Updated June 2026

FD Calculator

Your 7% FD might be losing you money. See what your fixed deposit actually earns after the bank deducts TDS and inflation eats the rest.

₹
Allowed range: ₹10,000 to ₹1,00,00,000. Values outside this range are adjusted to the nearest limit.
%
Allowed range: 3 to 10%. Values outside this range are adjusted to the nearest limit.
Yrs
Allowed range: 1 to 10 Yrs. Values outside this range are adjusted to the nearest limit.
Compounding
Tax Slab (TDS)
Adjust for Inflation
%
Allowed range: 3 to 12%. Values outside this range are adjusted to the nearest limit.
Principal
Interest Earned
TDS Deducted
Post-tax Nominal Maturity

₹6.61 L

Interest Earned

₹2.02 L

TDS Deducted

−₹40,305

Effective Rate

5.75% p.a.

Post-tax value in today's rupees (6% inflation)

₹4.94 L

Your FD matures to ₹6.61 L but is worth only ₹4.94 L in today's purchasing power. Your real return is -0.2% per year: you're losing money to inflation.

FD Growth Over Time

₹0₹1.8L₹3.6L₹5.5L₹7.3L1Y2Y3Y4Y5Y

Chart from year 1 to year 5. Maturity Value changes from ₹5.3L to ₹6.6L. Principal changes from ₹5L to ₹5L. After Inflation changes from ₹5.0L to ₹4.9L.

Maturity Value
Principal
After Inflation

Year-wise Breakdown

5 years

How Fixed Deposit Interest Works

A Fixed Deposit (FD) is a savings instrument where you deposit a lump sum with a bank for a fixed tenure at a predetermined interest rate. The bank compounds your interest: most commonly on a quarterly basis, and returns the maturity amount at the end of the tenure.

The compound interest formula is: A = P × (1 + r/n)n×t, where P is your principal, r is the annual interest rate, n is the compounding frequency, and t is the tenure in years.

The TDS Problem Nobody Talks About

When your FD interest exceeds ₹50,000 per year (₹1,00,000 for senior citizens), the bank deducts TDS before crediting your account. While banks deduct at 10%, your actual liability is at your slab rate. If you're in the 30% slab, you owe additional tax when filing returns.

This means a "7% FD" actually gives you:

  • At 30% slab: ~4.9% effective return
  • At 20% slab: ~5.6% effective return
  • At 5% slab: ~6.65% effective return

The Inflation Reality

Here's what most calculators won't show you: at 6% inflation, even the pre-tax 7% FD rate barely beats inflation. After tax, you're often at 4.9%: well below 6% inflation. Your FD is silently losing purchasing power every year.

Example: ₹5,00,000 in an FD at 7% for 5 years (30% slab, 6% inflation):

  • Nominal maturity: ₹7,07,862
  • After TDS at slab: ~₹6,38,000
  • Inflation-adjusted (today's value): ~₹4,77,000: less than you started with

When FD Still Makes Sense

Despite the real return problem, FDs are appropriate for:

  • Emergency fund: guaranteed liquidity with no market risk
  • Short-term goals (1-2 years): too short for equity volatility
  • Senior citizens: regular income via interest payout + higher threshold
  • Retirees in 0% slab: no TDS with Form 15H, full rate earned

How to Use This FD Calculator

  1. Enter your deposit amount (principal)
  2. Set the interest rate offered by your bank
  3. Choose tenure: most banks offer best rates for 3-5 year FDs
  4. Select compounding frequency (quarterly is most common in India)
  5. Choose your tax slab to see post-TDS maturity amount
  6. Toggle inflation to see the reality: what your maturity amount actually buys

FD vs Other Options

If your FD's real return is negative after inflation and tax, consider these alternatives for long-term goals:

  • SIP in index funds: 10-12% historical returns, tax-efficient (LTCG only on redemption)
  • PPF: 7.1% tax-free (EEE), but 15-year lock-in
  • Debt mutual funds: similar returns to FD but more tax-efficient for high-slab investors

FD by Amount & Tenure

₹1 Lakh FD for 1 Years ₹1 Lakh FD for 3 Years ₹1 Lakh FD for 5 Years ₹2 Lakh FD for 5 Years ₹3 Lakh FD for 5 Years ₹5 Lakh FD for 1 Years ₹5 Lakh FD for 2 Years ₹5 Lakh FD for 3 Years ₹5 Lakh FD for 5 Years ₹5 Lakh FD for 10 Years ₹10 Lakh FD for 1 Years ₹10 Lakh FD for 2 Years ₹10 Lakh FD for 3 Years ₹10 Lakh FD for 5 Years ₹10 Lakh FD for 10 Years ₹15 Lakh FD for 3 Years ₹15 Lakh FD for 5 Years ₹20 Lakh FD for 5 Years ₹25 Lakh FD for 3 Years ₹25 Lakh FD for 5 Years ₹50 Lakh FD for 5 Years ₹1 Crore FD for 5 Years

Frequently Asked Questions

How is FD interest calculated?
Banks calculate FD interest using compound interest, typically compounded quarterly. The formula is: A = P × (1 + r/n)n×t, where P is principal, r is annual rate, n is compounding frequency (4 for quarterly), and t is tenure in years. Most Indian banks compound quarterly.
What is TDS on fixed deposit?
TDS (Tax Deducted at Source) is deducted by banks when your FD interest exceeds ₹50,000 per year (₹1,00,000 for senior citizens). TDS is deducted at 10% by default, but you're taxed at your actual slab rate when filing returns. If you submit Form 15G (or Form 15H for senior citizens) declaring income below the taxable limit, no TDS is deducted.
Why does my FD give negative real returns?
If your FD rate is 7% and inflation is 6%, your pre-tax real return is only ~1%. After TDS at 30% slab, your effective rate drops to ~4.9%: below inflation. This means your money loses purchasing power despite "earning" interest. Our calculator shows this reality.
Is FD interest taxable?
Yes. FD interest is fully taxable at your income tax slab rate as "Income from Other Sources". For example, if you're in the 30% bracket and earn ₹80,000 FD interest, you owe ₹24,000 in tax on that interest. The ₹50,000 threshold only determines whether your bank deducts TDS at source, it does not reduce your tax liability.
Which is better: monthly or quarterly compounding?
Monthly compounding gives slightly higher returns than quarterly. For a ₹5L FD at 7% for 5 years: monthly compounding gives ₹7,08,940 vs quarterly ₹7,07,862: a difference of ~₹1,078. Most Indian banks offer quarterly compounding by default.
Should I invest in FD or SIP?
It depends on your risk appetite and time horizon. FD gives guaranteed but low real returns (often negative after inflation + tax). SIP in equity mutual funds historically delivers 10-12% but with volatility. For goals 5+ years away, SIP usually wins. For short-term parking (1-2 years), FD is safer. Use our Lumpsum vs SIP calculator to compare.
What is the current FD rate in 2026?
FD rates vary by bank and tenure. As of 2026, most major banks offer 6.5-7.5% for 1-5 year FDs. Senior citizens get an additional 0.25-0.50%. Private banks and small finance banks may offer up to 8-8.5% but carry slightly higher risk.
How can I avoid TDS on FD?
You can submit Form 15G (or Form 15H for senior citizens) if your total income is below the taxable limit. Alternatively, spread deposits across banks to keep interest below ₹50K per bank. Note: you still need to declare the interest as income and pay tax if applicable: TDS avoidance isn't tax avoidance.

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