How is FD interest calculated in India?▾
Most banks compound FD interest quarterly for cumulative deposits. Non-cumulative FDs pay interest out monthly or quarterly instead of compounding it.
Is FD interest taxable?▾
Yes, it is added to your income and taxed at your slab rate. Banks deduct 10% TDS when interest exceeds the threshold, which you can adjust in your return.
What is the effective yield?▾
It is the annual return after compounding. A 7% FD compounded quarterly yields about 7.19% a year.
Can I break an FD early?▾
Usually yes, with a penalty of 0.5–1% on the applicable rate. Tax-saver FDs have a 5-year lock-in and cannot be broken.
