What is the penalty for breaking an FD before maturity?

Banks typically impose a 0.5% to 1% penalty on the applicable interest rate for premature FD withdrawal. For example, if your FD rate is 7% for 3 years but you withdraw after 2 years, the bank applies the 2-year rate (say 6.5%) minus 1% penalty - meaning you earn only 5.5% instead of 7%. Tax-Saver FDs (5-year lock-in) cannot be broken prematurely under any circumstances before completion of 5 years.

How is Recurring Deposit (RD) different from FD?

A Fixed Deposit (FD) requires a lump sum investment upfront, while a Recurring Deposit (RD) involves depositing a fixed amount every month over a chosen tenure. RD is ideal for salaried individuals who want to save systematically rather than investing a lump sum. The interest rate for RDs is typically the same as FDs for similar tenures, and compounding is done quarterly in most Indian banks. The effective return of RD is lower than FD for the same tenure because earlier months earn interest for the full tenure while later months earn less - mathematically equivalent to investing at half the tenure on average.

FD Calculator India - Fixed Deposit Maturity & Interest Calculator

Last updated: March 2026 • Standard FD · RD · Tax-Saver FD • TDS · Premature Withdrawal · Bank Rate Comparison

India's most comprehensive FD calculator - calculate fixed deposit maturity amount, TDS deducted, post-tax interest, and real inflation-adjusted returns instantly. This online FD calculator India 2026 supports Standard FD, Recurring Deposit (RD), and Tax-Saver FD under Section 80C with quarterly and monthly compounding. Compare SBI, HDFC, ICICI, Axis and Kotak FD rates for your tenure, see your premature withdrawal penalty, and model FD renewal projections - all in one place.

FD Details

Senior Citizen +0.50%

Principal Amount

₹

Tenure

Years

Months

Interest Rate

% p.a.

Payout

Compounding

Tax Slab

Total Invested

₹1L

Gross Interest

₹-

Tax Deducted

₹-

Net Maturity

₹-

FD Breakdown

Component	Amount
Total Invested	₹-
Gross Interest	₹-
Tax @ 20%	₹-
Net Maturity	₹-
Effective Yield	-%

FD Summary

₹-

Type: Standard FD
Payout: Cumulative
Tenure: 3 yr 0 mo
Rate: 7.00%
Matures: -
TDS threshold: ₹40,000/yr

Inflation-Adjusted Real Value

₹-

Real return rate: - p.a.
Purchasing power vs today: -

Inflation 6%

Premature Withdrawal Calculator

Withdraw at 1 yr

Effective rate (penalised)-

Interest earned₹-

Penalty amount₹-

You receive₹-

Renewal Projection - What If You Reinvest at Maturity?

Cycle	Corpus at Maturity	Gain vs First

Year	Opening Balance	Deposit	Interest	TDS	Closing Balance

Disclaimer: This FD Calculator provides estimates based on user-entered rates. FD interest rates vary by bank, tenure, and customer type and change frequently. TDS thresholds and tax rules are based on FY 2025-26 provisions. Results are for educational purposes only - not financial advice. Always verify rates directly with your bank before investing.

How Fixed Deposit Interest is Calculated in India

A fixed deposit - also called a term deposit - is India's most trusted guaranteed returns instrument, offering capital protection with DICGC insurance up to ₹5 lakh per depositor per bank. Fixed deposit interest in India is calculated using two distinct methods depending on whether the FD is cumulative or non-cumulative. Understanding the difference directly impacts how much you earn - the gap between monthly payout and cumulative FD on the same principal and rate can be significant over 3–5 years.

Cumulative FD - Compound Interest

Indian banks compound cumulative FD interest quarterly by default. Interest earned each quarter is added back to the principal and earns interest in the next quarter - this is the compounding effect that makes long-tenure FDs grow rapidly in the final years. The formula is:

Maturity = P × (1 + r/n)^(n × t)

P = Principal | r = Annual rate (decimal) | n = Compounding periods/year (4 = quarterly) | t = Tenure in years

Example: ₹1,00,000 at 7% for 3 years with quarterly compounding:
Maturity = 1,00,000 × (1 + 0.07/4)^(4×3) = ₹1,23,144 - interest earned: ₹23,144.

Non-Cumulative FD - Simple Interest Payout

When you choose monthly, quarterly, or any payout mode, the bank does not compound your interest. Instead, simple interest is calculated on your principal and paid out at the chosen interval. The principal remains intact and is returned at maturity.

Interest per period = P × r / periods_per_year
Total interest = P × r × t (same as simple interest over full tenure)

For the same example - ₹1,00,000 at 7% for 3 years with quarterly payout - each quarter you receive ₹1,750 (7,000/4), total interest = ₹21,000 vs ₹23,144 in cumulative mode. The difference (₹2,144) is the compounding premium - money your money earns when reinvested.

Recurring Deposit (RD) - Monthly Deposits, Quarterly Compounding

RD deposits are made monthly but Indian banks apply quarterly compounding. The first deposit earns interest for the full tenure, the second for tenure minus one month, and so on. Our calculator simulates this month-by-month for accuracy, applying quarterly compounding at each quarter-end. The effective return of an RD is mathematically equivalent to an FD at the same rate for roughly half the tenure - because deposits made in the final months have almost no time to compound.

FD Doubling Time - Rule of 72

A quick way to estimate how long your fixed deposit will double is the Rule of 72: divide 72 by the annual interest rate. At 7%, your FD doubles in approximately 72 ÷ 7 = 10.3 years. At 7.5%, it's 9.6 years. This applies to cumulative FDs where interest compounds - non-cumulative (payout) FDs never double the principal since interest is paid out. For the precise effective annual rate (EAR) with quarterly compounding: EAR = (1 + r/4)⁴ − 1. At 7% nominal, EAR = 7.19% - meaning your money grows slightly faster than the advertised rate.

TDS on FD Interest - Section 194A

Banks deduct TDS at 10% when your aggregate annual interest from that bank exceeds ₹40,000 (₹50,000 for senior citizens). Submit Form 15G (or 15H for senior citizens) if your total income is below the taxable limit - this prevents TDS deduction entirely. Remember: TDS is only advance tax. You must declare FD interest in your ITR and pay additional tax if your slab rate exceeds 10%, or claim a refund if TDS was over-deducted. Whether you're on the old or new tax regime, FD interest is taxable at your slab rate - there is no exemption under either regime. For more on how your tax slab affects FD returns, see our Income Tax Calculator.

Bank FD Interest Rate Comparison - India Q1 2026

Rates below are indicative as of March 2026 for general investors on deposits below ₹2 crore. Senior citizen FD rates are 0.50% higher across all banks and tenures. Small finance banks (AU, IDFC First, Jana) and NBFCs (Bajaj Finance, Shriram) typically offer 0.5–1.5% higher rates than large private banks - but without the same DICGC coverage certainty on NBFC deposits. Always verify current rates on the official bank website before investing - rates change whenever RBI revises the repo rate.

FD laddering strategy: Instead of locking all your money in one long FD, split it across 1-year, 2-year, and 3-year FDs. This gives you partial liquidity every year, lets you reinvest at prevailing rates, and reduces the penalty risk of premature withdrawal. You can also take a loan against your FD at 1–2% above the FD rate - giving you liquidity without breaking the deposit.

Bank	1 Year	2 Years	3 Years	5 Years (Tax-Saver)	Senior Citizen Boost
SBI	6.80%	7.00%	6.75%	6.50%	+0.50%
HDFC Bank	7.10%	7.15%	7.25%	7.00%	+0.50%
ICICI Bank	7.10%	7.10%	7.20%	7.00%	+0.50%
Axis Bank	7.10%	7.20%	7.25%	7.00%	+0.75%
Kotak Bank	7.40%	7.25%	7.40%	6.20%	+0.50%

Rates are for tenures up to ₹2 crore. Rates above ₹2 crore may differ. Source: Official bank websites, March 2026. Verify at SBI, HDFC, ICICI, Axis, Kotak.

FD vs Debt Mutual Fund - Which Is Better in 2026?

As a fixed income investment and the most popular short-term investment option in India, FDs compete primarily with debt mutual funds, post office term deposits, and arbitrage funds. The April 2023 Budget removed the LTCG indexation benefit for debt mutual funds, making their tax treatment identical to FDs - both are taxed at your income slab rate on gains. This fundamentally changed the FD vs mutual funds after inflation debate. Here's how they stack up today:

Parameter	Fixed Deposit	Debt Mutual Fund
Typical return	6.5–7.5% (guaranteed)	6–8% (market-linked)
Capital protection	Yes (up to ₹5L DICGC)	No (NAV can fall)
Taxation	Slab rate on interest	Slab rate on gains (post Apr 2023)
Liquidity	Penalty on early exit	Exit at any time (T+2)
Best for tenure	Short-term (1–3 yr)	Medium-long (3–7 yr)
TDS	Yes (10% above ₹40K)	No TDS on gains
80C benefit	Yes (Tax-Saver FD, 5yr)	Yes (ELSS - equity only)

Verdict: For tenures under 3 years, FDs are preferable - guaranteed returns, no NAV risk, and DICGC insurance up to ₹5 lakh per bank. For 3+ years with moderate risk appetite, high-quality debt funds (dynamic bond or gilt funds) can outperform FDs in falling interest rate environments. But even at 7%, FDs quietly lose to inflation over long horizons - the real post-tax return is often below 1–2% for investors in the 20–30% slab. The post-2023 capital gains tax parity removes the historic advantage of debt funds, making the choice purely about return expectation vs capital safety. To see exactly how your FD compares against a SIP in equity mutual funds over the same period, try our SIP Calculator.

FD Calculator - Frequently Asked Questions

What is the current best FD interest rate in India in 2026?

As of Q1 2026, the best FD rates for general investors are offered by Kotak Mahindra Bank (7.40% for 1-year and 3-year tenures) and Axis Bank (7.25% for 3-year). HDFC and ICICI offer 7.10–7.25% across popular tenures. SBI offers 6.50–7.00%. Senior citizens get an additional 0.50–0.75% on all these rates. Rates are reviewed quarterly by the RBI and change based on repo rate decisions - always verify with the bank before investing.

How is FD interest calculated in India?

Cumulative FDs use compound interest: Maturity = P × (1 + r/n)^(n×t), where n = 4 for quarterly compounding (Indian standard). Non-cumulative (payout) FDs calculate simple interest: Interest per period = P × r / periods_per_year. The key difference is that cumulative FDs earn interest on interest - over a 5-year FD at 7%, cumulative mode returns approximately 7–8% more total interest than simple payout mode due to compounding.

Is FD interest taxable in India?

Yes - FD interest is fully taxable under "Income from Other Sources" at your applicable income tax slab rate. Banks deduct TDS at 10% when your annual FD interest from that bank exceeds ₹40,000 (₹50,000 for senior citizens). If your total income is below the basic exemption limit (₹3L under new regime, ₹2.5L under old), submit Form 15G or 15H to prevent TDS deduction. Interest must be declared in your ITR regardless of whether TDS was deducted. Use our Income Tax Calculator to model the exact post-tax impact.

What happens if I break my FD before maturity?

Banks impose a 0.5% to 1% penalty on the applicable interest rate for premature FD withdrawal. The bank first determines your applicable rate for the actual time elapsed (not the original booked tenure), then deducts the penalty. For example, if you booked a 3-year FD at 7% but withdraw after 18 months, the bank applies the 18-month rate (say 6.75%) minus 1% penalty - you earn only 5.75% instead of 7%. Tax-Saver FDs (5-year) cannot be broken prematurely under any circumstances. Use the Premature Withdrawal panel in the calculator above to see your exact penalty for any withdrawal month.

What is the difference between cumulative and non-cumulative FD?

Cumulative FD: Interest is compounded quarterly and reinvested - you receive principal + compounded interest at maturity. Best for wealth accumulation. Non-cumulative FD: Interest is calculated on simple interest basis and paid out at your chosen frequency (monthly, quarterly, half-yearly, annual). Principal is returned at maturity. Best for retirees or anyone needing regular income. At the same rate and tenure, cumulative FDs always yield more than non-cumulative because of compounding - the difference grows with tenure. Before choosing monthly payout FD for retirement income, read our detailed comparison of SWP vs FD for monthly income - SWP from a debt fund often delivers higher tax-efficient income than a monthly payout FD.

Is FD better than SIP in mutual funds?

For short-term goals (1–3 years) and risk-averse investors, FDs are superior - guaranteed returns, capital protection, and DICGC insurance up to ₹5 lakh per bank. For long-term wealth creation (7+ years), equity mutual fund SIPs have historically delivered 11–14% CAGR, significantly outperforming FDs post-inflation and post-tax. Since April 2023, debt mutual fund gains are taxed at slab rate - removing their earlier tax edge over FDs. If you want near-FD safety with marginally better post-tax returns in the short term, arbitrage funds vs FD is worth reading. The right choice depends on your time horizon, risk appetite, and tax bracket. Compare both on our SIP Calculator.

What is Tax-Saver FD and who should invest in it?

Tax-Saver FD is a 5-year fixed deposit that qualifies for Section 80C deduction up to ₹1.5 lakh per year under the old tax regime. The interest earned is fully taxable at your slab rate. At a 30% slab, investing ₹1.5L in a Tax-Saver FD saves you ₹46,800 in tax - but the 5-year lock-in means no premature withdrawal. Best for: risk-averse investors in the 30% slab under the old regime who want guaranteed returns with 80C benefits. Less suitable for those in the new tax regime (no 80C benefit available) or those who need liquidity. ELSS mutual funds offer the same 80C benefit with only a 3-year lock-in but carry market risk. If you're still deciding which regime to file under, read our guide on the old tax regime from April 2026 before committing to a Tax-Saver FD.

How long does it take for an FD to double? (Rule of 72)

Use the Rule of 72 to estimate your FD doubling time: divide 72 by the annual interest rate. At 7%, your fixed deposit doubles in approximately 10.3 years. At 7.5%, it's 9.6 years. At 6.5% (SBI), it takes 11.1 years. This rule applies only to cumulative FDs with quarterly compounding - non-cumulative (payout) FDs don't double because the interest is paid out periodically rather than reinvested. For a more precise calculation, use the formula: Doubling years = ln(2) / (n × ln(1 + r/n)), where n = 4 for quarterly compounding.

Can I take a loan against my FD instead of breaking it?

Yes - loan against FD is one of the most underused features of fixed deposits in India. Banks offer an overdraft or term loan of up to 90% of your FD value at an interest rate typically 1–2% above your FD rate. Since your FD continues to earn interest during the loan period, your net borrowing cost is only the 1–2% spread - making it one of the cheapest credit facilities available. This is especially useful when you need short-term liquidity without triggering premature withdrawal penalties. Most banks allow this facility on all FDs above 1 year, and it can be availed through internet banking instantly.

How is RD different from FD?

A Fixed Deposit (FD) requires a lump sum investment upfront, while a Recurring Deposit (RD) involves depositing a fixed amount every month - making it a monthly investment plan ideal for salaried investors. The minimum monthly RD deposit at most banks starts at ₹100–₹500. The interest rate is typically the same as FDs for the same tenure, and compounding is done quarterly. The effective yield of an RD is lower than a lump sum FD at the same rate - because deposits made in later months have less time to compound. RD is mathematically equivalent to making a single investment at approximately half the tenure with the same rate. Our calculator simulates RD month-by-month for full accuracy.

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