₹1,00,000 in a fixed deposit for 2 years at 7% (interest added every quarter) becomes ₹1,14,888. The interest earned is ₹14,888.
Deposit
₹1,00,000
Tenure
2 years
At 6.5%
₹1,13,764
At 7%
₹1,14,888
At 7.5%
₹1,16,022
Post office time deposit (7%)
₹1,14,888
Tax on this interest
FD interest is added to your income and taxed at your slab rate. Banks deduct TDS when interest crosses the yearly limit; you can give Form 15G or 15H if your income is below the taxable limit.