Quick Answer: FD maturity amount = Principal × (1 + r/n)^(n×t), where r = annual interest rate, n = compounding frequency per year, t = tenure in years. Most Indian bank FDs compound quarterly. A ₹1 lakh FD at 7% p.a. for 3 years (quarterly compounding) matures to approximately ₹1,23,114. Interest is taxable at your income slab rate; TDS at 10% applies if annual interest exceeds ₹40,000 (₹50,000 for senior citizens).
Fixed Deposit — Safe, Predictable Returns
Fixed Deposits are the most popular savings instrument in India. Banks like SBI, HDFC, ICICI typically offer 6.5–7.5% on regular FDs and 7–8% for senior citizens. While FD returns are guaranteed, the interest is fully taxable — so the effective post-tax return is lower than it appears.
FD vs Other Instruments (Post-Tax at 30% Bracket)
| Instrument | Pre-Tax Return | Post-Tax Return | Lock-in |
|---|---|---|---|
| Bank FD (typical) | 7.0–7.5% | ~5.0–5.2% | Flexible |
| PPF | 7.1% (EEE) | 7.1% | 15 years |
| NPS Equity (E) | ~10–12% (est) | ~9–10% | Till 60 |
| Debt MF (LTCG) | 7–8% | ~5.5–6% (slab) | 3+ years |
Frequently Asked Questions
Form 15G (for individuals below 60) and 15H (senior citizens) are self-declarations to the bank that your total income is below the taxable limit and TDS should not be deducted on FD interest. Submit at the beginning of each financial year to all banks where you have FDs.
Tax-Saving FDs (5-year lock-in under Section 80C) qualify for ₹1.5 lakh deduction on the principal invested. However, the interest earned is still fully taxable. These are only available in the old tax regime — there's no tax benefit in the new (default) regime.