What is a Fixed Deposit?
A Fixed Deposit (FD) is a financial instrument offered by banks and NBFCs where you invest a lumpsum for a fixed tenure at a pre-agreed interest rate. Unlike savings accounts, an FD locks in the rate for the entire period, protecting you from rate cuts. FDs are one of the safest investments in India – deposits up to ₹5 lakh per bank are insured by DICGC.
FD Formula
A = P × (1 + r/n)^(n×t)
Indian banks compound FDs quarterly (n = 4). Our calculator uses this standard so the results match what you will see on your bank's FD maturity certificate.
FD Tax Rules
Interest from FDs is fully taxable and added to your income under 'Income from Other Sources'. Banks deduct 10% TDS if interest exceeds ₹40,000 in a year (₹50,000 for senior citizens). Tax-saver FDs under section 80C have a 5-year lock-in.
Frequently Asked Questions
What is the minimum FD amount?
Most banks accept FDs from ₹1,000. Some private banks start at ₹5,000 or ₹10,000.
Can I break an FD early?
Yes, but you usually lose 0.5–1% of the agreed interest rate as a penalty.
Are FDs safe?
Yes. Bank FDs up to ₹5 lakh per bank are insured by DICGC.
Is FD interest taxable?
Yes, at your income tax slab rate.