Question 1

How is FD interest calculated?

Accepted Answer

Fixed deposit interest is calculated using the compound interest formula: A = P × (1 + r/n)^(n×t), where A is the maturity amount, P is the principal, r is the annual interest rate (as a decimal), n is the number of times interest is compounded per year, and t is the tenure in years. The interest earned is simply A − P.

Question 2

Which compounding frequency gives the highest return?

Accepted Answer

Monthly compounding gives the highest effective return compared to quarterly, half-yearly, or annual compounding for the same nominal interest rate. This is because more frequent compounding means interest is added to the principal more often, and subsequent interest is calculated on a slightly larger base. The difference is marginal but noticeable over longer tenures.

Question 3

Is FD interest taxable in India?

Accepted Answer

Yes, FD interest is fully taxable in India as per your income tax slab. Banks deduct TDS (Tax Deducted at Source) at 10% if the interest exceeds ₹40,000 in a financial year (₹50,000 for senior citizens). If your total income is below the taxable limit, you can submit Form 15G (or 15H for senior citizens) to avoid TDS deduction.

Question 4

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

Accepted Answer

In a cumulative FD, the interest is compounded and paid at maturity along with the principal — ideal for wealth creation. In a non-cumulative FD, interest is paid out periodically (monthly, quarterly, etc.) — suitable for those who need regular income. Our calculator computes the cumulative FD maturity value where interest compounds throughout the tenure.

Year	Opening	Interest	Closing
Yr 1	₹1,00,000	₹6,660	₹1,06,660
Yr 2	₹1,06,660	₹7,104	₹1,13,764

Year	Opening	Interest	Closing
Yr 1	₹1,00,000	₹6,660	₹1,06,660
Yr 2	₹1,06,660	₹7,104	₹1,13,764

FD Calculator

FD Details

FD Returns

Year-wise Balance

Frequently Asked Questions

FD Calculator

FD Details

FD Returns

Year-wise Balance

Frequently Asked Questions