What is a Fixed Deposit?
A Fixed Deposit (FD) is a financial instrument where you deposit a lump-sum amount for a fixed tenure at a predetermined interest rate. FDs are offered by banks, NBFCs, and post offices across India.
FD Interest Rates 2026
- SBI — 6.5–7.1% (general), 7.0–7.6% (senior citizens)
- HDFC Bank — 6.6–7.25%
- ICICI Bank — 6.5–7.2%
- Post Office TD — 6.9–7.5%
How FD Interest is Calculated
Most banks use quarterly compounding: A = P(1 + r/4)^(4t). For ₹1 lakh at 7% for 5 years, maturity = ₹1,41,478.
Tax on FD Interest
FD interest is taxable at your income tax slab rate. TDS of 10% is deducted if annual interest exceeds ₹40,000 (₹50,000 for senior citizens). Submit Form 15G/15H to avoid TDS if total income is below taxable limit.
FD vs Other Investments
- FD vs PPF: PPF offers tax-free returns but has 15-year lock-in
- FD vs Debt Funds: Debt funds offer better tax efficiency for 3+ year horizon
- FD vs SIP: SIP gives higher returns (12%+) but with market risk