Fixed Deposit (FD) Complete Guide, Top 10 Fixed Deposit Rate in India & Rules and Tips
A Fixed Deposit scheme is an excellent facility that is provided to the depositor to preserve a part of their savings. It proffers constant interest flow that is much preferable than equity investment (Share Market) and mutual funds.
The tenure of a fixed deposit can vary from 1 day to 10 years.
Being an investor, are you curious to learn about What does fixed deposit mean?, Best FD rates in India, how does Fixed deposit work? & Are fixed deposit safe?
All your queries will be answered through this post. In this post, we provided a complete guide about Fixed Deposit.
Fixed Deposit in Hindi:- Fixed Deposit Account (FD) क्या होता है ? बात करें Fixed Deposit (FD) की तो साधारण भाषा में हम कह सकते हैं | जब कोई व्यक्ति किसी बैंक में किसी निश्चित धनराशी को किसी निश्चित समय के लिए फिक्स या जमा कर देता है | तो उसे हम Fixed Deposit Account (FD) कहते हैं | आमतौर पर आपके बचत खाता और चालू खाता में जमा धनराशि की उपेक्षा (FD) में जमा की गई धनराशि पर बैंक Interest Rate अधिक होती है |
Stay tuned for this post to learn about “Fixed Deposit”.
In this article, we will cover the following key topics
- What is Fixed Deposit?
- Best FD rates in India
- Bank Fixed Deposit Scheme
- Fixed Deposit Interest Rates for Senior Citizens
- Tips to choose the best bank FD rate scheme
- What is TDS?
- Fixed Deposit V/s Recurring Deposit
- The fixed deposit Interest rate for senior citizen
- Frequently Asked Questions
So readers, without much ado, let’s proceed further!
What is Fixed Deposit?
Fixed deposit is one of the simplest financial instruments provided by the bank or non-banking financial institution which proffers you excellent interest as compared to the saving accounts, the reason, it is considered as one of the preferred financial instrument in India.
It is an ideal deposit facility for people of all age group.
Finding the Right Financial Organization & the service
It is recommended to go for the bank instead of any financial organization that issues fixed deposit policies to the investors. There are banks that offer high interest in short-run whereas others provide a higher rate in the long run.
It is to be noted that interest provided by the bank keeps on updating.
You need to check upon recently updated information about interest rates from their respective websites.
Now, go to a company only if;
There are lots of organizations that issue fixed deposit. Though, most of the financial organization live up to the promise where others are the false scheme. So, be cautious while depositing your funds.
To avoid any inconvenience search about the company over the internet, check whether it is listed in top trustworthy company names or not.
A little hard work and effort will fetch you great profit and updated knowledge too.
All you are required to do is to deposit your saved funds in the bank account and see your money multiply with time.
Top 10 Banks Fixed Deposit Interest Rates in India
Top 10 Banks Fixed Deposit Interest Rates in India
| Bank Name | Tenure | Interest Rate (p.a.) |
|---|---|---|
| Axis Bank FD Interest Rates | 7 days – 10 years | 3.50% – 7.75% |
| Bank of Baroda | 7 days – 10 years | 4.25% – 6.60% |
| Bank of India | 7 days – 10 years | 5.25% – 6.25% |
| Canara Bank | 7 days – 10 years | 4.20% – 6.00% |
| Central Bank of India | 7 days – 10 years | 4.75% – 6.50% |
| HDFC Bank | 7 days – 10 years | 3.50% – 7.70% |
| ICICI Bank | 7 days – 10 years | 4.00% – 6.50% |
| SBI Fixed Deposit | 7 days – 10 years | 5.75% – 6.75% |
| Yes Bank | 7 days – 10 years | 5.00% – 7.00% |
Top 10 Banks Fixed Deposit Interest Rates in India for Senior Citizens
| Bank Name | Tenure | Interest Rate(p.a.) |
|---|---|---|
| Axis Bank | 7 days – 10 years | 3.50% – 7.15% |
| Bank of Baroda | 7 days – 10 years | 4.75% – 7.10% |
| Bank of India | 7 days – 10 years | 5.25% – 6.75% |
| Canara Bank | 7 days – 10 years | 4.70% – 6.50% |
| Central Bank of India | 7 days – 10 years | 5.25% – 7.00% |
| HDFC Bank | 7 days – 10 years | 4.00% – 6.50% |
| ICICI Bank | 7 days – 10 years | 4.50% – 7.00% |
| State Bank Of India | 7 days – 10 years | 6.25% – 7.25% |
| Yes Bank | 7 days – 10 years | 5.50% – 7.50 |
Fixed deposits are ideal deposit scheme for people of all ages. However, the higher rate of interest is offered to senior citizen.
Typically Fixed Deposit options are mainly considered by senior citizens who want to invest their money in Safe Avenue.
The reason it is considered as most preferred is
- It is safe
- It acts as additional income as the rate offered to the senior citizen investors is high.
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Best Company Fixed Deposit 2021
A company fixed deposit is a scheme where investors deposit the saving
The interest of such financial organization is higher than that of bank
The higher the bank rates the higher the risk. While a bank fixed deposit is considered more secure than a company’s fixed deposit.
In an event of bankruptcy or fraud investor, the investor can’t sell their document to recover the funds.
Before opting for the company’s deposit investor checks for credit ranking of the leading companies.
Credit Rating AAA or AA means that companies have basic performance strength.
Check the interest rate before going for a fixed deposit in any company.
Revised List of High Paying Company FDs for 2021
| Name of Company | Fixed Deposit Term | Interest On Fixed Deposit (Regular) | Interest On Fixed Deposit (Senior) |
| Mahindra Finance | Three years | 9.00 percent per annum | |
| Sundaram Home Finance | Three years | 7.25 percent per annum | 9.40 percent per annum |
| HUDCO | Two years – Three years | 7.5 percent per annum | 7.75 percent per annum |
| HUDCO | One year | 7.5 percent per annum | 7.75 percent per annum |
| Kerala Transport Development Finance Corporation Ltd (KTFDC) | One year | 8.25 percent per annum | 7.75 percent per annum |
| LIC Housing Finance Limited | One year | 7.30 percent per annum | 7.40 percent per annum |
| Shriram City Union Finance | One year | 7.50 percent per annum | 7.70 percent per annum |
#Note
- The interest rate on fixed deposit is charged from time to time.
- Interest on Fds for the elder citizen in India vary from 7% per annum to 9.40%
Tax Saving Fixed Deposit
As per section 80C of the income tax act, the fixed deposit account holder can claim for the tax deduction for the amount up to 1.5 lakhs
The invested amount is deducted from gross total income to calculate a person’s taxable earning.
Below are 10 key things to know about tax saving fixed deposits.
- Only HUFs and individual can go for tax saving fixed deposit.
- Fixed deposit account can be open in any bank. Terms and conditions are applied for the minimum amount to be invested.
- The Lock-In period with fixed deposit is 5 year. Loans against fixed deposit and pre-mature withdrawal are not permissible.
- How to invest in tax saving FD? – You can invest in tax saving fixed very easily. There are many private and public banks that provide the facility of opening a fixed deposit account. The only exception is a rural and co-operative bank
- Investment in Post office saving schemes is eligible for a tax deduction as per section 80(C) of the income tax act.
- Fixed deposit in the post office can be transferred from one branch to another.
- An individual can open a fixed deposit account in “ single mode” or “joint mode “as per his/her suitability. if it’s a joint account, then the tax benefit can be claimed by the first account holder
- As per the tax bracket of person, a tax is levied on the interest earned on the deposit amount. The interest on the deposit amount is given on monthly/quarterly frequency
- The best thing is it offers you with nomination facility
- The additional advantage is FD interest rates are higher for senior citizens.
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FD Interest Calculator
FD interest calculator is a convenient and user-friendly tool that is accessible online.
By using fixed deposit calculator, an individual can instantly compute the interest that he will earn on his deposit.
Fixed Deposit Compound Interest Calculator
A compound interest calculator helps to compute the interest amount as well as the maturity amount at a compounded rate of interest.
It is a simple and quick tool that calculate computed interest for the fixed deposit on the basis of principal deposit amount interest rate and deposit time span.
How does a fixed Deposit calculator work?
- Amount to be deposited
It is the principal amount which an FD holder invest in a fixed deposit
- Deposit Term
It is the time span for which the amount is being deposited. FD term can vary from 7 days to 10 years.
- Interest rate
FD Interest Rate Calculator
The formula for fixed deposit interest calculation is based on the interest rate and frequency of compounding
The formula used for calculating interest on fixed deposit is shown below
A = P * (1+ r/n) ^ n*t
I = A – P
A = Maturity value
P = Principal amount
r = rate of interest
t = Number of years
n = Compounded interest frequency
I = Interest earned an amount
It’s the rate at which interest will be earned on the deposit amount.
WHY TDS?
The tax deducted is known as TDS. After the deduction, the payee will get the net amount. The payer is legally bound to deduct a tax before making payment. Bank deducts the tax at the end of every financial year.
You must be guessing now when to pay tax on income earned by the fixed interest, right?
Fixed deposit holder is supposed to pay the tax duly before the end of the financial year i.e 31st March.
If a fixed deposit holder earns high income from interest, then he is liable to pay tax on a quarterly basis.
Recurring Deposit vs Fixed Deposit
| Features / Scheme | Fixed Deposit | Recurring Deposit |
| Tenure | Usually, for FD schemes, the tenure ranges between 7 days to 10 years. The investor can choose a tenure that he is most comfortable with. | Tenure for Recurring deposits usually varies from 1 year to 10 years. The customer has to deposit a fixed amount at regular intervals over the tenure. |
| Investment Limit | There is no limit on the amount that can be invested in a fixed deposit scheme. But, this limit generally depends on the bank and the minimum investment is Rs. 100 and multiples while the maximum limit is Rs. 1.5 lakh. | While there is no prescribed minimum or maximum limit, this usually depends on the bank. Many banks have the minimum investment limit as Rs. 1000 and the maximum limit as Rs. 15 lakhs per month. |
| Rate of Return | For a period of a year, the interest rate varies between 6.96% to 8.00%. The interest rate depends on the capital and tenure opted for. The interest rate for FD is slightly higher than that of RD. | The interest rate varies between 5.25% to 7.90% for a tenure of one year. The rate of interest usually depends on tenure and monthly investment amount. |
| Tax benefits | For fixed deposit, a tax exemption under the section 80C of Income Tax Act 1961 is applicable. | Income tax will be not deducted if the interest you earn on your rd is up to Rs.10,000. |
| Documents Required | Identity Proof and address proof. Customers will have to submit documents like PAN card, passport and income documents if required. | Address proof and Identity Proof. Investors will have to submit documents like PAN card, passport, and income documents if required. |
| Income Interest | Interest earned on your FD is taxable and most of the banks deduct TDS. | Interest earned on your RD is taxable and most banks do not have the facility of TDS. |
| Additional Benefits | Loan Facility | No Plan |
| Eligibility |
|
|
| Withdrawal | At the end of tenure. Premature withdrawal is allowed with a penalty. | At the end of the opted tenure. Premature withdrawal is allowed with the penalty. |
What Should You Choose – RD or FD?
If you don’t have a lump sum to invest in a Fixed Deposit, but can afford a small portion of investment amount from income monthly a recurring deposit (RD) seems to be the right fit.
Both RD and FD are best suited for investors who are risk-averse investors who are mostly in the lower tax slab.
Use an online recurring deposit calculator to check to see what suits best for the amount that you can invest.
Although one single investment product cannot meet all needs, an RD is considered preferred by many because it puts considerably less financial stress in and gives almost the same returns as FD.
Fixed Deposit Maturity Calculator
It is a tool that is utilized to calculate the maturity amount i.e the returns on your fixed deposit.
The tool is easily available online and is quite similar to interest calculator.
Fixed Deposit Rules
Now, we will throw light on fixed deposit rules that every potential investor must follow
What are those rules let’s check out!
- Tax Deducted at source– Interest earned on fixed deposit is taxable.
In case income earned from fixed deposit exceeds 10,000 rupees, the bank charge tax at 10% as TDS.
# Note– If you don’t’ give your PAN number (Permanent account number) the bank is bound to charges tax at 20%.if you don’t have a pan card, request for the same ASAP
- Overdraft or loan facility is given against fixed deposit. State bank of India proffer the loan facility of up to 90% of the principal amount
- Insurance of Fixed Deposit-FD holder receives protection cover on his fixed deposit that is known as deposit insurance.
The facility is proffered by DICGC (Deposit Insurance and credit guarantee)
- Clubbing of interest income- the interest that you will earn on FD are clubbed across all branches of a bank for two purpose
Below listed are the purposes
- For calculating total interest earned by Fd holder
- For calculating the TDS
- Form 15G/15H-the form states that the earning of FD holder does not fall under income tax bracket. To saves TDS, FD holder can submit either 15H or 15G
- If you tend to think that you will deposit amount in the name of your non-working spouse or minor child, the earned interest would be accredited to his/her income. It will be taxed as per his/her income tax slab
- Cumulative Deposit-Tax expert declared that income earned through interest should be displayed every year.
- If the FD holder failed to display the interest income, it will lead to a mismatch in 26 AS Statement.
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Tips to Choose Best Bank FD Scheme
Let us learn what are the tips & tricks for choosing the best Fixed deposit
- Cautiously analyze, evaluate and compare factors such as maturity, interest, a penalty for breaking FD before maturity before choosing the fixed deposit and FD bank.
- Understand the broad macroeconomic factors and expected trends in interest rates. If you expect the interest rates to go up in the near future, opt for a shorter time span FD to keep your options open to investing when interest rates go up. If you expect the interest rates to go down in the near future, you can decide to opt for a longer tenure FD with a high-interest rate.
- Before parking your excess funds into a fixed deposit account, depositors should also check and compare the tenure wise interest rate offered on FD.
- In some cases, banks offer a higher rate of interest on FD held for a shorter tenure than on the FD kept for a longer time period. Similarly, it is not required that higher interest rates correspond with longer tenure. Banks may offer a higher interest rate on some selected tenure to manage their internal liquidity position.
- Last, but not least. Be Careful while planning all your expenses and open an FD only for an amount that you believe you will not need for a minimum period of time.
Suppose, if you have excess money Rs. 100,000 but you have a home loan repayment of Rs. 50,000 scheduled after two months. In this case, it is suggested that you deposit the amount Rs. 50,000 in a short-term FD of less than 2 months and the remaining Rs. 50,000 into a long tenure FD.
FD Interest Rates in India for Less Than 1 Year
| Bank | Tenure | Interest Rate |
|---|---|---|
| Kotak Mahindra Bank | 181 days to 363 days | 6.50% |
| Axis Bank | 6 months to 8 months 29 days | 6.25% |
| State Bank Of India | 180 days to 210 days | 6.35% |
| ICICI Bank | 61 days to 184 days | 6.00% |
| HDFC Bank | 46 days to 6 months | 5.75% |
| Bank of Baroda | 91 days to 180 days | 5.50% |
| IDFC Bank | 91 days to 180 days | 6.75% |
Frequently Asked Questions
Q. What is the minimum amount that we can be deposit into an FD account?
The minimum amount of Rs. 1,000 in FD account you can go deposit but there is no upper cap on deposit amount.
Q. What are the important documents necessary required for opening FD?
Given below are the needed documents required for opening a Bank FD Account
- Identity proof
- Address proof
- Signature proof
- Age proof (for senior citizens)
Q. Is the rate of interest on FD provided to senior citizens higher than regular fixed deposit?
Yes, senior citizens receive higher rates of interest between 0.25 and 0.75 percent interest rates on their FD.
What are the minimum and maximum duration for which I can open an account in FD?
For minimum 1 day and maximum up to 10 years although it may differ from bank to bank.
Q When do I become accountable for tax?
As per the Income Tax Act, 1961 under section 194A when the interest earned on FD in a financial year exceeds Rs. 10,000, TDS is applicable on the credited interest.
A depositor may also fill Form 15G/15H to avail exemption from paying tax on his interest income.
Q. Can I choose for an auto-renewal scheme while opening an FD?
Yes, you can go for an auto-renewal facility at the time of opening the FD account prior to maturity period.
Auto-renewal permits your fixed deposit to get renewed automatically for the same period as the original deposit. However, under the auto-renewal option, the time deposit receipt is with the bank’s custody and Memorandum of Deposit (MOD) is issued in lieu of fixed deposit receipt.
Q Why Fixed Deposit rate fluctuate?
The fixed deposit interest rate flutter due to changes in the prevailing macroeconomic conditions. The several factors responsible for the change in fixed deposit interest consist of a higher rate of inflation, liquidity condition and demand and supply conditions.
Q.When can I renew my FD?
You may renew FD on the maturity by giving a duly filled FD Application Form 15 day before the date of maturity along with the old FD receipt with revenue stamp of value on it. please note down that, your FD renewal is subjected to the terms and conditions of the FD scheme as applicable on the maturity date of the old deposit.
Q. Can I take a loan against fixed deposit?
Yes, there are many lenders that provide loans facility against a fixed deposit. The Bank generally proffer loans up to the extent of 75-95% depending upon the lender and loan tenure to fulfill the financial emergency.
Usually, loan against FD’s is quick and cheap.
Final Words
I hope this article on “Fixed Deposit or (FD)” has been of great assistance. Thanks for reading. If you like it, Please write to us through the comment section.
Any doubts/suggestion or views are cordially invited on this post.
All the best for future endeavors.
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