How FD Interest Is Calculated in India

Last updated: August 2026

A fixed deposit (FD) locks a lump sum with a bank for a set period at a fixed rate. Indian banks almost always compound the interest quarterly — every three months, interest is added to your balance, and the next quarter earns on the larger amount.

The formula

Maturity = P × (1 + r/4)^{4 × years}, where P is your deposit and r is the annual rate as a decimal. Because of quarterly compounding, your effective return is a little higher than the plain annual rate.

A worked example

₹1,00,000 at 7% for 5 years → maturity ₹1,41,478, so you earn ₹41,478 in interest. A ₹5,00,000 deposit at 7.5% for 3 years grows to about ₹6,24,858.

Tax on FD interest

FD interest is taxable as per your income slab, and banks deduct TDS once the interest crosses a threshold in a year. The maturity figure our calculator shows is before tax.