₹5,00,000 in a fixed deposit for 3 years at 7% (interest added every quarter) becomes ₹6,15,720. The interest earned is ₹1,15,720.
Deposit
₹5,00,000
Tenure
3 years
At 6.5%
₹6,06,704
At 7%
₹6,15,720
At 7.5%
₹6,24,858
Post office time deposit (7.1%)
₹6,17,538
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.