal deposit, r is the annual interest rate expressed as a decimal (e.g. 0.07 for 7%), m is the compounding frequency per year (4 for quarterly), and t is tenure in years.
Worked Example with Real Numbers:
If you deposit ₹1,00,000 at 7.0% per annum for 5 years with quarterly compounding (m = 4):
• Rate per period = 0.07 / 4 = 0.0175
• Total compounding cycles = 4 × 5 = 20 periods
• A = 1,00,000 × (1.0175)20 = ₹1,41,478
Total interest earned equals ₹41,478, producing an effective annual yield of 7.19%.
Why Compounding Frequency Matters
The more frequently your bank compounds interest, the higher your effective annual percentage yield (APY):
- Monthly Compounding (m = 12): Generates the highest return because interest is added back 12 times a year. On ₹5,00,000 at 8% for 5 years, maturity is ₹7,44,923.
- Quarterly Compounding (m = 4): The standard adopted across Indian public and private sector banks. Same ₹5,00,000 yields ₹7,42,974.
- Half-Yearly Compounding (m = 2): Yields ₹7,40,122.
- Yearly Compounding (m = 1): Yields ₹7,34,664 (nearly ₹10,000 lower than monthly compounding!).
FD Interest is Fully Taxable: The Post-Tax Reality
A widespread misconception is that Fixed Deposit returns are tax-free because the bank deducts TDS. In reality:
- TDS is Only Advance Tax: Banks deduct 10% TDS under Section 194A if annual interest exceeds ₹40,000 (₹50,000 for seniors). If you fall in the 20% or 30% tax bracket, you must pay the remaining differential tax when filing your annual ITR.
- Section 80TTB vs 80TTA: Senior citizens enjoy a tax deduction up to ₹50,000 on FD/RD interest under Section 80TTB. However, for non-seniors, Section 80TTA provides up to ₹10,000 deduction on savings bank interest only, leaving all FD interest 100% taxable!
- Post-Tax Real Returns: If you earn 7% on an FD and sit in the 30% tax slab (effective 31.2% with cess), your post-tax return is only 4.82%. Against an inflation rate of 6.0%, your money is actually losing purchasing power over time!
Comparison: FD vs. RD vs. PPF
| Feature | Fixed Deposit (FD) | Recurring Deposit (RD) | Public Provident Fund (PPF) |
|---|---|---|---|
| Investment Mode | One-time Lump Sum | Monthly Installments | Flexible (Monthly / Yearly) |
| Tenure | 7 Days to 10 Years | 6 Months to 10 Years | 15 Years (Extendable by 5 yrs) |
| Tax on Interest | Fully Taxable at slab rate | Fully Taxable at slab rate | 100% Tax-Free (EEE Status) |
| Liquidity | Premature withdrawal with penalty | Premature withdrawal with penalty | Partial withdrawal from Year 7 |
| Best For | Capital safety & lump sum parking | Disciplined monthly savings | Long-term wealth & tax saving |
Things People Get Wrong About Fixed Deposits
- Assuming 10% TDS Settles Their Tax Bill: TDS deducted by the bank is only a placeholder; investors in higher tax slabs must declare total interest in their ITR and pay the balance tax.
- Ignoring Inflation Erosion: Long-term FDs in high-tax brackets frequently produce negative real returns.
- Confusing Periodic Payouts with Cumulative Interest: Choosing monthly interest payouts reduces total lifetime interest compared to quarterly compounding.
- Overlooking Form 15G / 15H: Low-income earners who fail to submit declaration forms unnecessarily lose liquidity to TDS deductions.
Frequently Asked Questions
How is Fixed Deposit (FD) interest compounded in Indian banks?
Is Fixed Deposit interest taxable in India?
What is the difference between cumulative and non-cumulative FDs?
What extra interest rate do senior citizens get on FDs?
How can I avoid TDS on my fixed deposit?
What is the 5-year Tax Saving FD under Section 80C?
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Disclaimer: Estimates for information only, not financial advice. Interest rates, compounding frequencies, and TDS rules vary by commercial bank and tax residency. Verify rates directly with your financial institution.