₹2,00,000 in a fixed deposit for 3 years at 7% (interest added every quarter) becomes ₹2,46,288. The interest earned is ₹46,288.
Deposit
₹2,00,000
Tenure
3 years
At 6.5%
₹2,42,682
At 7%
₹2,46,288
At 7.5%
₹2,49,943
Post office time deposit (7.1%)
₹2,47,015
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.