Question 1

How is FD maturity calculated?

Accepted Answer

Fixed deposit maturity uses compound interest: A = P x (1 + r/n)^(n x t). Most banks compound FD interest quarterly, so n is 4. The maturity value is the principal plus compounded interest.

Question 2

Is FD interest taxable?

Accepted Answer

Yes. FD interest is fully taxable at your income tax slab rate and must be declared as 'income from other sources'. Banks deduct TDS if interest exceeds Rs 40,000 a year, or Rs 50,000 for senior citizens.

Question 3

What FD interest rate can I expect?

Accepted Answer

Bank FD rates in 2026 are typically 6.5% to 7.5% depending on tenure and bank. Senior citizens usually get 0.25% to 0.5% extra. Small finance banks may offer slightly higher rates.

Question 4

Can I withdraw an FD before maturity?

Accepted Answer

Most FDs allow premature withdrawal but with a penalty, usually 0.5% to 1% lower interest. Tax-saving 5-year FDs have a mandatory lock-in and cannot be withdrawn early.

Year	Amount Invested	Est. Returns	Total Value
Yr 1	₹5.00 L	₹35,930	₹5.36 L
Yr 2	₹5.00 L	₹74,441	₹5.74 L
Yr 3	₹5.00 L	₹1.16 L	₹6.16 L
Yr 4	₹5.00 L	₹1.60 L	₹6.60 L
Yr 5	₹5.00 L	₹2.07 L	₹7.07 L

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