๐ง Enter Deposit Details
Deposit Type
Total Investment โน1,00,000
โน
The lump sum amount you invest in the fixed deposit.
Interest Rate 7% p.a.
๐
% p.a.
The annual interest rate offered by your bank. Senior citizens usually get 0.25%โ0.75% extra.
Tenure 5 years
๐
months
Deposit period in months (e.g. 60 = 5 years). FD/RD tenures range from 6 months to 10 years.
Compounding Frequency
Most Indian banks compound FD interest quarterly. RD interest is always compounded quarterly.
TDS on Interest (Optional)
Estimate TDS Under Section 194A?
๐ง
Enter your deposit details and click Calculate to see the maturity value and interest earned.
The Maths
How FD & RD Interest is Calculated
Compound Interest, Compounded Quarterly
A fixed deposit grows a single lump sum, while a recurring deposit grows a stream of monthly deposits. Indian banks compound the interest quarterly:
FD & RD Maturity Formulas
FD: Maturity = P ร (1 + r/4)^(4 ร years)where P = principal, r = annual rate (decimal)
RD: Maturity = R ร [(1+i)^N โ 1] / [1 โ (1+i)^(โ1/3)]
where R = monthly deposit, i = r/4, N = number of quarters
Qtrly
Compounding frequency
10%
TDS rate (194A)
โน50K
TDS-free interest / yr
โน1L
Senior citizen limit
Complete Guide
FD & RD โ Taxation & TDS Rules
๐ก Taxable interest: Interest from both FDs and RDs is fully taxable as "Income from Other Sources" at your slab rate โ in both the Old and New Tax Regimes. There is no special exemption (unlike PPF, which is tax-free).
1. FD vs RD โ What's the Difference?
A Fixed Deposit is a one-time lump-sum investment locked in for a chosen tenure. A Recurring Deposit lets you deposit a fixed amount every month, ideal for building savings from regular income. Both offer assured, fixed returns unaffected by market movements.
2. TDS on Interest (Section 194A)
- Banks deduct TDS at 10% on interest once it crosses โน50,000 in a financial year (raised from โน40,000 by Budget 2025).
- For senior citizens (60+), the threshold is โน1,00,000 a year.
- If you don't provide your PAN, TDS is deducted at 20%.
- TDS is only advance tax โ you can claim it back in your ITR if your total tax is lower.
3. Avoiding TDS with Form 15G / 15H
If your total income is below the taxable limit, submit Form 15G (below 60) or Form 15H (senior citizens) to your bank at the start of the year. The bank will then not deduct TDS on your interest.
4. Important Points
- TDS being deducted doesn't mean interest is tax-free โ you must still add the full interest to your income and pay tax as per your slab, taking credit for the TDS.
- Interest is taxed on an accrual basis each year, even for a multi-year FD where interest is paid only at maturity.
- A 5-year tax-saver FD qualifies for Section 80C deduction, but its interest is still taxable.
Walkthrough Example
Step-by-Step Calculation Example
Consider Rohan, who opens a fixed deposit:
- Principal: โน1,00,000
- Interest rate: 7% per year
- Tenure: 5 years (60 months)
- Compounding: Quarterly
How the Maturity is Worked Out:
- Quarterly rate: 7% รท 4 = 1.75% per quarter.
- Number of quarters: 5 years ร 4 = 20.
- Maturity: โน1,00,000 ร (1.0175)ยฒโฐ โ โน1,41,478.
- Total interest: โน1,41,478 โ โน1,00,000 = โน41,478.
On TDS: Rohan's interest is about โน8,300 per year โ below the โน50,000 threshold โ so no TDS is deducted. He must still declare the interest and pay tax at his slab rate each year.
FAQs
Frequently Asked Questions
How is FD interest calculated?
Most banks calculate FD interest using compound interest with quarterly compounding: Maturity = P ร (1 + r/4)^(4 ร years), where P is the principal and r is the annual rate. Each quarter's interest is added to the principal, so you earn interest on interest.
Is FD and RD interest taxable?
Yes. Interest from both fixed and recurring deposits is fully taxable as "Income from Other Sources" at your income tax slab rate, under both the Old and New Regimes. Unlike PPF or Sukanya Samriddhi, FD/RD interest has no exemption.
When is TDS deducted on FD interest?
Banks deduct TDS at 10% under Section 194A once your interest crosses โน50,000 in a financial year (โน1,00,000 for senior citizens). Without a PAN, the rate is 20%. TDS is adjusted against your final tax and any excess is refunded when you file your ITR.
How can I avoid TDS on my deposit interest?
If your total income is below the taxable limit, submit Form 15G (below 60) or Form 15H (senior citizens) to your bank at the beginning of the financial year. The bank will then not deduct TDS. Note this only avoids TDS โ it doesn't make the interest tax-free if you are otherwise liable.
Which gives higher returns โ FD or RD?
For the same total amount and rate, an FD usually earns more because the full sum is invested from day one and earns interest for the entire tenure. In an RD, each installment is invested gradually, so the earlier the money, the more it earns. RDs suit those who save monthly rather than having a lump sum.
Is this calculator's result exact?
It's a close estimate using standard quarterly compounding. Your bank's exact maturity may differ slightly due to their rounding, the exact day-count, and whether interest is reinvested (cumulative) or paid out (non-cumulative). The TDS figure is indicative, based on the interest crossing the annual threshold.