Find just the interest you earn on a Fixed Deposit.
Uses the same quarterly-compounding FD formula, then isolates just the interest earned.
Interest: Maturity value − Principal
A fixed deposit is money you lend to a bank for a fixed period at a fixed rate. This calculator focuses on one number: the interest you will earn by the end. It uses quarterly compounding, the convention most Indian banks follow for cumulative FDs, and subtracts your principal from the maturity value to isolate the interest.
People use it when they compare FD offers, decide between a one-year and a three-year term, or estimate the interest that will be added to their income for tax. Senior citizens often check it before choosing a bank, because a quarter-point difference in rate adds up on a large deposit. The core question it answers is: how many rupees will this deposit earn me?
1. Note the principal P, the annual rate r as a percentage and the tenure t in years.
2. Convert the rate to a quarterly rate: i = r ÷ 100 ÷ 4.
3. Count the number of quarters: n = 4 × t.
4. Compute the maturity value: A = P × (1 + i)^n.
5. Subtract the principal to get interest: Interest = A − P.
6. If you want the yield per year, divide interest by P and by t, and compare it with the quoted rate.
With quarterly compounding, the bank credits one quarter of the annual rate every three months, and the next quarter's interest is calculated on the new, higher balance. After a year, ₹1 becomes (1 + r/4)^4 instead of 1 + r. At 7% this is about 1.0719, so the effective annual yield is 7.19%, not 7%. Banks often print this higher figure as the 'annualised yield'. Over longer tenures the gap widens, because interest keeps earning interest.
This calculation describes a cumulative FD, where interest is reinvested until maturity. If you choose a quarterly or monthly payout FD, the interest is sent to your account instead, and the balance stays at the principal. Then total interest is closer to simple interest: P × r × t. For the same rate and tenure, the cumulative option always ends with more money. The payout option suits people who need regular income, while the cumulative option suits people saving for a later goal.
FD interest is part of your taxable income. Banks deduct TDS once your interest in a year crosses a threshold set in the tax rules, and the deducted amount is credited against your final tax. TDS is not an extra tax, but it does reduce the cash you receive until you file your return. Also note that interest accrues every year even on a cumulative FD, so it may be taxable year by year rather than only at maturity.
Anil wants to park ₹3,00,000 from a bonus in a two-year cumulative FD. His bank offers 7.25% a year, compounded quarterly.
Answer: Interest earned ₹46,362; Maturity amount ₹3,46,362
Multiplying principal by rate by years and calling that the interest. That is simple interest and understates a cumulative FD.
Comparing a payout FD's interest with a cumulative FD's interest as if they were the same product.
Forgetting that TDS will reduce the cash received even though the interest earned is unchanged.
Using the senior citizen rate for a non-senior account, or the other way round.
Ignoring the penalty on premature withdrawal, which lowers the rate actually paid.
Comparing FD rates across banks and small finance banks.
Estimating interest income to include in advance tax or ITR planning.
Choosing between a shorter and a longer FD tenure.
Planning a laddered set of FDs that mature at different times.
Is FD interest taxable?
Yes. FD interest is added to your income and taxed at your normal rate. Banks also deduct TDS if your interest goes above a set limit in a financial year.