Fixed Deposit (FD) Calculator

What is a Fixed Deposit?

A fixed deposit is a single lump sum placed with a bank, NBFC or the Post Office for an agreed term at a rate fixed on the day you open it. That last part is the whole product: the rate is locked for the full tenure, so a later cut cannot touch a deposit already running, and a later rise will not lift it either. You are buying certainty, not upside.

Deposits with commercial banks, small finance banks and co-operative banks are insured by the Deposit Insurance and Credit Guarantee Corporation up to ₹5 lakh per depositor per bank — principal and accrued interest combined, and shared across every account you hold at that bank rather than counted per deposit. Post Office deposits sit outside that scheme entirely, carrying a direct Government of India guarantee with no ceiling.

How Fixed Deposit Interest is Calculated in India

Indian banks compound fixed deposit interest quarterly, in line with RBI convention. For a cumulative deposit — one where interest stays in and compounds — the maturity value is:

• •P — the principal you deposit.
• •r — the annual rate as a percentage. Dividing by 400 rather than 100 converts it to a quarterly decimal rate in one step: 7% becomes 0.0175 per quarter.
• •n — the tenure in years, so 4n is the number of quarters.

Put ₹5,00,000 in for five years at an illustrative 7% and the calculator returns ₹7,07,389 — ₹2,07,389 of interest on the amount deposited. The quarterly cycle is why that beats simple interest: compounding four times a year turns a 7% nominal rate into an effective annual yield of about 7.19%.

Short Tenures Use Simple Interest, Not Compounding

Below roughly 180 days there is no completed quarter to compound, so banks pay simple interest instead:

with T expressed as a fraction of a year. ₹1,00,000 for 90 days at 6% earns about ₹1,479, worked out on the actual number of days rather than a rounded quarter. This is why a 46-day and a 179-day deposit behave differently from a one-year deposit even at the same headline rate, and why the calculator above is built for terms measured in years.

Cumulative vs Non-Cumulative Fixed Deposits

The same deposit at the same rate pays out two very different ways depending on which variant you pick, and the choice is about what you need the money to do rather than which one is better.

The calculator above models the cumulative structure. For a monthly payout, divide the annual interest by twelve as an approximation — the true figure is slightly lower, because money paid out is money no longer compounding.

A Note on Regional Terminology

Across much of South India the same calculation is searched for as a vaddi calculator — వడ్డీ simply meaning interest in Telugu, with close equivalents in Kannada and Tamil usage. If you arrived looking for vaddi lekkalu on a bank deposit, this is the same arithmetic: principal, rate, tenure and quarterly compounding. The terminology differs; the formula does not.

Income Tax and TDS Rules on Fixed Deposits

Interest on a fixed deposit is fully taxable at your slab rate under "Income from Other Sources". It is taxable as it accrues each year, not only in the year the deposit matures — a costly misunderstanding on long deposits, because the whole gain landing in one assessment year can push you into a higher bracket.

Banks deduct TDS under Section 194A once your total interest from all deposits at that bank crosses ₹50,000 in a financial year, or ₹1,00,000 if you are a senior citizen. The rate is 10% where the bank holds your PAN and 20% where it does not, so keeping PAN updated is worth real money. TDS is neither an extra tax nor the final one: it is an advance credit set against your total liability when you file, and if your slab rate exceeds 10% you will still owe the balance.

If your total income for the year falls below the taxable limit, you can stop deduction at source by filing Form 15G (under 60) or Form 15H (60 and over) with each bank at the start of the financial year. These are declarations of expected income, not exemptions — filing one when your income is in fact taxable is a false declaration, and the interest stays reportable either way.

One distinction worth holding separately: Section 80TTB is not a TDS threshold. It is a deduction of up to ₹50,000 on deposit interest, available to senior citizens only, and it belongs to the old tax regime. Section 80TTA, which people often reach for, covers savings-account interest and expressly excludes time deposits — so it does not apply to a fixed deposit at all.

Choosing a Tenure, and What Breaking a Deposit Costs

Closing an FD early does not merely forfeit some interest — it re-prices the whole deposit. The bank recomputes your return at the rate that applied to the period the money actually stayed, then subtracts a penalty of typically 0.5% to 1% from that rate. Break a five-year deposit after two years and you are paid the two-year rate less the penalty, not the five-year rate you contracted for.

That is why a loan against your FD — commonly up to 90–95% of the deposit value, priced one to two percentage points above your own deposit rate — is usually the cheaper answer to a short-term cash need. The deposit keeps compounding at its contracted rate and you avoid the re-pricing entirely. Laddering across several smaller deposits with staggered maturities achieves something similar, letting you break only the piece you need.

For a monthly commitment rather than a lump sum, the recurring deposit calculator applies the same quarterly compounding to each instalment separately, and the Post Office MIS calculator covers the monthly-income variant of a lump-sum deposit.