# FD / Fixed Deposit Returns

> Bank FDs usually compound quarterly: maturity = P × (1 + r/4)^(4 × years). Interest is taxable every year at your slab rate as it accrues, even on cumulative FDs. Banks deduct 10% TDS when interest from that bank exceeds ₹50,000 in a year (₹1 lakh for senior citizens), unless you submit Form 15G/15H.

Interactive calculator: https://www.industax.com/calculators/fd-returns

- **TDS threshold (banks):** ₹50,000 / ₹1 lakh seniors
- **Senior citizen deduction:** ₹50,000 (80TTB, old regime)
- **Interest taxed:** Every year, at slab rate

## Tax rules for FD interest

| Rule | Detail |
| --- | --- |
| Taxed at | Slab rate, on accrual basis |
| TDS rate | 10% (20% without PAN) |
| TDS threshold (banks, from April 2025) | ₹50,000; ₹1,00,000 for senior citizens |
| Senior citizens | 80TTB deduction up to ₹50,000 on interest (old regime) |
| Avoid TDS | Form 15G (below 60) or 15H (60+) if total tax is nil |
| Tax-saver FD | 5-year lock-in; principal under 80C (old regime) |

## Post-tax return

A 7% FD gives about 4.9% after tax in the 30% slab (7% × (1 − 0.312)). Compare this with alternatives on a post-tax basis, especially debt mutual funds, which are now also taxed at slab rates.

## Worked example: ₹5 lakh for 3 years at 7%

1. Quarterly compounding: ₹5,00,000 × (1 + 0.07/4)^12 = ₹6,15,720.
2. Total interest = ₹1,15,720, taxed year by year as it accrues.
3. In the 30% slab, tax ≈ ₹36,105 over three years.

**Result:** Post-tax gain ≈ ₹79,600.

## FAQs

### Is FD interest taxable if I haven't received it?

Yes. Interest on cumulative FDs accrues each year and should be offered to tax yearly, even though it is paid at maturity.

### Can NRIs avoid tax on FDs?

Interest on NRE and FCNR deposits is tax-free while you are non-resident. NRO deposit interest is taxable, with 30% TDS plus surcharge and cess, subject to treaty relief.

### Does TDS mean my tax is fully paid?

Not if you are in a higher slab — 10% TDS covers only part of the tax at 20% or 30%; pay the balance as advance tax or self-assessment tax.

## Official sources

- incometaxindia.gov.in: https://www.incometaxindia.gov.in/

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This is general information, not advice for your specific facts.