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Work out what a fixed deposit matures to — and, more importantly, what’s left of it once tax has taken its share.
The short version
A ₹5,00,000 fixed deposit at 7% for five years, compounded quarterly, matures at about ₹7,07,393. The interest earned is roughly ₹2,07,393.
But FD interest is taxed at your slab rate. In the 30% bracket you keep about ₹1,45,175 of that interest, making your effective return closer to 4.9% than 7%. This calculator shows both figures, because only one of them is the money you actually get.
Maturity value, before tax
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Effective post-tax return
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Compounded quarterly, the standard basis for Indian bank fixed deposits. Tax applied to interest at your marginal slab rate.
The headline rate isn’t your return
This is the single most misunderstood thing about fixed deposits. FD interest is added to your income and taxed at whatever slab you fall in. A 7% FD returns 7% to someone with no taxable income and about 4.9% to someone in the 30% bracket. Those are different products wearing the same label.
It matters most when you compare an FD against something tax-free. PPF at 7.1% tax-free isn’t marginally better than a 7% FD — for a 30% taxpayer it’s roughly 45% better on the return. Run both before assuming the FD is the safe default.
Inflation takes a second bite
A 4.9% post-tax return against 6% inflation is a negative real return. Your money grew in rupees and shrank in what it can buy. That doesn’t make FDs useless — capital preservation and guaranteed liquidity are genuine features, and money you’ll need within three years generally shouldn’t be anywhere riskier. But an FD is a parking space, not a wealth-building instrument, and treating it as the latter is how people end up disappointed after fifteen disciplined years.
Things worth knowing before you book one
- TDS applies. Banks deduct tax at source once your interest crosses an annual threshold. TDS is not the full tax — if you’re in a higher slab you still owe the difference at filing. Thresholds are revised periodically, so confirm the current one with your bank.
- Premature withdrawal costs you. Breaking an FD early usually means the rate is reset to whatever applied for the period actually held, minus a penalty of around 0.5–1%.
- Deposit insurance is capped. DICGC cover applies per depositor per bank, principal and interest combined. Large sums are worth splitting across banks.
- Senior citizens get more. Most banks add roughly 0.5% for depositors above 60.
- Cumulative vs payout. This calculator assumes cumulative, where interest compounds. A monthly-payout FD gives you income but no compounding, so the maturity figure will be lower.
Common questions
Is FD interest compounded monthly or quarterly?
Quarterly, at nearly every Indian bank, which is what this calculator uses. If your bank compounds annually the maturity figure will be slightly lower — check the deposit advice rather than assuming.
Can I avoid TDS on FD interest?
If your total income is below the taxable limit, submitting Form 15G — or 15H if you’re a senior citizen — stops the bank deducting TDS. It doesn’t exempt you from tax if you do in fact owe it; it only prevents deduction where none is due.
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Educational content only — not financial advice. Interest rates, TDS thresholds and deposit insurance limits change; verify current figures with your bank before acting. Tax treatment depends on your individual circumstances.
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