₹5,00,000 in a fixed deposit for 2 years at 7% (interest added every quarter) becomes ₹5,74,441. The interest earned is ₹74,441.
Deposit
₹5,00,000
Tenure
2 years
At 6.5%
₹5,68,819
At 7%
₹5,74,441
At 7.5%
₹5,80,111
Post office time deposit (7%)
₹5,74,441
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.