FD Maturity Amount and TDS on FD Interest, Explained

Fixed deposits are simple to open and easy to lose track of. Here is how the numbers work, so you can check your bank and plan renewals and tax.

How FD maturity value is calculated

Most Indian banks compound FD interest every quarter. For a cumulative FD:

Maturity value = Principal × (1 + rate ÷ 4) ^ (number of quarters)

Example: ₹2,00,000 at 7.05% for 24 months (8 quarters) = 2,00,000 × (1.017625)^8 ≈ ₹2,30,040. Interest earned is about ₹30,040.

With a monthly or quarterly payout FD, interest is paid out as it is earned and the maturity value is just the principal.

How RD maturity value is calculated

For a recurring deposit with monthly instalment R, quarterly rate i (annual rate ÷ 400 when the rate is in percent) and n quarters, banks use:

Maturity = R × [(1 + i)^n − 1] ÷ [1 − (1 + i)^(−1/3)]

A ₹5,000 RD at 6.65% for 24 months gives roughly ₹1,28,000, of which ₹1,20,000 is your own money.

When TDS is cut on interest

Banks deduct 10% TDS (20% if PAN is not linked) when interest from that bank crosses ₹50,000 in a financial year, or ₹1,00,000 for senior citizens. The limit is per bank, not per FD, and it counts interest earned, not only interest paid out.

Form 15G and 15H

If your total income is below the taxable limit, you can submit Form 15G (below 60) or Form 15H (60 and above) to the bank at the start of each financial year, and it will not deduct TDS. Submit it to every bank where you hold FDs.

TDS is not the final tax

FD interest is taxable at your slab rate every year, even for a cumulative FD that pays at maturity. If you are in a higher slab, you may owe more than the TDS. If you owe less, you claim the extra back in your return.

Never miss a renewal

1. Keep one list of every FD and RD with its maturity date.
2. Check it on the 1st of each month and look 30 days ahead.
3. Before renewing, compare rates; small finance banks and the Post Office sometimes pay more.
4. Keep deposits in a single bank under ₹5 lakh per depositor if you want them fully covered by DICGC insurance.

Quick checklist for every FD

1. Note the receipt number, holder, nominee and maturity date the day you open it.
2. Choose cumulative if you don't need regular income; payout FDs suit retired parents.
3. Check whether it auto-renews, and at what rate.
4. Spread large amounts across banks to stay within insurance cover.
5. Keep Form 15G or 15H copies and match TDS with Form 26AS every year.

Our FD & RD Maturity Tracker works out maturity values the way banks do, warns you 30 days before each maturity and adds up interest per bank so you can see where TDS will apply.