₹10,000 in a fixed deposit for 2 years at 7% (interest added every quarter) becomes ₹11,489. The interest earned is ₹1,489.
Deposit
₹10,000
Tenure
2 years
At 6.5%
₹11,376
At 7%
₹11,489
At 7.5%
₹11,602
Post office time deposit (7%)
₹11,489
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.