What is a Fixed Deposit (FD)?
A Fixed Deposit (FD) is a financial instrument offered by banks and NBFCs where you deposit a lump sum amount for a fixed period at a predetermined interest rate. FDs are one of the safest investment options in India, offering guaranteed returns with minimal risk.
Fixed Deposits are ideal for conservative investors who prioritize capital preservation and predictable returns over high-risk, high-reward investments. With flexible tenures ranging from 7 days to 10 years, FDs cater to both short-term and long-term financial goals.
How to Use the FD Calculator
- Enter Deposit Amount: Input the lump sum you want to invest (minimum ₹1,000)
- Set Interest Rate: Enter the annual interest rate offered by your bank (typically 5-8%)
- Choose Tenure: Select the deposit period in months (1-120 months)
- Select Compounding: Choose how often interest is compounded (Quarterly/Monthly/Annual)
- View Results: See maturity amount, interest earned, and effective annual rate
Understanding the FD Formula
FD maturity value is calculated using the compound interest formula:
Where:
- A = Maturity Amount
- P = Principal deposit amount
- r = Annual interest rate (in decimal)
- n = Number of times interest is compounded per year
- t = Time period in years
Types of Fixed Deposits
Regular FD
Standard FD where interest is compounded and paid at maturity or periodically. Suitable for most investors seeking steady returns.
Tax-Saving FD
5-year lock-in FD offering tax deduction under Section 80C (up to ₹1.5 lakh). However, interest earned is taxable.
Senior Citizen FD
Special FDs for citizens above 60 years, offering 0.25-0.75% higher interest rates than regular FDs.
Flexi FD
Linked to your savings account, automatically sweeping excess funds into FD and breaking FD when needed for withdrawals.
FD Interest Rates in India (2025)
FD rates vary by bank, tenure, and deposit amount. As of 2025:
- Public Sector Banks: 5.5% - 7.5% p.a.
- Private Banks: 6.0% - 8.0% p.a.
- Small Finance Banks: 7.0% - 9.0% p.a.
- Senior Citizens: Additional 0.25% - 0.75%
Tax Implications on FD
TDS on FD Interest
Banks deduct TDS at 10% if your total interest income exceeds ₹40,000 per year (₹50,000 for senior citizens). Submit Form 15G/15H if your total income is below the taxable limit to avoid TDS.
Taxability
FD interest is fully taxable as per your income tax slab. Unlike PPF, there's no tax exemption on FD interest or maturity amount.
Premature Withdrawal
Most banks allow premature FD withdrawal but charge a penalty of 0.5-1% on the interest rate. Some banks also levy a processing fee. Check your bank's specific terms before breaking an FD.
Related Calculators
- PPF Calculator - Calculate PPF maturity amount
- RD Calculator - Calculate Recurring Deposit returns
- Compound Interest Calculator - General compound interest calculations
- Retirement Calculator - Plan your retirement savings