FD Interest Calculation – Rs. 1000 to 1 Lakh in Fixed Deposits

FD interest calculation fixed deposit

FD Interest Calculation can be easily done either by using the Online FD Calculator or using FD Interest calculation excel formula. How much interest you can get in FD or Fixed deposits when you deposit amount of Rs. 1000 to Rs. 1 lakh for next 1 year?

At 7% interest rate for 1 year, you get Rs. 1072 maturity amount in FD on Rs. 1000 deposits, Rs. 10,719 on Rs. 10,000 deposits, Rs. 53,593 on Rs. 50,000 deposits and Rs. 1,07,186 on Rs. 1 Lakh deposits. The interest rate is fixed throughout the tenure of fixed deposits until the FD gets matured or renewed, after which the new interest rate will be applicable. It is important to note that FD provides you quarterly compounding and the interest amount is taxed as per the income tax slab rates you belong to.

Let us understand FD interest calculation in more details.

FD Interest Calculation – Rs. 1000 to Rs. 1 Lakh Fixed Deposit Video

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You can use the fincalc blog FD Calculator to check the interest amount on your fixed deposit and interest rate for mentioned tenure

What is FD?

  • FD or fixed deposit is one of the popular saving schemes that help you to save for your future financial goal
  • The financial goal can be anything like buying a new gadget after 6 months or contributing towards emergency funds
  • The interest rate on FD or fixed deposits depends on the tenure – duration for which you want to save in fixed deposits
  • Hence interest rate can range between 3% to 8% depending on tenure and post office or bank where you want to open fixed deposit
  • You can check the latest FD interest rate in Post Office here and calculate your interest amount accordingly
  • The interest amount is calculated on quarterly basis, which is than added to your FD balance to earn more interest amount
  • It is important to note that interest amount in FD is taxed as per the income tax slab rates. Which means, whatever income you earn with FD will be added to your total income and taxed as per the slab rate you belong to in financial year.
  • You can read more about Income Tax Calculation with Examples here
  • Note that Section 80TTA is not applicable for FD interest, since it is only applicable for interest earned on savings account with limit of Rs. 10,000 in financial year.
  • For senior citizens, Section 80TTB has the limit of Rs. 50,000 in a financial year

Let us now understand how FD interest is calculated.

How is FD Interest Calculated?

We will understand FD interest calculation with simple example of Rs. 10,000 deposit in FD.

Assume that you open Fixed deposit of Rs. 10,000 on 1st Jan 2024 for 1 year at interest rate of 7%. The interest rate is converted to quarterly interest rate and interest is calculated on the fixed deposit using below formula:

FD Interest amount = FD Interest rate (quarterly) * Balance / 100
FD Interest amount = (7 / 4) * 10000 / 100
FD Interest amount = 1.75 * 10000 / 100
FD Interest amount = Rs. 175

As seen above, Rs. 175 is the interest amount for first quarter. This interest amount is added to your deposit and the balance becomes Rs. 10,175. Now this balance is used to calculate interest in second quarter as mentioned below

FD Interest amount = FD Interest rate (quarterly) * Balance / 100
FD Interest amount = (7 / 4) * 10175 / 100
FD Interest amount = 1.75 * 10175 / 100
FD Interest amount = Rs. 178.06

Again, this interest amount in second quarter is added to your FD balance and current balance is now Rs. 10,353.06.

Similarly after 3rd quarter the balance becomes Rs. 10,534 and after 4th quarter the FD balance will be Rs. 10,719.

This balance of Rs. 10,719 after 1 year will be your maturity amount and same is mentioned in the video at the top of this article. If your tenure is more than 1 year, than same process is followed to calculate the FD interest every quarter to help you get quarterly compounding by adding the interest in your balance after every 3 months.

Below is the summary interest amount on FD (Fixed deposits) on Rs. 1000 to 1 Lakh

FD Interest Calculation Summary

FD Interest Calculation at 7% interest rate for 1 year tenure
FD Interest Calculation at 7% interest rate for 1 year tenure

Is FD calculated in simple interest or compound interest?

As seen in above FD calculation examples, the compound interest is used to calculate interest in FD based on the tenure of FD.

It is important to note that above process of compounding is applicable only when minimum tenure of FD is 6 months. For tenure of less than 6 months, simple interest is used for FD Interest calculation

Income Tax Calculation FY 2023-24 Video

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FD vs RD Which is Better?

FD helps you to deposit fixed amount over a period of time, where as RD or Recurring deposit helps you to deposit amount every month over a period of time.

Using RD, you gradually move towards achieving your goal one step at a time every month by fixed amount of deposits in Recurring deposit.

So if you already have the enough principal amount to be used after 1 year of tenure – use Fixed deposits, else if you do not have enough amount right now but want to gradually save for your future goal, use Recurring deposits.

The interest earned using RD will be bonus for you after achieving the goal.

Use the fincalc blog RD calculator to check the interest amount in Recurring deposits.

FD Calculator in Excel DOWNLOAD

You can also download the FD calculator in excel to calculate interest in fixed deposits. Fill below form to download the FD calculator in excel:

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Conclusion

So FD interest calculation is very simple. You get quarterly interest in fixed deposits based on the deposit you make and tenure you select. The annual interest rate is first converted to quarterly interest rate which is than used to calculated fixed deposit interest amount after every 3 months.

This quarterly interest is than added to the balance of fixed deposit to earn you more interest amount, which is called compounding in FD. It is best to open FD to achieve your short term financial goals.

Also, note that the interest amount you earn in fixed deposits are taxable as per the income tax slab rates for the financial year.

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What you can do with this mobile App?

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