FD Calculator: Cumulative vs Payout, and How TDS Works (2026)
Last updated: 13 October 2026
Quick answer: An FD calculator compounds interest quarterly: maturity = principal × (1 + rate/4)4 × years. On ₹5 lakh at 7% for five years, the cumulative option returns ₹7,07,389, while quarterly payouts total ₹1,75,000 of interest. Banks deduct 10% TDS once yearly interest crosses ₹50,000 (₹1 lakh for seniors); Form 121 now replaces Forms 15G and 15H.
Last updated: 13 October 2026 Quick answer: An FD calculator compounds interest quarterly: maturity = principal × (1 + rate/4) 4 × years . On ₹5 lakh at 7% for five years, the cumulative option returns ₹7,07,389, while quarterly payouts total ₹1,75,000 of interest. Banks deduct 10% TDS once yearly interest crosses ₹50,000 (₹1 lakh for seniors); Form 121 now replaces Forms 15G and 15H. Key takeaways Compounding: a 7% FD compounded quarterly yields 7.19% a year effectively. Cumulative vs payout: cumulative earns about ₹32,000 more on ₹5 lakh over five years, but payouts give regular income. TDS thresholds: ₹50,000 a year per bank, ₹1 lakh for senior citizens; 10% rate, 20% without PAN. Form 121: replaced Forms 15G/15H under the Income-tax Act, 2025 from tax year 2026-27. Tax: interest is taxable every year at your slab rate, even on a cumulative FD. Most people choose an FD by its headline rate. Two quieter choices matter almost as much: whether you take interest out or let it compound, and how tax is deducted along the way. On a ₹5 lakh deposit, those choices can change your five-year outcome by more than ₹30,000. This guide explains how an FD calculator works, the difference between cumulative and payout options, the effective yield behind the card rate, and the TDS rules for 2026, including the new Form 121 that replaced Forms 15G and 15H when the Income-tax Act, 2025 came into force on 1 April 2026. How does an FD calculator work? An FD calculator is a tool that works out how much a fixed deposit will be worth at maturity, given the amount, interest rate, tenure and compounding frequency. Indian banks usually compound interest every quarter on deposits of six months or more. The formula is: A = P × (1 + r/n) n × t , where P is the principal, r the annual rate as a decimal, n the number of compounding periods a year (4 for quarterly) and t the years. Worked example: ₹5,00,000 at 7% for 5 years. Quarterly rate = 7% ÷ 4 = 1.75%. Number of quarters = 20. Maturity = 5,00,000 × 1.0175 20 = ₹7,07,389 . Interest earned = ₹2,07,389. Short deposits work differently. For tenures under six months, many banks pay simple interest at maturity, so compounding does not apply. Check the bank's terms if you are comparing a 3-month deposit with a liquid fund. Why the effective yield is higher than the card rate Because interest is added every quarter and then earns interest itself, the true annual return, called the effective annual yield , is higher than the card rate. The formula is (1 + r/4) 4 − 1. Card rate Effective yield (quarterly compounding) ₹5 lakh after 3 years ₹5 lakh after 5 years 6.50% 6.66% ₹6,06,704 ₹6,90,210 7.00% 7.19% ₹6,15,720 ₹7,07,389 7.50% 7.71% ₹6,24,858 ₹7,24,974 Some NBFCs and small finance banks advertise the effective yield; banks usually show the card rate. When comparing, make sure you are comparing like with like. Our FD rates comparison for October 2026 (/insights/fd-rates-comparison-october-2026) lists card rates by lender. Chart showing FD card rate versus effective annual yield with quarterly compounding Cumulative vs non-cumulative FD: which earns more? A cumulative FD reinvests interest and pays everything at maturity. A non-cumulative (payout) FD pays interest out monthly, quarterly, half-yearly or yearly, so the principal never grows. ₹5 lakh at 7% Cumulative interest Quarterly payout interest Difference 1 year ₹35,930 ₹35,000 ₹930 3 years ₹1,15,720 ₹1,05,000 ₹10,720 5 years ₹2,07,389 ₹1,75,000 ₹32,389 The quarterly payout is ₹8,750 (₹5,00,000 × 7% ÷ 4). Monthly payouts are slightly lower than one-third of that, about ₹2,900 rather than ₹2,917, because banks discount the monthly rate to account for paying you earlier. That is why Shriram Finance, for example, shows a 7.58% monthly-payout rate against 7.85% for the same 36-60 month deposit on its October 2026 card. FD calculator chart comparing cumulative and quarterly payout interest on ₹5 lakh at 7% over 1, 3 and 5 years Which option should you choose? Cumulative suits money for a future goal, such as a down payment in three years, where you do not need income. Quarterly or monthly payout suits retirees and anyone using the FD to pay regular bills. The "loss" against cumulative is not a loss if you spend the interest. Payout reinvested elsewhere can match cumulative returns only if you reinvest at a similar rate, which few people do consistently. Retirees often pair monthly-payout FDs with other income sources; see our guide to turning a corpus into a monthly paycheque (/insights/retirement-income-strategy-india) . How is FD interest taxed in 2026? FD interest is taxed as "income from other sources" at your slab rate, in the year it accrues. This catches many people out on cumulative FDs: you pay tax every year even though you receive nothing until maturity. Banks also deduct TDS on accrued interest each year. What you keep depends on your bracket. On a 7% FD, the post-tax return is 6.64% at 5.2% (5% slab plus cess), 5.54% at 20.8%, and 4.82% at 31.2%. With CPI inflation at 4.8% in August 2026, a top-bracket saver's real return is close to zero. Our FD vs debt mutual fund comparison (/insights/fixed-deposit-vs-debt-mutual-funds-which-gives-better-post-tax-returns-now) covers alternatives where tax is deferred until redemption. Under the old tax regime, senior citizens can claim a deduction of up to ₹50,000 on deposit interest (the old Section 80TTB). Most other deductions are unavailable in the new regime, which is the default. See senior citizen tax planning (/insights/senior-citizen-tax-planning-interest-pension-rent) for how retirees use these limits. When is TDS deducted on FD interest? TDS (tax deducted at source) is an advance collection of tax by the bank, not an extra tax. The thresholds below were raised by the Union Budget 2025-26 from April 2025, and the same structure applies to payments from 1 April 2026 under section 393 of the Income-tax Act, 2025. Depositor and payer TDS applies when yearly interest exceeds Before April 2025 TDS rate Senior citizen (60+), bank/co-operative bank/post office ₹1,00,000 ₹50,000 10% Others, bank/co-operative bank/post office ₹50,000 ₹40,000 10% Other payers (for example, corporate FDs) ₹10,000 ₹5,000 10% No PAN furnished Same thresholds 20% The threshold applies per payer, across all your deposits with that bank, not per FD. Splitting ₹15 lakh into three FDs at the same bank does not avoid TDS; spreading it across banks may, but tax is still payable on the full interest. Two worked examples Priya, 35, salaried: ₹8 lakh in one bank at 6.50%. Interest in the year: about ₹53,281. That crosses ₹50,000, so the bank deducts 10%, about ₹5,328. Priya is in the 30% slab, so she pays the balance when filing her return. Mr Kulkarni, 68, retired: ₹15 lakh at 7.50% senior rate. Interest: about ₹1,15,704. That crosses ₹1 lakh, so TDS of about ₹11,570 is deducted. If his total tax for the year is nil, he can submit Form 121 to the bank to prevent it. Comparison of TDS rules on FD interest for people below 60, senior citizens, and specified senior citizens aged 75 and above What replaced Form 15G and Form 15H in 2026? Under the Income-tax Act, 2025, Forms 15G and 15H have been merged into a single declaration, Form 121 , filed under section 393(6) and Rule 211 of the Income-tax Rules, 2026. The Income Tax Department's transition FAQs say declarations for a tax year beginning on or after 1 April 2026 must be in Form 121. The eligibility conditions are unchanged from the old regime: Individuals below 60 (and HUFs, trusts): tax on estimated total income must be nil, and the total of incomes covered must not exceed the basic exemption limit. Senior citizens (60 or above): only the nil-tax condition applies. That is why a senior with a large deposit can still use it if rebates bring tax to zero. The form has Part A for you (PAN, estimated income, details of deposits) and Part B for the bank, which allots a 26-character unique identification number and reports the declaration to the department each quarter. A valid, operative PAN is mandatory. Give a separate form to every bank or company paying you interest, ideally at the start of the tax year. File it only if you genuinely qualify: the declaration is made under the Act, and tax on the interest remains payable if your income turns out to be taxable. Four steps to submit Form 121 to avoid TDS on fixed deposit interest Form 125: no ITR for some senior citizens over 75 Residents aged 75 or older whose only income is pension and interest from the same "specified bank" can file Form 125 (formerly 12BBA). The bank then computes their tax, applies deductions and rebates and deducts the tax, and they need not file an income-tax return. It covers only pension and interest from that bank. Is your FD safe beyond the calculator maths? An FD calculator assumes you get your money back. For bank deposits, including small finance banks, the Deposit Insurance and Credit Guarantee Corporation (DICGC) insures up to ₹5 lakh per depositor per bank, covering principal and interest together. Corporate FDs from NBFCs carry no such cover. By comparison, the US FDIC insures $2,50,000 per depositor per bank per ownership category and the UK's FSCS covers £1,20,000 from December 2025, so Indian savers with larger sums should spread deposits across banks. Our guide to small finance bank FDs and DICGC cover (/insights/small-finance-bank-fd-dicgc-insurance) explains the details. Five ways to get more from your FD Pick cumulative unless you need income. The compounding gap grows with time. Use the right family member. Interest on deposits in a non-earning spouse's name, from money you gifted, is clubbed with your income; deposits funded by their own money are taxed in their hands. Submit Form 121 early if you qualify, to avoid waiting for a refund. Check Form 26AS/AIS after each quarter to make sure TDS is credited to your PAN. Ladder maturities to manage rates and liquidity; see lock in FDs now or wait (/insights/lock-in-fd-now-or-wait-rate-hike-2026) . For goal-based planning beyond FDs, try the calculators on our tools page (/tools) , or read our tax planning guide for FY 2026-27 (/insights/tax-planning-guide-india) . Related reading FD rates compared: banks, SFBs and corporate FDs (October 2026) (/insights/fd-rates-comparison-october-2026) Lock in FDs now or wait for December's RBI policy? (/insights/lock-in-fd-now-or-wait-rate-hike-2026) Senior citizen income: FD vs SCSS vs RBI Floating Rate Bonds (/insights/senior-citizen-fd-vs-scss-vs-rbi-floating-rate-bonds) The new Income-tax Act 2025: what changed for individuals (/insights/income-tax-act-2025-changes-individuals) Emergency fund: how much and where to keep it (/insights/emergency-fund-guide-india) Frequently Asked Questions How is FD interest calculated in India? Most banks compound FD interest quarterly using A = P × (1 + r/4) 4t . On ₹1 lakh at 7% for one year, quarterly compounding gives ₹7,186 of interest, slightly more than the ₹7,000 simple-interest figure. For deposits under six months, many banks pay simple interest at maturity instead. Is a cumulative FD better than a non-cumulative FD? A cumulative FD earns more because interest compounds: on ₹5 lakh at 7% for five years it earns ₹2,07,389 versus ₹1,75,000 from quarterly payouts. A non-cumulative FD is better if you need regular income. Both are taxed every year on interest accrued. What is the TDS limit on FD interest for 2026-27? Banks, co-operative banks and post offices deduct TDS once your interest from that payer exceeds ₹50,000 in a tax year, or ₹1 lakh if you are 60 or above. The rate is 10% with PAN and 20% without. These thresholds took effect in April 2025 and continue under the Income-tax Act, 2025. Is Form 15G or Form 15H still valid in 2026? For tax year 2026-27 onwards, Forms 15G and 15H have been merged into Form 121 under section 393(6) of the Income-tax Act, 2025. Eligibility is unchanged: nil tax on estimated income, plus, for those under 60, total income within the exemption limit. Banks now accept Form 121 online or on paper. Is TDS deducted on cumulative FDs every year? Yes. Interest on a cumulative FD accrues each year even though it is paid at maturity, so banks deduct TDS on the accrued amount annually if it crosses the threshold. The tax is reduced from the deposit value. You should also report the accrued interest in your return every year. Can I claim back TDS deducted on my FD? Yes. TDS appears in your Form 26AS and Annual Information Statement. When you file your income-tax return, it is set off against your actual tax liability, and any excess is refunded. Check AIS regularly to make sure the bank has reported TDS correctly against your PAN. Do senior citizens pay tax on FD interest? Yes, at their slab rate, but they get a higher TDS threshold of ₹1 lakh and, under the old regime, a deduction of up to ₹50,000 on deposit interest. Seniors aged 75 or more with only pension and interest from one bank can file Form 125 and skip the tax return. Sources: Income Tax Department, Form 121 FAQs (https://www.incometaxindia.gov.in/documents/d/guest/form-121-faqs) ; Form 125 FAQs (https://www.incometaxindia.gov.in/documents/d/guest/form-125-faqs) ; Guidance notes on forms under the Income-tax Rules, 2026 (https://www.incometaxindia.gov.in/faqs-and-guidance-notes-on-forms-as-per-income-tax-rules-2026) ; FAQs on transition to the Income-tax Act, 2025 (https://www.incometaxindia.gov.in/documents/81799/11848482/Updated-FQAs-on-Interplay%26Transitions.pdf/e10ad2b6-9495-de90-58d3-20606d8954ae?t=1775128640970) ; Union Budget 2025-26 speech and annexure (https://www.indiabudget.gov.in/budget2025-26/doc/Budget_Speech.pdf) ; Shriram Finance FD rates (https://www.shriramfinance.in/fixed-deposit) ; DICGC guide to deposit insurance (https://www.dicgc.org.in/guide-to-deposit-insurance) ; FDIC (https://www.fdic.gov/resources/deposit-insurance) ; FSCS (https://www.fscs.org.uk/check/check-your-money-is-protected/) . Worked examples are Money n Wealth calculations. Unsure whether you qualify for Form 121, or how to cut tax on deposit interest? The answer depends on your full income picture and tax regime. Talk to Money n Wealth (/contact) for a free portfolio review. This article is for general educational purposes only and does not constitute financial advice. Figures and examples are illustrative. Please consult a qualified financial adviser for guidance specific to your situation. Money n Wealth (Predics Fintech Services Pvt Ltd) is an AMFI-registered Mutual Fund Distributor (ARN-121995) and APMI-registered PMS Distributor (APRN07444); it is not a SEBI-registered investment adviser and may earn distribution commission on investments made through it.
Frequently Asked Questions
How is FD interest calculated in India?
Most banks compound FD interest quarterly using A = P × (1 + r/4) 4t . On ₹1 lakh at 7% for one year, quarterly compounding gives ₹7,186 of interest, slightly more than the ₹7,000 simple-interest figure. For deposits under six months, many banks pay simple interest at maturity instead.
Is a cumulative FD better than a non-cumulative FD?
A cumulative FD earns more because interest compounds: on ₹5 lakh at 7% for five years it earns ₹2,07,389 versus ₹1,75,000 from quarterly payouts. A non-cumulative FD is better if you need regular income. Both are taxed every year on interest accrued.
What is the TDS limit on FD interest for 2026-27?
Banks, co-operative banks and post offices deduct TDS once your interest from that payer exceeds ₹50,000 in a tax year, or ₹1 lakh if you are 60 or above. The rate is 10% with PAN and 20% without. These thresholds took effect in April 2025 and continue under the Income-tax Act, 2025.
Is Form 15G or Form 15H still valid in 2026?
For tax year 2026-27 onwards, Forms 15G and 15H have been merged into Form 121 under section 393(6) of the Income-tax Act, 2025. Eligibility is unchanged: nil tax on estimated income, plus, for those under 60, total income within the exemption limit. Banks now accept Form 121 online or on paper.
Is TDS deducted on cumulative FDs every year?
Yes. Interest on a cumulative FD accrues each year even though it is paid at maturity, so banks deduct TDS on the accrued amount annually if it crosses the threshold. The tax is reduced from the deposit value. You should also report the accrued interest in your return every year.
Can I claim back TDS deducted on my FD?
Yes. TDS appears in your Form 26AS and Annual Information Statement. When you file your income-tax return, it is set off against your actual tax liability, and any excess is refunded. Check AIS regularly to make sure the bank has reported TDS correctly against your PAN.
Do senior citizens pay tax on FD interest?
Yes, at their slab rate, but they get a higher TDS threshold of ₹1 lakh and, under the old regime, a deduction of up to ₹50,000 on deposit interest. Seniors aged 75 or more with only pension and interest from one bank can file Form 125 and skip the tax return.
Unsure whether you qualify for Form 121, or how to cut tax on deposit interest?
The answer depends on your full income picture and tax regime. Talk to Money n Wealth for a free portfolio review.