Fixed deposit calculator

What a fixed deposit really earns

The maturity value is what the bank quotes. The calculator also takes out income tax at your slab — FD interest is taxed as income, every year — and inflation, which is how you see what the deposit adds to your buying power.

Your numbers

Change anything; the result updates as you type.

Result

A fixed deposit fixes the rate, not what it buys.

Deposits suit money that cannot be put at risk. For money that can take a market’s swings, MindForge publishes the backtest behind each of its three strategies, and the two paid ones trade in their own broker-verified Zerodha accounts.

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How FD interest is calculated

Banks compound a cumulative deposit at a set frequency — quarterly is the most common. The maturity value is the deposit × (1 + rate ÷ n) raised to n × years, where n is the number of compounding periods a year.

maturity = deposit × (1 + r/n)^{n × years}

Tax: the part the rate does not show

FD interest is added to your income and taxed at your slab rate, plus 4% health and education cess, in the year it accrues — even on a cumulative deposit that pays nothing out until maturity. At the defaults, ₹5 lakh at 7% for five years earns ₹2,07,389; at the 30% slab you keep ₹1,42,684 of it, a post-tax yield of 5.15% a year.

Inflation: whether it grew at all

Take 6% inflation out of that 5.15% and the same deposit earned −0.80% a year in real terms: more rupees at maturity, slightly less that they can buy.

Assumptions this makes

A cumulative deposit at one fixed rate for the whole tenure, held to maturity — no premature-withdrawal penalty.
Tax at your slab plus 4% cess on all of the interest; no surcharge, and no other income or deduction changes the slab. Tax is due each year as interest accrues; the figures total it and do not charge it to the deposit. TDS is not an extra cost: it is credited against the same tax.
One constant inflation rate. Illustration, not a forecast and not investment advice.

Questions

Is FD interest taxable every year even if I receive it at maturity?

Yes. Interest on a cumulative deposit accrues every year and is taxable in that year at your slab rate, whether or not it is paid out. The bank may also deduct TDS, which counts towards the same tax.

What is the effective annual rate?

The rate the deposit actually grows at in a year once compounding is counted. 7% compounded quarterly is 7.19% a year, which is why banks often quote both.

Why can the real return be negative?

Because tax comes out of the interest first and inflation then erodes what is left. When the post-tax yield is below inflation, the deposit returns more rupees than it took, but they buy less than the original sum did.

Does it matter whether interest is compounded monthly or quarterly?

A little. More frequent compounding pays interest on interest sooner: ₹5 lakh at 7% for five years is ₹7,07,389 compounded quarterly and ₹7,08,813 compounded monthly.

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