Everything About Fixed Deposits in India

FD rates range from 4%–9% p.a. depending on bank type, tenure, and depositor category. As of May 2026:

• Public sector banks (SBI, BOB): 6.25%–6.65% for standard tenures.
• Large private banks (HDFC, ICICI, Axis): 6.5%–7.25%.
• Small Finance Banks (Jana SFB, AU SFB, Equitas): 7.5%–8.25% for general customers.
• Senior citizens get an extra 0.25%–0.75%; Jana SFB offers 9.00% for 1-year senior citizen FDs.

→ See live rates across 25 banks

For cumulative FDs (standard): M = P × (1 + r/n)^n×t

• P = principal, r = annual rate as decimal, n = compounding frequency (4 = quarterly), t = tenure in years.
• Example: ₹1 lakh at 7%, quarterly, 1 year → M = ₹1,07,186.
• For tenures under 6 months, simple interest applies: M = P × (1 + r×t).

For non-cumulative (monthly payout): each month's interest = P × r ÷ 12; principal returned at maturity.

Yes — fully, in both old and new regimes. FD interest is added to your total income and taxed at your slab rate (0%–30%). No exemption for any tenure or bank type.

• Banks deduct TDS at 10% (with PAN) if annual interest from a single bank exceeds ₹40,000 (₹50,000 for senior citizens).
• Without PAN: TDS is 20%.

→ Full FD taxation guide

TDS is 10% (with PAN) when annual interest from one bank exceeds ₹40,000 (₹50,000 for seniors). Without PAN, it doubles to 20%.

• TDS is deducted by the bank and appears in your Form 26AS.
• It is a withholding, not a final tax. If your slab is 30% and 10% was withheld, you pay the rest at ITR filing.
• If you're in a nil-tax bracket, file ITR to claim a full refund of TDS deducted.

• Cumulative: Interest is reinvested quarterly and paid as a lump sum at maturity. Higher total return due to compounding. Best for wealth accumulation.
• Non-cumulative: Interest is paid out at chosen intervals (monthly, quarterly, half-yearly, or annually). Principal stays unchanged; returned at maturity. Best for retirees needing regular income.

At ₹1 lakh, 7%, 1 year: cumulative maturity = ₹1,07,186; non-cumulative earns ₹7,000 total (₹583/month × 12) — ₹186 less due to no compounding on payouts.

Yes, for most FDs. Banks recalculate interest at the rate applicable for the actual duration held, then deduct a premature withdrawal penalty of 0.5%–1% p.a.

• Exception: tax-saver 5-year FDs cannot be withdrawn before maturity under any circumstances.
• Sweep-in FDs and flexi FDs are designed for partial/full access without penalty.

Typically 0.50%–1.00% p.a. deducted from the rate applicable for the period held.

• SBI: 0.50% | HDFC, ICICI: 1.00% | most banks: check your FD certificate.
• Example: 3-year FD at 7.5%, broken after 1 year. 1-year rate = 7%. Penalty = 1%. Effective rate = 6%.
• You do not lose principal — only a portion of the promised interest.

Yes, up to ₹5 lakh per depositor per bank, insured by DICGC (an RBI subsidiary). This covers principal + accrued interest combined.

• If you have ₹5L or less — 100% protected regardless of bank failure.
• If you have ₹10L — ₹5L is guaranteed; the remaining ₹5L depends on liquidation proceeds.
• Strategy: spread across multiple banks to keep each bank's total below ₹5L.

DICGC (Deposit Insurance and Credit Guarantee Corporation) is an RBI subsidiary that insures deposits in every bank, Small Finance Bank, and Regional Rural Bank in India.

• Cover: ₹5 lakh per depositor per bank (principal + interest combined).
• All savings, FD, RD, and current accounts at the same bank count together towards this limit.
• NBFCs are not covered by DICGC. Post Office deposits are backed by the Government of India directly.

₹5 lakh per depositor per bank — raised from ₹1 lakh in February 2020. This limit is per bank, not per account.

• All your accounts (savings + FD + RD) at the same bank are aggregated.
• Joint accounts: each holder's share is insured separately up to ₹5 lakh.
• To protect larger sums: distribute across multiple banks. ₹50 lakh across 10 banks = fully insured.

As of May 2026:

• General customers: Jana SFB — 8.25% for 1-year FD.
• Senior citizens: Jana SFB — 9.00% for 1-year FD.
• Large private banks: IDFC First Bank 7.90%; Bandhan Bank 8.05% (1-year).
• NBFCs: Bajaj Finance 8.05% (no DICGC cover).

→ Full rate comparison table

Yes — consistently 0.75%–1.5% higher than large banks for equivalent tenures. SFBs compete aggressively for retail deposits because they can't access wholesale funding as easily.

• Jana SFB: 8.25% (1yr) | Equitas SFB: ~8.10% | Ujjivan SFB: ~8.25% | AU SFB: ~7.60%.
• vs SBI: 6.50% | HDFC: 7.10% for the same 1-year tenure.

Yes. SFBs are RBI-licensed and DICGC-insured — deposits up to ₹5 lakh are protected identically to SBI or HDFC Bank. The higher interest rate is a function of their business model, not reduced depositor safety within the insurance limit.

• Jana SFB, AU SFB, Equitas SFB, Ujjivan SFB, Suryoday SFB are all established and RBI-compliant.
• Keep per-bank deposit below ₹5L to remain within the full insurance cover.

A 5-year bank FD that qualifies for Section 80C deduction — investing up to ₹1.5 lakh/year reduces your taxable income by that amount in the year of investment.

• Hard 5-year lock-in — premature withdrawal is not allowed.
• Only the first holder of a joint FD gets the 80C benefit.
• The interest earned is fully taxable at your slab rate every year. The tax deduction is on principal only.
• Rates are the same as regular 5-year FDs at the same bank (no special rate for the tax-saving category).

No — this is a widespread misconception. The 5-year tax-saver FD gives a Section 80C deduction on your investment principal. The interest earned over 5 years is fully taxable at your income slab rate, accruing each financial year.

• Only PPF interest is tax-free at all stages (EEE).
• 5-year FD interest is taxable. Always. In both old and new regimes.

→ Full explanation: FD Interest Taxation

• Submit Form 15G (below 60, total income below taxable limit) or Form 15H (senior citizen, income below taxable limit) to each bank at the start of each financial year.
• Split FDs across multiple banks — TDS is calculated per bank. Keep per-bank annual interest below ₹40,000 (₹50,000 for seniors) to avoid TDS automatically.

Avoiding TDS reduces cash-flow friction but doesn't change your tax liability — declare all FD interest in your ITR.

• Form 15G: For individuals below 60 whose total income is below the basic exemption limit AND whose total interest income is also below that limit. Self-declaration to prevent TDS.
• Form 15H: For senior citizens (60+) whose total income is below the taxable limit. Only one condition — no income limit on interest separately.
• Submit at the start of each financial year (April) to each bank — not just at booking or maturity.

Yes. Banks are legally required to offer senior citizens (60+) higher rates — typically 0.25%–0.75% above the regular rate. Standard premium is 0.50% p.a.

• Jana SFB senior citizen 1-year rate: 9.00% vs 8.25% regular — a 0.75% premium.
• Senior citizens also get a higher TDS threshold: ₹50,000 vs ₹40,000 for general depositors.
• Some banks offer an extra premium for super senior citizens (80+).

A sweep-in FD links your savings account to an FD. When your savings balance exceeds a threshold (e.g., ₹25,000), the surplus is automatically swept into an FD to earn higher interest.

• When your savings balance falls short of a minimum, FD units are broken to fund withdrawals — with no penalty.
• You earn FD-level interest on idle savings while retaining full liquidity.
• Offered by SBI (MOD scheme), HDFC, ICICI, Axis, and most major banks. Auto Sweep / MODS are other names for the same product.

A flexi FD allows partial withdrawals in fixed units (e.g., ₹1,000 or ₹5,000 increments) without breaking the entire FD or triggering a penalty on the remaining balance.

• The remaining balance continues to earn the contracted rate.
• Useful for emergency access without sacrificing the return on the full corpus.
• Some banks use "flexi FD" and "sweep-in FD" interchangeably; others have distinct products — check your bank's terms.

Yes. Banks offer overdraft or loan-against-FD facilities at 1%–2% above the FD rate, up to 90–95% of the FD value.

• No credit check, no income proof — the FD is the collateral.
• The FD continues earning interest during the loan — net cost = only the 1–2% spread.
• Example: FD at 7%, loan at 8–9% — far cheaper than a personal loan at 12–18%.
• Best for: short-term liquidity needs when you don't want to break a high-rate FD.

Monthly interest on ₹1 lakh (non-cumulative, monthly payout mode) = Principal × Rate ÷ 12:

• At 7%: ₹583/month
• At 8%: ₹667/month
• At 9% (Jana SFB senior citizen): ₹750/month

To earn ₹1,000/month, you need ≈ ₹1.71L at 7%, ₹1.5L at 8%, or ₹1.33L at 9%.

→ Full monthly interest table for ₹1L–₹25L

It depends on your tax slab and time horizon.

• PPF at 7.1% tax-free beats any FD at a 30% slab where the FD rate is below ~10.1% (7.1 ÷ 0.7).
• At 0% slab (income below taxable limit), a 9% FD beats PPF's 7.1% by 1.9%.
• PPF has a 15-year lock-in; FDs offer any tenure from 7 days.
• Strategy: max PPF (₹1.5L/year) first for tax-free compounding, then use FDs for surplus or shorter goals.

After the 2023 budget change, debt mutual funds are taxed at your slab rate — the same as FD interest. The indexation advantage is gone.

• FD: fixed, guaranteed return (DICGC ₹5L protection).
• Debt fund: market-linked returns (7%–8% typical) with no guarantee.
• For known-horizon goals, FDs are simpler and comparably taxed.
• For very short-term parking (7–30 days), liquid funds may be slightly more efficient than short FDs.

• 5-year FD: rates are high and likely to fall; you need the Section 80C deduction; no near-term cash need.
• 1-year FD: rates are flat or rising; you may need the money soon; you want renewal flexibility.
• FD ladder: split equally across 1yr–5yr tenures — annual liquidity at close to the 5-year rate.

→ Compare 1yr rollover vs 5yr lock-in in the calculator

Split your FD corpus equally across 5 tenures: 1yr, 2yr, 3yr, 4yr, 5yr. One FD matures each year — annual liquidity. Reinvest each maturity as a new 5-year FD. After 5 years, every tranche is a 5-year FD maturing in sequence.

• Maximum long-term rate on most of your corpus.
• Annual access to 20% of your money without penalty.
• Multi-bank splitting keeps per-bank interest below the ₹40,000 TDS threshold.

→ FD Ladder concept guide · Model in the calculator

• Roll short-term when rates are rising — each 1-year renewal captures higher rates.
• Lock long-term when rates are falling — secure today's rate against future cuts.
• Rule of thumb: if rates are expected to rise 0.75%+ before first renewal, rolling wins. Otherwise, lock in.

→ Compare in the FD Rollover calculator

• With a registered nominee: Bank pays principal + accrued interest to the nominee after a simple claim process. No court order needed for amounts within the bank's threshold (typically up to ₹5L).
• Without a nominee: Legal heirs must submit a succession certificate or letters of administration — a lengthy, expensive legal process. This can take years.
• Action item: Register a nominee for every FD you hold. Verify nomination status after booking, especially for online FDs.

Yes, through NRE, NRO, or FCNR accounts — each suited for different income sources.

• NRE FD: Foreign income → INR. Interest tax-free in India. Freely repatriable.
• NRO FD: India-sourced income (rent, dividends). 30% TDS on interest. Repatriation capped at USD 1M/year.
• FCNR FD: Foreign income → foreign currency. No exchange-rate risk. Tax-free in India.

→ Full NRE vs NRO vs FCNR comparison

• NRE FD: Funded from foreign income (salary, freelance abroad). INR deposit. Interest is tax-free in India. Principal + interest fully repatriable. No corpus limit.
• NRO FD: Funded from India-sourced income (rent, pension, dividends). INR deposit. Interest taxed at 30% TDS. Repatriation limited to USD 1M/year.
• Default for NRIs routing foreign savings: NRE — same rate, zero Indian tax, full repatriation freedom.

→ Complete guide: NRE vs NRO vs FCNR