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Fixed Deposit Formula:
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Fixed Deposit (FD) is a popular investment option in India where you deposit a lump sum amount for a fixed period at a predetermined interest rate. The interest is compounded quarterly, providing returns on both principal and accumulated interest.
The calculator uses the fixed deposit formula for quarterly compounding:
Where:
Explanation: The formula calculates the maturity amount when interest is compounded quarterly, which is the standard practice for fixed deposits in Indian banks.
Details: Accurate FD calculation helps investors plan their finances, compare different investment options, and understand the returns they can expect from their fixed deposit investments.
Tips: Enter principal amount in Indian rupees, annual interest rate in percentage, and time period in years. All values must be positive numbers.
Q1: How often is interest compounded in Indian fixed deposits?
A: Most Indian banks compound interest quarterly for fixed deposits, though some may offer monthly compounding for specific schemes.
Q2: Are fixed deposit returns taxable in India?
A: Yes, interest earned from fixed deposits is taxable under Income Tax Act, 1961. TDS is deducted if interest exceeds ₹40,000 (₹50,000 for senior citizens) per financial year.
Q3: What is the minimum investment period for fixed deposits?
A: The minimum period varies by bank but typically starts from 7 days to 10 years for regular fixed deposits.
Q4: Can I withdraw my fixed deposit before maturity?
A: Yes, but premature withdrawal usually attracts a penalty of 0.5-1% on the interest rate, and you may get a lower interest rate.
Q5: Are fixed deposits safe investments?
A: Fixed deposits are considered safe as they are offered by banks and covered under Deposit Insurance and Credit Guarantee Corporation (DICGC) up to ₹5 lakh per depositor per bank.