Tax on FD interest
FD interest is added to your income and taxed at your slab rate every year, even in a cumulative FD where you get the money only at maturity. Banks also deduct TDS once the interest crosses a set limit.
Nirmala-ben's 3-year FD would earn about ₹1,15,720 in interest. If her income is below the taxable limit, she can submit Form 15G (15H for those 60 and above) so the bank does not deduct TDS. If she does pay tax, her real return will be lower than 7%.
Frequently asked questions
How much interest does a ₹5 lakh FD give per month?
With 7% compounded quarterly as an example, the first year's interest is about ₹35,930, which averages roughly ₹2,994 a month. A monthly payout FD normally pays a bit less. Your actual figure depends on your bank and tenure, and seniors often earn more.
What is the interest on a ₹5 lakh FD for 1 year?
About ₹35,930 at 7% a year compounded quarterly, giving a maturity of ₹5,35,930. Banks quote different rates for each tenure, and senior citizens are usually offered a little extra, so check the rate before you book.
₹5 lakh FD for 2 years: how much will I get?
Roughly ₹5,74,441, of which ₹74,441 is interest, at a 7% example rate compounded quarterly. Over 3 years the maturity rises to about ₹6,15,720. Tax on the interest will bring the take-home figure down.
Should I keep ₹5 lakh in one FD or two?
Splitting can help. If you book two FDs of ₹2.5 lakh and need money urgently, you can break just one and keep earning on the other. Breaking one large FD early cuts the interest on the full ₹5 lakh.
