What is a Fixed Deposit (FD)?
A Fixed Deposit is a financial instrument offered by banks and NBFCs where you deposit a lump sum amount for a fixed period at a fixed interest rate. It is considered a safe investment because returns are guaranteed, unlike stocks or mutual funds.
Current FD Interest Rates in India (2025)
FD rates in India vary across banks, usually between 6% to 8% per annum for a 5-year tenure. Senior citizens get an additional 0.25% to 0.50% higher interest.
For calculation, let’s assume:
- Investment Amount (Principal) = ₹10,00,000
- FD Tenure = 5 Years
- Interest Rate = 7% per annum (compounded quarterly)
Formula to Calculate FD Maturity Amount
FD maturity is calculated using the compound interest formula: A=P×(1+rn)n×tA = P \times \left(1 + \frac{r}{n}\right)^{n \times t}A=P×(1+nr)n×t
Where:
- A = Maturity Amount
- P = Principal Amount (₹10,00,000)
- r = Annual Interest Rate (7% = 0.07)
- n = Number of compounding periods per year (quarterly = 4)
- t = Tenure in years (5 years)
Step-by-Step Calculation
- P = ₹10,00,000
- r = 0.07
- n = 4
- t = 5
A=10,00,000×(1+0.074)4×5A = 10,00,000 \times \left(1 + \frac{0.07}{4}\right)^{4 \times 5}A=10,00,000×(1+40.07)4×5 A=10,00,000×(1.0175)20A = 10,00,000 \times (1.0175)^{20}A=10,00,000×(1.0175)20 A≈10,00,000×1.419A ≈ 10,00,000 \times 1.419A≈10,00,000×1.419 A≈₹14,19,000A ≈ ₹14,19,000A≈₹14,19,000
So, after 5 years, your FD maturity amount = ₹14.19 lakh.
Your total interest earned = ₹4.19 lakh.
FD Returns Table (₹10 Lakh for 5 Years at Different Interest Rates)
| Interest Rate | Maturity Value (₹) | Interest Earned (₹) |
|---|---|---|
| 6% | 13,48,000 | 3,48,000 |
| 6.5% | 13,82,000 | 3,82,000 |
| 7% | 14,19,000 | 4,19,000 |
| 7.5% | 14,55,000 | 4,55,000 |
| 8% | 14,93,000 | 4,93,000 |
Factors Affecting FD Returns
- Bank FD Rate – Different banks offer different interest rates.
- Compounding Frequency – Quarterly compounding gives higher returns than annual compounding.
- Tenure – Longer tenure usually means higher returns.
- Senior Citizen Benefits – Extra interest (0.25% – 0.50%) for senior citizens.
- Tax Deduction – FD interest above ₹40,000 (₹50,000 for seniors) is taxable under TDS.
Should You Invest ₹10 Lakh in FD for 5 Years?
FDs are perfect for:
- Investors looking for guaranteed and safe returns.
- People who do not want to take risks with stock markets.
- Senior citizens who get higher FD rates.
However, for higher returns, you can also explore mutual funds, government bonds, or hybrid investment options.
Final Thoughts
Investing ₹10 lakh in FD for 5 years can give you around ₹14.19 lakh at 7% interest, which means a profit of ₹4.19 lakh. It is a safe and reliable investment, especially for risk-averse investors and senior citizens.
FAQs
1. What will be the maturity amount of ₹10 lakh FD after 5 years?
At 7% interest (quarterly compounding), you will get approximately ₹14.19 lakh after 5 years.
2. How much interest will I get on ₹10 lakh FD in 5 years?
You will earn around ₹4.19 lakh in interest at a 7% FD rate.
3. Which bank gives the highest FD rates in 2025?
Private banks and small finance banks usually offer higher FD rates (7.5% – 8%) compared to big public sector banks.
4. Is FD interest taxable?
Yes, FD interest is taxable as per your income tax slab. Banks also deduct TDS if the annual interest exceeds ₹40,000 (₹50,000 for seniors).
5. Is FD better than mutual funds?
FD is safer with guaranteed returns, while mutual funds can give higher returns but involve risk.
If you want guaranteed, tax-adjusted, and stable returns, FD is one of the best investment options in 2025.
Disclaimer: This article is for general information only. The interest rates and terms mentioned in it depend on the policies of the bank and NBFC. These may change from time to time. Before taking any type of loan, get complete information from your bank.