Note (September 2026): From 1 April 2026, India’s Income-tax Act, 2025 replaced the Income-tax Act, 1961. Most of the deductions mentioned below continue under new section numbers (for example, the Section 80C deduction of up to ₹1.5 lakh is now in Section 123), and most of them can be claimed only under the old tax regime, while the new regime is the default. Check the Income Tax Department’s website for the current rules before you file.
Introduction
With the current state of the world, people are seeking a more secure investment. One of the most popular ways to do the same is through a fixed deposit (FD).
This investment product attracts people because of its relatively low risk and its fixed, contracted rate of return. It is not, however, a liquid product: breaking an FD before maturity normally attracts a penalty and a reduced interest rate, and a five-year tax-saving FD cannot be withdrawn early at all. This post will answer all your questions concerning fixed deposits, fixed deposits calculator and TDS savings.
Know FD and its Types?
FD is an investment that resembles the feature of a savings account. Banks and other financial institutions mostly offer it with a fixed rate of return and maturity date. However, the interest rate on FDs is higher than that of a savings account. The main advantage of an FD is that the rate is contracted in advance, so the return does not move with the market. Two qualifiers matter. The rate is guaranteed by the bank, and bank deposits are covered by DICGC deposit insurance up to ₹5,00,000 per depositor per bank, principal and interest combined, for deposits held in the same right and the same capacity — that is a ceiling across all your accounts at one bank, not per account. And a guaranteed nominal return is not the same as a guaranteed real return: if inflation runs above your FD rate, purchasing power still falls.
Types of FD
- Regular FD: Regular FD accounts are where you deposit money at a specific interest rate for a specific period.
- Flexi Fixed Deposit: These FDs give you the ease and adaptability of both a savings and an FD account. Get the liquidity of savings accounts and the higher interest rates of FDs in this fixed-rate deposit account.
- Tax-Saving FDs: The investor gets regular FD benefits with a tax savings advantage in this FD.
- Senior Citizens Fixed Deposit: Tailored for people 60 years and above with features like high-interest rates than a regular FD.
Interest Calculation – Cumulative and Non-Cumulative
Cumulative and non-cumulative fixed deposits are FDs based on interest payout. A cumulative fixed deposit provides the interest payout on the maturity date. In contrast, a non-cumulative fixed deposit gives interest payouts regularly. In a non-cumulative FD account, the time between interest payments ranges from monthly to quarterly and, in some cases, semi-annually.
Since the bank does not withhold the interest in a non-cumulative FD, you will get a consistent payout. Thus, it provides less interest than cumulative FD because the power of compounding is not realised.
Is a fixed deposit taxable?
FD holders are eligible for a deduction only where the FD is a tax-saving fixed deposit with a tenure of five years or more; an ordinary FD does not qualify. The Section 80C ceiling is ₹1,50,000 per financial year across all eligible investments combined, and 80C is available only under the old tax regime — under the new regime the deduction does not apply.
However, the interest earned from a fixed deposit for 6 months or any other chosen is taxable, and the same is deducted at the source. The interest income is added under the section “Income from other sources” and is taxable as per the account holder’s income tax slab.
TDS on fixed deposit interest income
The bank deducts TDS from the interest collected on the fixed deposit before paying it to the depositors.
However, the threshold depends on age. From FY 2025-26, TDS applies where FD interest exceeds ₹50,000 in a financial year for depositors under 60 and ₹1,00,000 for senior citizens aged 60 and above. These limits were raised in Budget 2025.
Banks must deduct TDS at a rate of 10% from the deposits. However, if the depositor fails to furnish a Permanent Account Number (PAN), the bank will impose a TDS withholding of 20%.
What is a fixed deposit calculator?
A fixed deposits calculator is a tool that assists applicants in estimating their anticipated profits after a fixed deposit tenure. This calculator is accessed online and is free of cost. It considers the principal amount, term, and appropriate interest rate to determine the final maturity amount.
To assist you in making a wise financial decision, the fixed deposits calculator estimates your earnings based on the amount you invest in a fixed deposit for 6 months or other tenures.
Conclusion
In conclusion, fixed deposits can provide a balance to one’s portfolio as they do not involve risk. However, market-linked products like stocks and mutual funds do.
First, ensure that the bank or financial institution with whom you create an FD is reliable. RBL Bank is a suitable option as it fully lets you enjoy the advantages of fixed deposits. Furthermore, RBL Bank offers a broad range of financial services that may easily assist you in satisfying your short and long-term needs.
Tax thresholds, interest rates and deposit-insurance limits change. The figures above reflect the position for FY 2025-26; confirm current rules with your bank or the Income Tax Department before acting on them.
