Monthly payout FDs are ideal for retirees needing regular income
Interest Rate6.75%
4%Monthly payout rates slightly lower10%
Tenure5 yrs
1 yr10 yrs
Compare FD Across Major Banks
₹
Rates as of Q1 FY 2025-26 — verify with bank before investing.
Principal
—
amount invested
Interest Earned
—
gross interest
Maturity Amount
—
at end of tenure
Tax Deducted
—
TDS on interest
Post-Tax Returns
—
in hand
Monthly Payout
—
per month
⚠️
TDS & Tax on FD Interest
FD interest is fully taxable at your income slab rate. TDS is deducted at 10% if interest exceeds ₹40,000/year (₹50,000 for senior citizens). Submit Form 15G/15H if total income is below ₹3 lakhs.
Growth Over Time
InterestPrincipal
Year-by-Year Breakdown
Year
Principal
Interest
Balance
FD interest is taxable as “Income from Other Sources” at your slab rate. TDS at 10% if annual interest exceeds ₹40,000 (₹50,000 for senior citizens). Rates are indicative — verify with your bank before investing.
A Fixed Deposit (FD) is India’s most trusted savings instrument — over 60 crore FD accounts exist across Indian banks. It offers guaranteed returns, DICGC insurance up to ₹5 lakhs, and flexible tenures from 7 days to 10 years.
⚡ FD Quick Reference — FY 2025-26
SBI FD (1 yr)6.80%
Post Office TD (5 yr)7.50%
Kotak Mahindra (3 yr)7.60% ↑
HDFC / ICICI (2–3 yr)7.00–7.10%
Senior Citizen extra+0.50%
TDS threshold (general)₹40,000 / yr
TDS threshold (senior citizen)₹50,000 / yr
DICGC insurance cover₹5 lakh / bank
Tax Saver FD (80C)₹1.5 lakh / yr
The FD Formula
A = P × (1 + r/n)^(n×t) P = Principal · r = Annual rate · n = Compounding frequency · t = Tenure in years
Example: ₹1L at 7% quarterly (n=4) for 3 years → Maturity = ₹1,23,145 · Interest = ₹23,145
Current FD Rates — Major Indian Banks (FY 2025-26)
Bank
1 Year
2 Years
3 Years
5 Years
Senior Citizen
SBI
6.8%
7.0%
6.8%
6.5%
+0.5%
HDFC Bank
6.6%
7.0%
7.0%
7.0%
+0.5%
ICICI Bank
6.7%
7.0%
7.1%
7.0%
+0.5%
Axis Bank
6.7%
7.1%
7.25%
7.0%
+0.5%
Post Office
6.9%
7.0%
7.1%
7.5%
Same
Kotak Mahindra
7.1%
7.2%
7.6%
6.2%
+0.5%
FD vs PPF — Which is Better?
For anyone in the 20% or 30% tax slab, PPF wins decisively. At 7% FD vs 7.1% PPF: a 30% taxpayer earns only 4.9% net from FD after tax, while PPF at 7.1% is completely tax-free. PPF’s EEE status makes it India’s most tax-efficient debt instrument. The catch: PPF has a 15-year lock-in. FD is appropriate for goals under 5 years where liquidity is needed.
Tax on FD Interest
FD interest is “Income from Other Sources” — taxable at your income slab rate
TDS deducted at 10% if annual interest from one bank exceeds ₹40,000 (₹50,000 for senior citizens)
Submit Form 15G (below 60 years) or Form 15H (senior citizen) if total income is below ₹3 lakhs to avoid TDS
Even if no TDS is deducted, you must declare FD interest in your ITR every year
5-year Tax Saver FD qualifies for Section 80C deduction (up to ₹1.5L) but interest is still taxable
Frequently Asked Questions
What is the FD interest rate in India in 2025-26?+
FD rates for 2025-26 range from 6.5% to 7.6% for regular citizens and up to 8.1% for senior citizens at major banks. SBI offers 6.8% for 1 year, 7.0% for 2 years. Kotak Mahindra offers 7.6% for 3 years — highest among major banks. Post Office Time Deposit offers 7.5% for 5 years with sovereign (government) backing.
How much will I get on ₹1 lakh FD for 1 year at 7%?+
₹1 lakh at 7% per annum with quarterly compounding for 1 year gives a maturity of ₹1,07,186 — total interest of ₹7,186. If you are in the 30% tax slab, TDS of ₹718 is deducted and your post-tax interest is approximately ₹5,030, making your effective yield around 5.03%.
Is FD interest taxable in India? How is TDS calculated?+
Yes — FD interest is fully taxable as “Income from Other Sources” at your income slab rate. TDS is deducted at 10% by the bank when your total interest from one bank exceeds ₹40,000 in a financial year (₹50,000 for senior citizens). Submit Form 15G (under 60 years, income below ₹3 lakh) or Form 15H (senior citizens) to prevent TDS deduction.
FD vs PPF — which gives better returns in India?+
For anyone in the 20% or 30% tax bracket, PPF is significantly better despite similar headline rates. At 7% FD vs 7.1% PPF — a 30% taxpayer earns only 4.9% net from FD while PPF at 7.1% is completely tax-free (EEE status). PPF has a 15-year lock-in. FD is appropriate for goals under 5 years where liquidity is needed.
Can I break an FD before maturity? What is the penalty?+
Yes — bank FDs can be prematurely closed with a penalty of 0.5%–1% deducted from the applicable rate. Post Office Time Deposits cannot be broken within 6 months. 5-year Tax Saver FDs cannot be broken at all. Always set up auto-renewal to avoid premature closure hassle.
What is Form 15G and Form 15H for FD?+
Form 15G is a self-declaration submitted by individuals below 60 years to prevent TDS on FD interest if their total estimated income for the year is below ₹3 lakh. Form 15H is the equivalent for senior citizens (60+). Submit these forms at the start of every financial year to each bank where you hold FDs.
Is my FD money safe? What if the bank fails?+
DICGC (a subsidiary of RBI) insures all bank deposits including FDs up to ₹5 lakhs per depositor per bank — covering both principal and interest. If you have more than ₹5 lakhs to invest, spread it across multiple banks. Post Office Time Deposits are backed by the Government of India — effectively zero credit risk.
Which gives more returns — monthly payout or cumulative FD?+
Cumulative FD always gives a higher maturity amount because interest is reinvested and compounds. Banks also offer 0.1–0.25% lower rates on monthly payout FDs vs cumulative. Example: ₹5 lakh at 7% for 5 years — cumulative gives ₹7,05,234 vs monthly payout ₹7 lakh total. Choose monthly payout only if you need regular income. For wealth building, always choose cumulative.