1. What is the Fixed Deposit Formula?

The Fixed Deposit formula calculates the maturity amount for fixed deposits in India using compound interest. It helps investors understand how much their investment will grow over time with regular compounding.

2. How Does the Calculator Work?

The calculator uses the compound interest formula:

Where:

• \( A \) — Maturity amount (INR)
• \( P \) — Principal amount (INR)
• \( R \) — Annual interest rate (decimal)
• \( n \) — Compounding frequency per year
• \( T \) — Time period in years

Explanation: The formula calculates how much your initial investment will grow based on the interest rate and compounding frequency over the specified time period.

3. Importance of FD Calculation

Details: Accurate FD calculation helps investors plan their savings, compare different FD schemes, and make informed investment decisions for financial goals.

4. Using the Calculator

Tips: Enter principal amount in INR, annual interest rate as percentage, select compounding frequency, and time in years. All values must be positive numbers.

5. Frequently Asked Questions (FAQ)

Q1: What is the difference between simple and compound interest?
A: Simple interest is calculated only on the principal amount, while compound interest is calculated on both principal and accumulated interest.

Q2: How does compounding frequency affect returns?
A: More frequent compounding (monthly vs annually) results in higher returns due to interest being calculated on accumulated interest more often.

Q3: Are FD returns taxable in India?
A: Yes, interest earned on fixed deposits is taxable as per your income tax slab in India.

Q4: What is TDS on fixed deposits?
A: Banks deduct TDS (Tax Deducted at Source) at 10% if interest income exceeds ₹40,000 (₹50,000 for senior citizens) in a financial year.

Q5: Can I break my FD before maturity?
A: Yes, but premature withdrawal usually attracts a penalty and you may get a lower interest rate than the contracted rate.