Fixed Deposit Maturity Summary
What is a Fixed Deposit (FD)?
A Fixed Deposit (FD) is one of the safest investment instruments in India. You deposit a lump sum with a bank or NBFC for a fixed tenure at a pre-agreed interest rate. The rate does not change during the tenure, making it a risk-free, predictable investment. FDs are insured up to ₹5 lakh per depositor per bank by the DICGC (Deposit Insurance and Credit Guarantee Corporation).
FD Interest Calculation Method
For cumulative FDs (interest paid at maturity), banks in India compound interest quarterly: A = P × (1 + r/4)^(4×t). For non-cumulative FDs, simple interest is calculated on the principal for each payout period. The quarterly compounding of cumulative FDs results in a slightly higher effective yield than the stated nominal rate.
FD Rates in India (2024–25)
Major Indian banks currently offer FD rates ranging from 6.5% to 7.75% for general citizens, and 0.25% to 0.75% additional for senior citizens. Small finance banks and some NBFCs offer higher rates — sometimes above 8% — but may carry slightly higher credit risk. Post Office Time Deposits offer government-backed rates between 6.9% and 7.5% depending on tenure.
Tax on FD Interest in India
Interest earned on FDs is fully taxable as "Income from Other Sources" at your applicable income tax slab rate. Banks deduct TDS at 10% if interest exceeds ₹40,000 per year (₹50,000 for senior citizens). You can submit Form 15G (or 15H for seniors) to avoid TDS if your total income is below the taxable limit.