Fixed Deposit (FD) Calculator
Compute maturity value and total interest earned on cumulative bank and post office fixed deposits with quarterly compounding.
Fixed Deposit Insights & Tax Guidance
Guaranteed returns breakdown for ₹1,00,000 at 6.5% for 5 years.
🏛️ 1. TDS & Taxation Rules
FD interest is fully taxable at your applicable income tax slab rate. Banks deduct 10% TDS if interest income exceeds ₹40,000/year (₹50,000 for senior citizens). Submit Form 15G / 15H if your total income is below the taxable threshold.
🛡️ 2. DICGC Insurance Cover
Under RBI guidelines, all deposits (principal + interest) up to ₹5,000,000 (₹5 Lakhs) per bank are 100% insured and protected by DICGC.
🪜 3. FD Laddering Strategy
Instead of locking the entire amount in a single long-term FD, split it across 1, 2, 3, and 5-year maturities. This provides regular liquidity and protects you from reinvestment rate fluctuations.
📋 4. Tax-Saver FD (Section 80C)
5-Year Tax Saver FDs allow tax deductions up to ₹1.5 Lakh under Section 80C (Old Regime), but have a mandatory 5-year lock-in with no premature withdrawal.
How Bank Fixed Deposits Work
A Fixed Deposit (FD) is a secure financial instrument offered by commercial banks, Small Finance Banks, NBFCs, and India Post. You invest a lump sum amount for a fixed tenure (from 7 days up to 10 years) at a guaranteed predetermined interest rate.
In cumulative FDs, interest is compounded quarterly (every 3 months) and reinvested with the principal, so you earn interest on previously accumulated interest until maturity.
The Quarterly Compounding Formula
The maturity amount (A) for bank fixed deposits with quarterly compounding is calculated as:
- A: Maturity Amount
- P: Principal Deposit
- r: Annual Interest Rate (%)
- t: Tenure in Years
Cumulative vs. Non-Cumulative Fixed Deposits
| Feature | Cumulative FD (Reinvestment) | Non-Cumulative FD (Regular Payout) |
|---|---|---|
| Interest Payout | Paid in full along with principal at maturity | Paid periodically (Monthly, Quarterly, Annually) |
| Compounding Effect | Higher (Full benefit of quarterly compounding) | Lower (No compounding as interest is withdrawn) |
| Best Suited For | Wealth creation, emergency funds, capital growth | Retirees and individuals seeking regular passive income |
Frequently Asked Questions (FD FAQ)
What is the DICGC insurance guarantee limit?
Under the Deposit Insurance and Credit Guarantee Corporation (DICGC) Act, every depositor is insured up to a maximum of ₹5,00,000 (₹5 Lakhs) for both principal and interest across all branches of each insured bank.
When do banks deduct TDS on fixed deposits?
Banks deduct 10% TDS if your total FD interest income across all branches of a bank exceeds ₹40,000 in a financial year (₹50,000 for Senior Citizens). If PAN is not provided, TDS is deducted at 20%.
How can I avoid TDS deduction using Form 15G / 15H?
If your total taxable income is below the basic exemption threshold, you can submit Form 15G (for individuals below 60) or Form 15H (for senior citizens 60+) at the beginning of each financial year to prevent TDS deduction.
What is an FD Laddering Strategy?
FD Laddering is dividing your total deposit across multiple maturity tenures (e.g. 1-year, 2-year, 3-year FDs). When each FD matures, you reinvest it at current interest rates, ensuring liquidity and rate diversification.