How To Calculate Bank Interest Rate For Fixed Deposit

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FD Interest Calculator 2021

Last Updated 12th Nov 2021

An FD calculator calculates the maturity value of the deposited amount. You can use the online FD calculator to know about the returns on your investments based on following factors.

Deposit Amount – This is the amount which you invest once in your FD account. Minimum deposit amount should be ₹ 1,000.
Interest Rate – FD rates vary depending upon deposit tenure.
Deposit Tenure – Maturity value also depends on the period for which you invest your money in FD. Generally, FD tenure ranges from 7 days to 10 years.
Interest Compound Frequency – This calculates maturity amount based on monthly, quarterly, half yearly or annual frequency.

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Fixed Deposit Interest Calculator

Deposits are of two types – periodic interest payout and cumulative.

Periodic Interest Payout - In this option, you would receive a fixed interest at the end of every period (say, a quarter). The interest amount would remain unchanged through the tenure of the FD. Entire principal would be repaid at the end of the period.

Cumulative deposit - You may remember having studied "compound interest" in middle school. Say, you place a deposit of ₹ 10,000/- with Bank A at 10% p.a. for 3 years. Now, how much money would you get at the end of 3 years?

Is it ₹ 10,000 in principal plus 10% interest or ₹ 1,000 multiplied by 3? That comes to ₹ 13,000. However, if you use the FD interest calculator here, the result will be ₹ 13,449. Why does bank pay you this extra ₹ 449? This is the compounded FD interest.
In simple terms, interest on bank FD's is typically compounded quarterly. So, a 10% per annum rate of interest means 2.5% per quarter. At the end of first quarter, the bank credits ₹ 250 to your deposit account and in the next quarter, the interest payable is 2.5% on ₹ 10,250 and not on ₹ 10,000. This process repeats itself for 12 quarters and earns you a total compound interest of ₹ 3,449.
More the compounding frequency, higher the interest a customer earns on FD. So, instead of quarterly compounding, if the above FD was on monthly compounding basis, the interest amount would be ₹ 3,482 instead of ₹ 3,449 with quarterly compounding.
In the context of fixed deposits, FD interest compounding refers to earning interest on the interest itself! Slightly complicated but then you make more money this way!

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FD Maturity Calculator

The interest earned on a FD depends on the deposit amount, interest applicable, deposit tenure and the type of interest calculation frequency. Interest on FD can be calculated monthly, quarterly, half-yearly and annually. The interest rate for senior citizens is higher than the normal rates.

Suppose if you make an investment of ₹ 1,00,000 in FD for a 5-year tenure at an interest rate of 6.00% for depositors below 60 years and 6.50% for senior citizens. The interest calculation on the deposited amount is done quarterly. The maturity amount for this deposit amount is ₹ 1,34,686 and the total interest earned is ₹ 34,686 for below 60 years of age citizens. However, the interest earned for senior citizens is ₹ 38,042 which is higher. The maturity schedule of FD for 5 years is explained below in the table –

Maturity Schedule for ₹ 1,00,000 FD at 6.00% for Citizens below 60 years and at 6.50% for Senior Citizens for 5 years

Year	Citizens below 60 Years of Age			Senior Citizens above 60 Years
	Interest Earned	Closing Balance	Interest Earned	Closing Balance
2021	₹ 998	₹ 1,00,998	₹ 1,080	₹ 1,01,080
Nov-Dec	₹ 998	₹ 1,00,998	₹ 1,080	₹ 1,01,080
2022	₹ 6,198	₹ 1,07,196	₹ 6,732	₹ 1,07,812
Jan-Mar	₹ 1,515	₹ 1,02,513	₹ 1,643	₹ 1,02,723
Apr-Jun	₹ 1,538	₹ 1,04,051	₹ 1,669	₹ 1,04,392
Jul-Sep	₹ 1,561	₹ 1,05,612	₹ 1,696	₹ 1,06,088
Oct-Dec	₹ 1,584	₹ 1,07,196	₹ 1,724	₹ 1,07,812
2023	₹ 6,578	₹ 1,13,774	₹ 7,180	₹ 1,14,992
Jan-Mar	₹ 1,608	₹ 1,08,804	₹ 1,752	₹ 1,09,564
Apr-Jun	₹ 1,632	₹ 1,10,436	₹ 1,780	₹ 1,11,344
Jul-Sep	₹ 1,657	₹ 1,12,093	₹ 1,809	₹ 1,13,153
Oct-Dec	₹ 1,681	₹ 1,13,774	₹ 1,839	₹ 1,14,992
2024	₹ 6,982	₹ 1,20,756	₹ 7,659	₹ 1,22,651
Jan-Mar	₹ 1,707	₹ 1,15,481	₹ 1,869	₹ 1,16,861
Apr-Jun	₹ 1,732	₹ 1,17,213	₹ 1,899	₹ 1,18,760
Jul-Sep	₹ 1,758	₹ 1,18,971	₹ 1,930	₹ 1,20,690
Oct-Dec	₹ 1,785	₹ 1,20,756	₹ 1,961	₹ 1,22,651
2025	₹ 7,410	₹ 1,28,166	₹ 8,169	₹ 1,30,820
Jan-Mar	₹ 1,811	₹ 1,22,567	₹ 1,993	₹ 1,24,644
Apr-Jun	₹ 1,839	₹ 1,24,406	₹ 2,025	₹ 1,26,669
Jul-Sep	₹ 1,866	₹ 1,26,272	₹ 2,058	₹ 1,28,727
Oct-Dec	₹ 1,894	₹ 1,28,166	₹ 2,092	₹ 1,30,819
2026	₹ 6,521	₹ 1,34,687	₹ 7,221	₹ 1,38,041
Jan-Mar	₹ 1,922	₹ 1,30,088	₹ 2,126	₹ 1,32,946
Apr-Jun	₹ 1,951	₹ 1,32,039	₹ 2,160	₹ 1,35,106
Jul-Sep	₹ 1,981	₹ 1,34,020	₹ 2,195	₹ 1,37,301
Oct	₹ 667	₹ 1,34,687	₹ 740	₹ 1,38,041

Most of the banks offer tax savings fixed deposit scheme with a lock-in period of 5 years. You can invest in the tax-saving option and can save tax on the fixed deposit.

FD Calculation Formula

FD investors can calculate the returns and maturity amount on a fixed deposit by using the FD maturity calculator. The FD maturity calculator is an online tool that helps one determine the FD interest rate earned and the maturity amount, on the basis of a mathematical formula. The formula to calculate the FD returns is, A=P(1+r/n)^n*t. Here, A is the maturity amount, P is the principal amount invested in the FD, r is the rate of interest and n is the tenure. The FD interest rate calculator or FD maturity calculator is a reliable, and convenient tool that helps one to determine the returns offered on FD.

Income Tax on Fixed Deposit Interest

Interest income from FD's is taxed at the tax rate applicable to the deposit account holder. It means that the interest income forms part of the total income of the account holder while and it is taxed as per the applicable tax slab the individual falls under.
One word of caution - interest on deposits is to be taxed on an accrual basis and not a receipt basis. Say, you place a cumulative deposit with a bank for 5 years and hence will receive interest only at the end of five years. Still, you must pay tax on the accrued interest for each of the years in that year itself.

TDS on FD interest

Banks are required to deduct TDS on FD interest when the interest exceed ₹ 40,000/- in a financial year. This is calculated with all branches of the same bank taken together. In case you have not provided your PAN details to the bank or NBFC, then a TDS of 20% will be levied.
In case of companies, they must deduct TDS on FD interest at 10% when the interest earned in a year exceed ₹ 5,000/-.

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FAQs

✅What is the minimum amount that can be deposited into a FD account?

You can deposit a minimum amount of Rs. 1,000 in FD account but there is no upper cap on deposit amount.

✅Are there any extra benefits for senior citizens on fixed deposit?

Yes, senior citizens get extra benefit of higher interest rates on their FD.

✅What is the minimum and maximum tenure for which I can open an account in FD?

You can open a fixed deposit account for minimum 7 days and maximum upto 10 years although it may vary bank to bank.

✅When do I become accountable for tax?

As per Income Tax Act, 1961 under section 194A when the interest earned on FD in a financial year exceeds Rs. 40,000, TDS is applicable on the credited interest.

✅How is a fixed deposit calculated?

The formula to calculate the maturity amount of a cumulative FD is:
A = P(1+r/4/100)^(4*n)
Here, 4 represents quarterly compounding;
it will be replaced by 12 in case of monthly compounding, by 2 in case of half-yearly compounding and by 1 in case of yearly compounding.

✅Is the interest earned on a bank Fds taxed? If yes, then how?

Yes, the interest on the bank fixed deposit is taxed. The interest is income is included in your total income while calculating income tax, and the tax is levied as per the applicable tax slab.

✅Is there a penalty if the bank fd is prematurely withdrawn?

Yes, if the bank FD is prematurely withdrawn, then a certain percentage of penalty on the final amount. The scale of the penalty varies from bank to bank.

✅How can I save tax on FD?

If your total income does not fall under any income tax slab, then you can submit Form 15G or 15H (for senior citizens) to stop the bank from deducting TDS on the interest income of your fixed deposit.

✅In how many years FD will double?

The interest rate on FD depends upon the tenure you choose. To know the time duration in which your FD amount will get doubled, you have to divide 72 with the highest rate. For example, if the highest rate on FD is 6.95%, then the number of years in which your FD will get doubled is 72/6.95= 10.36. Thus, it will take 10 years for your FD to get doubled. You can use an online FD calculator to strategize your investment.

✅What are the details required to use an FD Calculator?

You can use the FD calculator to calculate the maturity value of the deposited amount by details such as the principal amount that you have invested, rate of interest on your investments, tenure of deposits and interest compound frequency.

2021-11-09 : Indian Bank Slash Fixed Deposit Interest Rate
Indian Bank has revised the interest rate for fixed deposits on different tenures. Currently, the bank is offering a highest interest rate of 5.25 percent for 5 year tenure. Senior citizens fd rates are 0.50 percent higher than the general rates.
2021-11-08 : Yes Bank Revises Fixed Deposit Rates
Yes Bank has revised fixed deposit rates for various tenures. The rates are revised for general customers and senior citizens. Interest rate for 7 days to 14 days tenure is 3.25 percent and 4 percent on 46 to 90 days tenure.
2021-11-01 : Jammu and Kashmir Bank Revises FD Rates
Jammu and Kashmir Bank has revised the interest rate for fixed deposits on different tenures. The bank is offering an interest rate of 5.30 percent for 3 year to 5 year tenure. Senior citizens will get a 0.50 percent higher interest rate than the general rate.
2021-10-12 : PNB Introduces PNB Pranam Fixed Deposit Scheme
Punjab National Bank (PNB) has introduced a new fixed deposit scheme for senior citizen customers. A customer who has attained an age of 55 years can avail of this scheme and deposit maximum Rs 1,99, 99,999.
2021-10-11 : Bank Of Baroda Offers Special Rate For Senior Citizens on FD
Bank of Baroda (BOB) is has introduced special privileges for senior citizens on fixed deposits. This scheme has been extended till March 31, 2022. Under the scheme, the customers get a 1% additional interest rate for 5 years to 10 years and use video KYC facility and doorstep banking.

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