₹5 Lakh Fixed Deposit Returns – Comprehensive Guide
A ₹5 lakh fixed deposit represents a significant investment milestone in India. At this amount, you're fully covered by DICGC insurance—the entire ₹5 lakh is protected if the bank fails. Whether you're a business owner, professional with lump-sum savings, or someone reinvesting matured FDs, understanding exactly how your ₹5 lakh will grow is essential for financial planning.
At 7% interest for 5 years with quarterly compounding, ₹5 lakh grows to ₹7,04,565, generating ₹2,04,565 in pure interest. This demonstrates the remarkable power of compound returns—with simple interest, you'd earn only ₹1,75,000. That's an additional ₹29,565 in pure compound earnings, representing nearly 17% more returns. At 8% for 5 years, your maturity reaches ₹7,35,045.
₹5 Lakh FD Returns Table – Complete Breakdown
Below is a pre-calculated table showing maturity amounts for ₹5 lakh across all major interest rates (6% to 8%) and tenures (1 to 10 years) with quarterly compounding. Use this for quick reference across different scenarios.
| Tenure | 6.00% p.a. | 6.50% p.a. | 7.00% p.a. | 7.50% p.a. | 8.00% p.a. |
|---|---|---|---|---|---|
| 1 Year | ₹5,30,680 | ₹5,33,343 | ₹5,36,031 | ₹5,38,730 | ₹5,41,214 |
| 2 Years | ₹5,63,078 | ₹5,68,557 | ₹5,74,113 | ₹5,79,759 | ₹5,85,006 |
| 3 Years | ₹5,97,025 | ₹6,05,115 | ₹6,13,336 | ₹6,21,696 | ₹6,29,470 |
| 5 Years | ₹6,74,432 | ₹6,89,421 | ₹7,04,565 | ₹7,19,874 | ₹7,35,045 |
| 7 Years | ₹7,62,182 | ₹7,82,858 | ₹8,04,220 | ₹8,26,336 | ₹8,48,486 |
| 10 Years | ₹9,09,700 | ₹9,44,047 | ₹9,80,099 | ₹10,17,805 | ₹10,56,916 |
Bank-wise FD Rates for ₹5 Lakh Investment
Major Indian banks offer varying interest rates on ₹5 lakh FDs. Private banks typically offer higher rates than public sector banks. The rates below are indicative—current rates change monthly, so always verify on your bank's official website before investing.
| Bank | 1 Year | 2 Years | 3 Years | 5 Years | 10 Years |
|---|---|---|---|---|---|
| SBI | 5.50% | 6.00% | 6.50% | 6.50% | 6.25% |
| HDFC Bank | 6.00% | 6.50% | 7.00% | 7.50% | 7.00% |
| ICICI Bank | 6.25% | 6.75% | 7.00% | 7.50% | 7.25% |
| Axis Bank | 5.75% | 6.25% | 6.75% | 7.25% | 6.75% |
| PNB | 5.40% | 5.90% | 6.40% | 6.75% | 6.50% |
DICGC Insurance Coverage for ₹5 Lakh FD
₹5 lakh is precisely at the DICGC (Deposit Insurance and Credit Guarantee Corporation) insurance limit. This means your entire ₹5 lakh deposit is 100% protected if the bank fails. DICGC guarantees repayment of both principal and accrued interest up to ₹5 lakh per bank, within 45 days of the bank's failure. You don't need to split this amount across multiple banks. However, if you're investing more than ₹5 lakh, you must split the excess across different banks to maintain coverage.
Tax on ₹5 Lakh FD Interest
All FD interest is taxable as per your income tax slab. For ₹5 lakh at 7% for 5 years, your total interest is ₹2,04,565. If your interest in a financial year exceeds ₹40,000 (₹50,000 for senior citizens), the bank will automatically deduct 10% TDS. On ₹2,04,565, the annual interest is approximately ₹38,000-40,000 in the early years, then higher in later years, so TDS may apply in some years.
To avoid TDS, submit Form 15G (non-senior) or Form 15H (senior citizen) to your bank before FD maturity if your total annual income is below the taxable threshold. This saves you from the timing hassle of TDS, though you can claim it back when filing your tax return anyway. For high-income individuals, TDS is not a major concern as it merely advances your tax payment.
Why ₹5 Lakh is Popular for FD Investments
₹5 lakh represents the insurance coverage limit, making it the largest amount you can safely deposit in a single bank without worrying about protection. It's an ideal amount for those saving from year-end bonuses, business profits, or accumulated savings. The returns are substantial—at 7% for 5 years, you earn over ₹2 lakh in interest alone. Yet it's not so large that managing across multiple banks becomes complex. For investors wanting a mix of safety and reasonable returns, ₹5 lakh in FDs is often part of a diversified portfolio alongside SIPs, RDs, and PPF.
Frequently Asked Questions (FAQs)
How much interest on ₹5 lakh FD?
At 7% for 5 years with quarterly compounding, you earn ₹2,04,565 interest with maturity of ₹7,04,565. At 8%, interest is ₹2,35,045 with maturity ₹7,35,045. Use the calculator above for your specific rate and tenure.
Is ₹5 lakh FD fully insured?
Yes, ₹5 lakh is exactly at DICGC's insurance limit. Your entire deposit is covered if the bank fails. DICGC guarantees repayment within 45 days. For amounts above ₹5 lakh, you must split across banks to maintain coverage.
Should I split ₹5 lakh across banks?
No need to split. Since DICGC covers ₹5 lakh per bank, you can deposit the full amount in one bank and keep the entire amount insured. Splitting is only necessary for amounts exceeding ₹5 lakh per bank.
Which bank offers best rates on ₹5 lakh FD?
HDFC, ICICI, and Axis offer 7-7.5% for 3-5 year tenures on ₹5 lakh. SBI offers 6-6.5%, and PNB offers slightly lower. Small Finance Banks offer 8-9% but carry higher risk. Always verify current rates directly on bank websites, as they update monthly.
What is TDS on ₹5 lakh FD interest?
If annual interest exceeds ₹40,000 (₹50,000 for seniors), banks deduct 10% TDS. To avoid TDS, file Form 15G/15H before maturity if your total income is below taxable threshold. The TDS is credited when you file your income tax return.