What Is a Fixed Deposit (FD)?
A Fixed Deposit (FD) is a financial instrument offered by banks, NBFCs, and the Post Office where a lump sum is deposited for a fixed tenure at a predetermined interest rate. It is expressed as an annual percentage rate, compounded quarterly.
Unlike a savings account, the rate on an FD is locked in the day it is opened and does not change for the rest of the tenure, regardless of what happens to market rates afterward. This makes it one of the most predictable investment options available to Indian savers.
FDs are also called term deposits or time deposits, especially by NBFCs and the Post Office. Most Indian banks compound the interest quarterly, adding each quarter's interest to the principal before the next quarter is calculated.
Deposits at scheduled commercial banks, including small finance banks, are insured up to Rs 5 lakh per depositor per bank under the RBI-regulated DICGC scheme.
FD Formula: How to Calculate Maturity Amount
Indian banks calculate FD interest with quarterly compounding, using this formula:
A = P × (1 + R/400)^(4 × T)
Here A is the maturity amount, P is the principal you invest, R is the annual rate in percent, and T is the tenure in years.
Dividing by 400 converts the annual rate into a quarterly decimal. Interest is added to the principal every three months, so later quarters earn interest on a slightly larger base than earlier ones.
Worked example
Rs 1,00,000 at 7.10% p.a. for 5 years, compounded quarterly, grows to approximately ₹1,42,175, a total interest of roughly ₹42,175. Enter these numbers in the calculator above to verify.
FD Formula in Excel: Three Methods
The same quarterly compounding maturity value can be built in a spreadsheet three different ways.
| Method | Formula | Notes |
|---|---|---|
| Direct formula | =P*(1+R/400)^(4*T) | P, R, T reference the cells holding principal, rate, and years. |
| POWER function | =P*POWER(1+R/400,4*T) | Identical result; POWER() is more readable in a shared workbook. |
| FV function | =-FV(R/400,4*T,0,P) | Excel's built-in future value function; the leading minus sign flips the sign convention FV() uses for outflows. |
How Banks Structure FD Interest Rates
Banks publish FD rates as a table of tenure buckets, and the highest rate rarely sits on the shortest or longest tenure. It is usually in the 1 to 3-year range instead.
Small finance banks and NBFCs generally price FDs higher than large banks to attract deposits, but NBFC FDs are not DICGC-insured, so the issuer's credit rating matters more there.
Rates change with every RBI policy cycle. Confirm the current rate with your bank, then use the slider above with that rate to see the actual maturity value.
| Issuer | Type | DICGC insured |
|---|---|---|
| SBI | Public sector bank | Yes |
| HDFC Bank | Private bank | Yes |
| ICICI Bank | Private bank | Yes |
| Axis Bank | Private bank | Yes |
| Post Office (POTD) | Government-backed | Sovereign guarantee |
| Bajaj Finance | NBFC (corporate FD) | No, rated by CRISIL/ICRA instead |
TDS on FD Interest: Rules You Should Know
Banks deduct 10% TDS under Section 194A once your total FD interest from that bank crosses Rs 40,000 in a financial year, or Rs 50,000 for senior citizens. Without a PAN on file, the deduction rate rises to 20%.
TDS is only a withholding, not the final tax. The full interest is still taxable at your slab rate, and any gap versus the TDS deducted is settled when you file your return; check the exact figure with the Income Tax Calculator.
If your total income is below the taxable limit, filing Form 15G (below 60) or 15H (60 and above) stops the deduction at source. For TDS estimated against your own deposit, PAN status, and age bracket, use the FD Maturity Calculator.
Tax-Saving FD
A tax-saving FD is a 5-year fixed deposit that qualifies for a deduction of up to Rs 1.5 lakh per year under Section 80C of the Income Tax Act. It carries a mandatory 5-year lock-in with no premature withdrawal option, and no loan can be taken against it during that period.
The interest earned is still fully taxable at your slab rate; only the principal invested gets the 80C benefit, not the interest. Most major banks, including SBI, HDFC, ICICI, and Axis Bank, offer tax-saving FDs at their standard 5-year FD rate.
Senior Citizen FD Rates
Banks add a fixed premium, commonly 0.25% to 0.75% per annum, for depositors aged 60 and above, sometimes more for super senior citizens aged 80 and above. It applies once the account is opened in the senior citizen category with valid age proof.
Senior citizens can also claim a deduction of up to Rs 50,000 on FD interest under Section 80TTB, separate from the Section 80C deduction available on a tax-saving FD. For an FD calculator with a built-in senior citizen toggle and TDS estimate, use the FD Maturity Calculator.
FD vs RD: What Is the Difference?
An FD requires a one-time lump-sum deposit at the start of the tenure. A Recurring Deposit (RD) instead takes a fixed installment every month over the same tenure, which suits savers building capital from monthly income rather than investing a lump sum already on hand.
| Factor | Fixed Deposit | Recurring Deposit |
|---|---|---|
| Investment style | One lump sum at the start | Fixed monthly installment |
| Best suited for | Savers with a lump sum on hand | Savers building capital from salary |
| Compounding | Quarterly, on the full principal | Quarterly, on the growing balance |
| Deposit insurance | DICGC up to Rs 5 lakh per bank | DICGC up to Rs 5 lakh per bank |
Use the RD Calculator to work out the maturity value of monthly installments instead of a lump sum. If you have a large sum to deploy but want to reduce reinvestment risk from a single rate, the FD Laddering Calculator splits it across staggered tenures instead of one FD.
FD Maturity Calculator
Add PAN status and age bracket to see the exact TDS deducted on your deposit.
FD vs Market-Linked Investments
An FD returns a fixed, guaranteed rate regardless of markets, which is both its appeal and its limitation. A mutual fund SIP can return more over the long run, but with no guarantee, and can be negative in a given year.
FDs suit money you cannot afford to see shrink, such as an emergency fund. For long-term goals, compare the numbers with the SIP Calculator or the Lumpsum Calculator before deciding.
How to Use This FD Calculator
The calculator needs three inputs:
- Total Investment: enter the lump sum you plan to deposit, using the slider or by clicking the value to type an exact figure.
- Rate of Interest: enter the annual rate your bank has quoted for the tenure you plan to choose.
- Time Period: set the tenure in years or months using the toggle, or pick one of the preset year buttons.
- Review the result: read the maturity amount, interest earned, and effective annual yield, then expand the growth schedule to see the year-by-year build-up.
Limitations of This FD Calculator
Assumes a constant rate for the full tenure.
Banks do not revise the rate on an existing FD mid-tenure, so this holds true in practice, but it will not reflect a premature-withdrawal penalty if you break the deposit early.
Does not calculate TDS.
This page keeps the calculation to principal, rate, and tenure. Use the FD Maturity Calculator for a version with PAN status, age bracket, and TDS built in.
Assumes standard quarterly compounding.
A small number of niche FD products compound monthly or annually instead. Confirm the compounding frequency stated in your bank's FD certificate before relying on this result for a non-standard product.
Does not account for reinvestment risk.
The maturity amount assumes the rate holds for the entire tenure. If you plan to renew the FD partway through at a different rate, calculate each leg separately.
Frequently Asked Questions
Disclaimer: All calculations on this page are indicative only, based on the principal, rate, and tenure you enter. Actual FD returns depend on the exact terms of the deposit certificate issued by your bank or the Post Office, including compounding frequency, premature-withdrawal terms, and applicable TDS. This calculator does not account for TDS, and past interest rates do not guarantee future rates. This tool is for educational and planning purposes only and does not constitute financial advice. Consult a SEBI-registered investment adviser or a chartered accountant before making investment decisions.