How the FD calculator works

A fixed deposit (FD) is a low-risk instrument where you lock a lump sum with a bank or company for a fixed tenure at a fixed interest rate. For a cumulative FD, interest is reinvested and paid out together with the principal at maturity.

The maturity formula is Maturity = P × (1 + r/m)^(m × t), where P is your deposit, r is the annual rate (as a decimal), m is the number of compounding periods per year and t is the tenure in years. This tool uses m = 4 (quarterly compounding), the convention followed by most Indian banks.

Enter your deposit amount, the interest rate and the tenure. The tool instantly shows your maturity amount, the interest earned and the original principal.

Why compounding frequency matters

Because interest earns interest, the more frequently it is compounded, the higher the maturity value at the same nominal rate. Quarterly compounding produces a slightly higher effective yield than annual compounding.

• Cumulative FD: interest is reinvested and paid with the principal at maturity (modelled here).
• Non-cumulative FD: interest is paid out monthly, quarterly or yearly and is not reinvested.
• Senior citizens usually get 0.25%–0.75% extra — just enter the higher rate to model it.
• Premature withdrawal usually attracts a small penalty and a reduced interest rate.

FD taxation and 80C tax-saving FDs

Interest on an FD is fully taxable under “Income from Other Sources” at your slab rate, and banks deduct TDS (generally 10% with a valid PAN) once annual interest crosses the threshold. You can submit Form 15G/15H to avoid TDS if your income is below the taxable limit.

A 5-year tax-saving FD qualifies for deduction up to ₹1.5 lakh under Section 80C of the old regime, but the interest it earns remains taxable. A chartered accountant can help compare the post-tax FD return against other 80C options like PPF or ELSS.

Example: ₹1 lakh FD at 7% for 5 years

A ₹1,00,000 deposit at 7% annual interest with quarterly compounding over 5 years matures at roughly ₹1,41,478 — interest earned of about ₹41,478. The same deposit at simple annual interest would earn slightly less, which is why the compounding frequency shown matters when comparing offers.

For CA firms and advisors

Chartered accountants and advisors use FD projections to plan clients’ fixed-income allocations, estimate taxable interest for advance tax and TDS reconciliation, and compare an FD’s post-tax return against alternatives. The figures here are indicative; the bank’s actual rate and compounding terms prevail.

Illustrative FD maturity on ₹1,00,000 (quarterly compounding)