Question 1

What is a Fixed Deposit (FD)?

Accepted Answer

A Fixed Deposit (FD) is a financial instrument offered by banks where you deposit a sum of money for a fixed tenure at a predetermined interest rate. FDs offer guaranteed returns and are considered low-risk investments.

Question 2

How is FD interest calculated?

Accepted Answer

FD maturity value = P × (1 + r/n)^(n×t), where P is the principal, r is the annual interest rate, n is the compounding frequency per year (4 for quarterly, 2 for half-yearly, 1 for annually), and t is the tenure in years.

Question 3

Is FD interest taxable in India?

Accepted Answer

Yes, FD interest is taxable in India. Banks deduct TDS at 10% if interest exceeds ₹40,000 per year (₹50,000 for senior citizens). The total interest is added to your income and taxed at your applicable slab rate.

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