₹2,00,000 in a fixed deposit for 2 years at 7% (interest added every quarter) becomes ₹2,29,776. The interest earned is ₹29,776.
Deposit
₹2,00,000
Tenure
2 years
At 6.5%
₹2,27,528
At 7%
₹2,29,776
At 7.5%
₹2,32,044
Post office time deposit (7%)
₹2,29,776
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.