The RBI raised the repo rate to 5.50% on 7 October 2026, its first hike since February 2023, and dropped any talk of near-term cuts. If you have money sitting in a savings account or an FD coming up for renewal, that changes the maths a little. This guide covers where FD rates stand today, what ₹1 lakh actually earns after tax, and where an FD still belongs in your money plan.
Key Highlights
- Rates now: SBI pays 6.25% for 1 year, 6.40% for 2 years and 6.05% for 5–10 years (general public, below ₹3 crore). The Post Office 5-year Time Deposit pays 7.5% for October–December 2026.
- Repo is up: The RBI hiked the repo rate to 5.50% on 7 October 2026. Bank FD rates usually follow with a lag, so short tenures keep your options open.
- Tax changes the picture: ₹1 lakh in SBI’s 5-year FD grows to about ₹1,35,018, but only about ₹1,24,092 after tax in the 30% slab, roughly 4.4% a year.
- Best job for an FD: an emergency fund and the safe part of your portfolio. Even in the 30% slab, keep some money in FDs, because debt funds carry their own uncertainty.
- Bottom line: Use FDs for safety and certainty, not for beating inflation. Pair them with an RD, PPF and equity SIPs for long-term goals.
What are FD interest rates in October 2026?
SBI last revised its retail FD card rates on 15 December 2025, and they are still in force as of 19 October 2026. For deposits below ₹3 crore, the general public gets:
| Tenure | SBI general (% p.a.) | SBI senior citizen (% p.a.) |
|---|---|---|
| 7–45 days | 3.05 | 3.55 |
| 46–179 days | 4.90 | 5.40 |
| 180–210 days | 5.65 | 6.15 |
| 211 days to <1 year | 5.90 | 6.40 |
| 1 year to <2 years | 6.25 | 6.75 |
| 2 years to <3 years | 6.40 | 6.90 |
| 3 years to <5 years | 6.30 | 6.80 |
| 5 years to 10 years | 6.05 | 7.05* |
| Amrit Vrishti (444 days) | 6.45 | senior benefit extra |
The Post Office side is simpler (Post Office rate history). For October–December 2026 the government kept small savings rates unchanged: the Time Deposit pays 6.9% for 1 year, 7.0% for 2 years, 7.1% for 3 years and 7.5% for 5 years. Interest is compounded quarterly and paid annually, and the deposit carries a sovereign guarantee.
Will FD rates go up after the repo rate hike?
Possibly, but not overnight. The MPC moved its stance to “calibrated tightening”, which means the next step is either a hike or a pause. Banks usually raise loan rates first and deposit rates later. SBI has already moved its external benchmark lending rate to 8.15% from 15 October, but its retail FD card is unchanged so far.
My practical read: if you are opening a fresh FD now, a 1–2 year tenure is sensible, because you can roll over at a higher rate if banks follow the RBI. Lock in five years only for money you genuinely won’t touch, or use the Post Office 5-year TD, whose 7.5% is already well above any SBI 5-year card rate.
How much does ₹1 lakh in an FD earn after tax?
Headline rates hide the tax bite. I worked out the maturity value of ₹1 lakh at today’s rates with quarterly compounding, then applied tax on the interest at each slab plus 4% cess.
| Deposit (rate, tenure) | Maturity, pre-tax | After tax, 0% slab | After tax, 20% slab | After tax, 30% slab | Post-tax yield, 30% slab |
|---|---|---|---|---|---|
| SBI 1 yr (6.25%) | ₹1,06,398 | ₹1,06,398 | ₹1,05,067 | ₹1,04,402 | 4.40% |
| SBI 2 yr (6.40%) | ₹1,13,540 | ₹1,13,540 | ₹1,10,724 | ₹1,09,316 | 4.55% |
| SBI 3 yr (6.30%) | ₹1,20,626 | ₹1,20,626 | ₹1,16,336 | ₹1,14,191 | 4.52% |
| SBI 5 yr (6.05%) | ₹1,35,018 | ₹1,35,018 | ₹1,27,734 | ₹1,24,092 | 4.41% |
| Post Office 5-yr TD (7.5%) | ₹1,44,995 | ₹1,44,995 | ₹1,35,636 | ₹1,30,956 | 5.54% |
Look at the last column. In the 30% slab, SBI FDs give roughly 4.4–4.6% a year after tax, while the RBI expects CPI inflation to average about 5.8% over the next three quarters. So in real terms a taxed FD is not growing your money. It is protecting it. You can try your own amount and tenure on our FD calculator.
How is FD interest taxed under the Income-tax Act, 2025?
From 1 April 2026 the Income-tax Act, 2025 replaced the 1961 Act, but the basic treatment of FD interest is the same. Interest is added to your income and taxed at your slab rate, under whichever regime you choose. Banks and post offices deduct 10% TDS once your interest crosses ₹50,000 a year with that institution (₹1 lakh for senior citizens). That is now under section 393 of the new Act, in place of the old section 194A.
A 5-year tax-saver FD still qualifies for the ₹1.5 lakh deduction under section 123 (the old 80C), but only in the old regime. The interest on it remains taxable. Our guide to Section 80C deductions explains which other products share that limit.
Where does an FD actually fit? My take
I’m often asked whether FDs make any sense for someone in the 30% bracket. My honest answer is yes, for part of the money. In my view an FD is the best home for your emergency fund. It is simple, you can break it in a day, and the value doesn’t swing when markets fall. That is exactly when you are most likely to need the money.
Debt mutual funds can look better on paper after tax, but they carry uncertainty: interest rate moves, credit events and NAV drops at the wrong moment. A rate-hike cycle like the one that started this month is precisely when bond fund NAVs can wobble. So even in the 30% slab I keep some part of the safe portfolio in FDs and don’t push everything into debt funds.
For monthly saving towards a 3–5 year goal, an RD does the same job in instalments; check the numbers on our RD calculator. For long-term, tax-free compounding, PPF at 7.1% is hard to beat for a safe product, and you can see what extending it to 20–25 years does on the PPF calculator. Growth itself should come from equity SIPs. If you want to compare safe options side by side, see our list of safe investment options in India, or browse all our financial calculators.
Smart ways to use FDs in 2026
- Ladder them. Split ₹3 lakh into three FDs of 1, 2 and 3 years. One matures every year, so you get liquidity, and you can reinvest at higher rates if they rise.
- Keep each FD below ₹5 lakh where possible. SBI charges a 0.50% premature-withdrawal penalty up to ₹5 lakh and 1% above it. DICGC insurance covers up to ₹5 lakh per depositor per bank, principal and interest combined, across all branches of that bank.
- Submit Form 15G/15H if eligible. If your total income is below the taxable limit, this stops unnecessary TDS.
- Seniors, compare first. SBI’s 7.05% (5–10 years, WeCare) and the Post Office 5-year TD at 7.5% sit close together, while SCSS pays 8.2% this quarter.
Frequently asked questions
What is the SBI FD interest rate for 1 year in October 2026?
6.25% a year for the general public and 6.75% for senior citizens, on deposits below ₹3 crore (card rate effective 15 December 2025, still in force on 19 October 2026).
Is the Post Office FD better than an SBI FD?
On rate, yes, for most tenures. The Post Office pays 6.9–7.5% against SBI’s 6.25–6.40%. Both are very safe. SBI is easier to open and break online, so many people keep the emergency fund in a bank FD and the 5-year money in the Post Office TD.
Will FD rates increase after the RBI repo rate hike?
They may rise gradually. The RBI raised the repo rate to 5.50% on 7 October 2026 with a “calibrated tightening” stance. Deposit rates usually follow with a lag of a few weeks to months.
Is FD interest taxable in the new tax regime?
Yes. FD interest is taxed at your slab rate under both regimes. The tax-saver FD deduction (section 123, formerly 80C) is available only in the old regime.
Should I keep my emergency fund in an FD?
Yes, a bank FD (or a sweep-in FD) is one of the best places for it. It is liquid, carries no market risk and is insured up to ₹5 lakh per bank by DICGC.
Sources: SBI retail term deposit rates (sbi.bank.in, updated 19 Oct 2026); India Post / Ministry of Finance OM No. 1/4/2019-NS dated 30.09.2026 on small savings rates for Q3 FY 2026-27; RBI Monetary Policy Statement, 7 Oct 2026 (latest figures on our Live Rates & Data page); Income-tax Act, 2025 (incometaxindia.gov.in); DICGC FAQs (dicgc.org.in). Rates change, so confirm with your bank before investing. This article is for information only and is not investment advice.
Written by Ashutosh Joshi, PGDM (Finance), B.Com, New Delhi.
