Do FDs compound monthly or quarterly in India?

Most Indian scheduled commercial banks compound FD interest quarterly (4 times per year). Some small finance banks and NBFCs offer monthly compounding for better yields.

When is TDS deducted from FD interest?

TDS at 10% is deducted when your total interest from a single bank exceeds ₹40,000 per financial year (or ₹50,000 for senior citizens). You can submit Form 15G (non-senior) or 15H (senior) to avoid TDS if you are below the taxable income threshold.

Is RD better than FD for regular saving?

For monthly savers, RD is better as it builds savings discipline. However, FDs generally earn slightly more total interest because the entire principal earns from day 1 rather than growing month by month.

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FD & RD Calculator

Compare maturity earnings between Fixed Deposits (FD) and Recurring Deposits (RD) with quarterly compounding.

Select Deposit Type

Fixed Deposit (FD)

Recurring Deposit (RD)

Deposit Principal (INR)₹1.00 Lakh

Interest Rate (% p.a.)7.1%

Time Period (Years)5 Years

Maturity Projections

Estimated deposit returns summary.

Estimated Maturity Value

₹0

Total Invested Amount₹0

Interest Returns Earned₹0

Absolute Returns Rate0.0%

Indian Banking Rules:

By default, most Indian scheduled commercial banks compound Fixed Deposit interest quarterly (every 3 months).

Tax Deduction at Source (TDS) of **10%** is applicable if your annual interest earned exceeds **₹40,000** (or **₹50,000** for senior citizens) unless Form 15G/15H is submitted.

Complete Educational Guide

How FD and RD Interest is Compounded in India

Fixed Deposits (FD) and Recurring Deposits (RD) are the safest savings instruments offered by Indian banks and NBFCs. Understanding their compounding mechanics helps you compare returns against mutual funds and choose the right instrument for your short-term goals.

FD & RD Maturity Formulas

FD: M = P × (1 + r/n)^(n×t) | RD: M = P × [(1+r)^n −1] / (1 − (1+r)^⁻¹)

Where:

FD: P is principal, r is annual interest rate/100, n is compounding frequency, t is years
RD: P is monthly installment, r is monthly rate (annual/1200), n is total months
Most Indian banks compound FD interest quarterly (4 times per year)
TDS applies if annual interest earned exceeds ₹40,000 (₹50,000 for senior citizens)

How to Calculate & Use this Tool:

Choose FD or RD

Select Fixed Deposit for lump sum savings, or Recurring Deposit for monthly installment savings.

Enter Principal or Installment

For FD, input the total lump sum amount. For RD, enter your monthly recurring deposit amount.

Set Rate & Tenure

Enter the interest rate offered by your bank and the total deposit tenure in years.

Compare Maturity Values

Review total interest earned, gross maturity value, and effective annual yield.

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