FD Summary
| Principal Amount | ₹20,00,000 |
| Interest Rate | 7.25% p.a. |
| Tenure | 5 years |
| Compounding | Quarterly |
| Interest Earned | ₹8,64,521 |
| Maturity Amount | ₹28,64,521 |
Tax Note: The ₹8,64,521 interest earned is fully taxable at your income slab rate. In the 30% bracket, your after-tax interest is approximately ₹5,80,958.
Impact of Compounding Frequency
Same principal, same rate — different compounding gives different returns:
| Compounding | Principal | Interest Rate | Interest Earned | Maturity Amount |
|---|---|---|---|---|
| Monthly | ₹20,00,000 | 7.25% | ₹8,70,702 | ₹28,70,702 |
| Quarterly | ₹20,00,000 | 7.25% | ₹8,64,521 | ₹28,64,521 |
| Half-Yearly | ₹20,00,000 | 7.25% | ₹8,55,456 | ₹28,55,456 |
| Annually | ₹20,00,000 | 7.25% | ₹8,38,027 | ₹28,38,027 |
Returns at Different Interest Rates
How much does a 0.5% rate difference matter? More than you think:
| Interest Rate | Interest Earned | Maturity Amount |
|---|---|---|
| 6.5% | ₹7,60,840 | ₹27,60,840 |
| 7.0% | ₹8,29,556 | ₹28,29,556 |
| 7.25% | ₹8,64,521 | ₹28,64,521 |
| 7.5% | ₹8,99,896 | ₹28,99,896 |
| 8.0% | ₹9,71,895 | ₹29,71,895 |
Calculate Your FD Returns
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Use FD CalculatorFrequently Asked Questions
What is the maturity amount for ₹₹20 Lakh FD for 5 years?
At 7.25% interest with quarterly compounding, ₹₹20 Lakh FD matures to ₹28,64,521 in 5 years. You earn ₹8,64,521 as interest income.
Is FD interest taxable in India?
Yes. FD interest is added to your income and taxed at your slab rate. Banks deduct TDS at 10% if interest exceeds ₹40,000 per year (₹50,000 for senior citizens). You can submit Form 15G/15H to avoid TDS if your income is below taxable limit.
Which compounding frequency gives the best FD returns?
Monthly compounding gives the highest effective yield. For ₹₹20 Lakh at 7.25% for 5 years: monthly compounding gives ₹28,70,702, quarterly gives ₹28,64,521, and annual gives ₹28,38,027.
Should I break my FD if interest rates rise?
Breaking an FD early typically incurs a 0.5–1% penalty. Do the math: if new rates are 1%+ higher, breaking and reinvesting often makes sense for longer tenures. For FDs with less than 6 months remaining, it's usually not worth it.
FD vs SIP — which is better for this amount?
FD gives guaranteed returns of ₹28,64,521 in 5 years. SIP in equity mutual funds could potentially grow ₹₹20 Lakh lumpsum to ₹35,24,683 at 12% — but with market risk. FD suits short-term goals or emergency funds. SIP suits 5+ year wealth creation goals.