FD Calculator

What is a Fixed Deposit (FD)?

A Fixed Deposit (FD) is a financial instrument offered by banks and NBFCs in India where you deposit a lump sum amount for a fixed tenure at a predetermined interest rate. FDs are considered one of the safest investment options as they are not affected by market fluctuations. They offer guaranteed returns and are ideal for conservative investors looking for capital preservation with steady income.

How to Use This FD Calculator

1. Enter the principal amount (the lump sum you want to deposit) in INR.

2. Enter the annual interest rate offered by your bank.

3. Enter the time period in years for the deposit.

4. Select the compounding frequency (yearly, half-yearly, quarterly or monthly) and click "Calculate FD".

FD Formula

The maturity amount for a Fixed Deposit is calculated using the compound interest formula: A = P x (1 + r/n)^nt, where P is the principal amount, r is the annual interest rate (in decimal), n is the number of times interest is compounded per year, and t is the tenure in years. Most Indian banks compound FD interest on a quarterly basis.

Frequently Asked Questions

What is the difference between FD and a savings account?

A savings account offers lower interest rates (typically 2.5-4% in India) but allows flexible withdrawals. An FD offers higher interest rates (5-7.5% or more for senior citizens) but locks your money for a fixed period. Premature withdrawal from an FD usually attracts a penalty.

Is FD interest taxable in India?

Yes, interest earned on FDs is fully taxable as per your income tax slab. Banks deduct TDS at 10% if the total interest earned in a financial year exceeds Rs 40,000 (Rs 50,000 for senior citizens). You can submit Form 15G/15H to avoid TDS if your total income is below the taxable limit.

What compounding frequency should I choose?

More frequent compounding (quarterly or monthly) results in slightly higher returns compared to yearly compounding. Most banks in India compound FD interest quarterly by default. Check with your bank for the exact compounding method used.