A Fixed Deposit (FD) is a financial instrument provided by banks which provides investors with a higher rate of interest than a regular savings account, until the given maturity date.
Compound Interest Formula
A = P(1 + r/n)nt
Where:
A = Final amount
P = Principal (initial investment)
r = Annual interest rate (decimal)
n = Number of times interest is compounded per year
t = Time period in years
Tax Considerations
Interest earned on Fixed Deposits is taxable in India. TDS (Tax Deducted at Source) is applicable if the interest earned exceeds ₹40,000 per year (₹50,000 for senior citizens). The interest is added to your income and taxed as per your income tax slab.