Fixed Deposits remain India's most popular savings instrument, with over ₹200 lakh crore deployed across banks. In 2026, FD rates range from 6.5% to 8.25% depending on the bank, tenure, and depositor category. Senior citizens enjoy an additional 0.25-0.50% rate benefit and a higher TDS exemption limit of ₹50,000 (vs ₹40,000 for regular depositors). Our calculator shows your exact maturity value after TDS deduction.
Best FD Interest Rates in 2026
Top FD rates (regular depositors): SBI — 7.10% (1-2 years), HDFC Bank — 7.15%, ICICI — 7.10%, Bank of Baroda — 7.15%, Post Office TD — 7.50% (5 years). Senior citizen rates are 0.50% higher at most banks. Small finance banks like Unity, Ujjivan, and AU offer up to 8.25% but with ₹5 lakh DICGC insurance limit.
TDS on Fixed Deposits: Rules for 2026
Banks deduct TDS at 10% if annual FD interest exceeds ₹40,000 (₹50,000 for senior citizens). If PAN is not provided, TDS jumps to 20%. You can submit Form 15G (below 60 years) or Form 15H (senior citizens) if your total income is below the basic exemption limit to avoid TDS. TDS is deducted on accrued interest, not just paid interest.
FD vs Debt Mutual Funds in 2026
Post the 2023 tax rule change, debt mutual fund gains are taxed at slab rate regardless of holding period — same as FD interest. This removes the historical LTCG advantage of debt funds. However, FDs offer guaranteed returns and DICGC insurance (up to ₹5 lakh), making them safer. For amounts above ₹5 lakh, consider splitting across multiple banks for full insurance coverage.
Tax-Saving FD Under Section 80C
Tax-saving FDs have a 5-year lock-in and qualify for Section 80C deduction up to ₹1.5 lakh. Most banks offer 6.5-7.5% on tax-saving FDs. While the interest is taxable, the Section 80C deduction can save up to ₹46,800 (30% bracket) in taxes. Available only under the Old Tax Regime.
Cumulative vs Non-Cumulative FD
Cumulative FDs compound interest and pay everything at maturity — best for wealth building. Non-cumulative FDs pay interest monthly/quarterly — ideal for retirees needing regular income. For a ₹10 lakh FD at 7.25% for 5 years: cumulative gives ~₹14.18 lakh at maturity, while non-cumulative gives ~₹6,042/month but totals less due to no compounding.