How FD Interest Is Calculated in India

Q: Is FD interest taxable?

Yes — it's added to your income and taxed at your slab rate, and banks deduct TDS above a yearly threshold. The maturity shown is before tax.

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.

Calculate your FD maturityOpen the calculator →

Frequently asked questions

How often is FD interest compounded?+

Most Indian banks compound FD interest quarterly, which gives a slightly higher return than simple annual interest.

Is FD interest taxable?+

Yes, it's added to your income and taxed at your slab rate, and banks deduct TDS above a yearly threshold. The maturity shown is before tax.

How FD Interest Is Calculated in India

The formula

A worked example

Tax on FD interest

Frequently asked questions

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