FD Calculator

What do you understand by FD (Fixed Deposit)?

Fixed Deposit abbreviated as FD is a financial investment option. FD is a time-bound investment option offered by banks and various financial institutions. The interest rate offered on FD is more than that offered for savings account deposits. Making FD a better investment option compared to the savings account deposit. You deposit a large lumpsum amount at once for a pre-specified tenure. You can either withdraw the interest income monthly. Otherwise, you can also claim the interest income and the principal amount at the time of maturity.

Stating the facts, more than 31% of India’s population belongs to the middle-class income group. The income left after the expenses by the people belonging to the middle class is very low. This favours the need for a low-risk and consistent return investment option. Exactly what FD offers, low-risk consistent returns.

Till the 1980’s the banks were free to decide the interest rates on FD. However, a fixed upper limit of 8% per annum that they should follow. Later, the ceiling was removed in the mid-1980’s.

In 1992 FD went through some changes, wherein a ceiling of 13% p.a. was set by the RBI for all the FDs over 46 days.

What is an FD (Fixed Deposit) Calculator?

An FD calculator is an online tool that calculates the interest on your FD account and the maturity amount.

Calculating the maturity amount manually using a traditional calculator is a daunting task. Especially if dealing with numbers is not a piece of cake for you.

Pocketful’s online FD calculator has a user-friendly interface that is simple, smooth & easy to use. To calculate the maturity amount you just have to enter the details like the amount you have deposited, investment tenure and the interest rate. Then Pocketful’s online FD calculator will calculate the amount in less than a second.

How does an FD Calculator Work & Why is it Necessary?

The formula used by Pocketful’s online Fixed Deposit calculator, is given below:

A=P+((P*R*T)/100)

A	Maturity Amount
P	Principal Amount
R	Interest Rate
T	Investment Tenure

Let’s understand it with an example

Suppose Mr Sam has a lumpsum amount of Rs.10,00,000. He wants to invest in a low-risk and consistent return investment option. His bank is offering an 8% return p.a. For seven years.

Here, 8% will be the interest rate(R), seven will be the investment tenure(T) and Rs. 10,00,000 will be the principal amount(P)

To know the maturity amount, Mr. Sam will come to Pocketful’s online FD return calculator platform and enter the required details.

And then press enter. And voila!

The maturity amount for his investment after 7 years will be Rs. 14,85,947

Reasons you should use a Fixed Deposit Calculator in India

• A Fixed Deposit calculator helps you to calculate the exact returns on your investment without performing all the technical calculations. Otherwise, calculating the maturity amount using a traditional calculator could be a hassle.
• Pocketful’s Fixed Deposit interest calculator is completely free to use. You do not have to pay any charges to use our platform. You can calculate the returns on your Fixed Deposit investment at the ease of your home.
• Online calculators help you to compare different investment options. Which in turn helps you to make better financial decisions. So, you can achieve your financial goals with ease.
• Knowing your maturity amount beforehand helps you to do your financial planning accordingly. Using the tools that are present online is an efficient way to keep track of your growth. Using different online calculators for various purposes helps you to stay motivated and pivot at the right time.

TAX Obligations on FD (Fixed Deposit)

Interest income received from FD is fully Taxable. The interest income is added to the personal income of the individual. Then, with the prevailing Tax Slab, you are taxed accordingly.

Banks deduct the tax from your interest income while crediting it to your account. You are taxed on your interest income if the amount exceeds the limit of Rs. 40,000 per month. In the case of senior citizens, this limit is Rs. 50,000.

If you do not withdraw your interest income monthly, the bank deducts the tax at the end of each financial year.

Understanding the Relevance of TDS (Tax Deducted at Source)

TDS is an Indian withholding Tax. The payer is supposed to deduct the tax from the income, dividends and sale of the asset before paying it to the payee. The amount deducted by the payer goes to the Central Government.

While filing your income tax returns, you add the gross amount received, not the net amount. Since this credit of TDS is provided from the total tax liability or a TDS refund is offered in case of no tax liability.

For example, if your interest income is Rs. 500, the bank would deduct 5% TDS. Then, your account will get credited with Rs. 475. But, while filing your ITR, you will show interest income as 500 and not 475. You will claim the TDS deducted by the bank as a TDS refund or tax credit from the outstanding liability.