₹10,000 in a fixed deposit for 3 years at 7% (interest added every quarter) becomes ₹12,314. The interest earned is ₹2,314.
Deposit
₹10,000
Tenure
3 years
At 6.5%
₹12,134
At 7%
₹12,314
At 7.5%
₹12,497
Post office time deposit (7.1%)
₹12,351
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.