Question 1

How is FD maturity amount calculated?

Accepted Answer

FD maturity is calculated using compound interest: A = P × (1 + r/n)^(n×t), where P is the principal, r is the annual rate (decimal), n is the compounding frequency per year, and t is the tenure in years. For quarterly compounding, n=4; for half-yearly, n=2; for annually, n=1.

Question 2

What compounding frequency do Indian banks use for FDs?

Accepted Answer

Most Indian banks compound FD interest quarterly. Some banks offer monthly or half-yearly compounding. The FD certificate or account statement will specify the compounding frequency.

Question 3

Is FD interest taxable in India?

Accepted Answer

Yes. FD interest is fully taxable as 'Income from Other Sources' at your applicable income tax slab rate. Banks deduct TDS at 10% if interest exceeds ₹40,000 per year (₹50,000 for senior citizens). Submit Form 15G/15H to avoid TDS if your total income is below the taxable limit.

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How is FD interest calculated?

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