A Fixed Deposit (FD) is a financial instrument offered by banks and NBFCs that offers higher, guaranteed interest rates than a regular savings account, in exchange for locking in your money for a fixed tenure. Saving a fixed amount every month instead of a lumpsum? Use the RD Calculator.
Worked Example:
FD: ₹1,00,000 at 6.5% for 5 years (quarterly compounding)
A = 1,00,000 × (1 + 0.065/4)^(4×5) = ₹1,38,042
Is FD interest taxable?▾
Yes, FD interest is fully taxable as per your income tax slab. Banks deduct TDS at 10% if annual interest exceeds ₹50,000 (₹1,00,000 for senior citizens), per the FY 2025-26 threshold revision. You must declare FD interest in your ITR even if TDS is not deducted.
What is the FD interest rate for senior citizens?▾
Most banks offer an additional 0.25% to 0.75% interest rate to senior citizens (age 60+) over the normal FD rate. Some banks like SBI offer +0.50% to senior citizens.
Can I break an FD before maturity?▾
Yes, premature closure is allowed but banks charge a penalty of 0.5-1% on the applicable interest rate. For emergencies, you can also take a loan against FD up to 90% of the deposit amount.