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How much will ₹5 lakh in a Fixed Deposit grow to in 5 years?

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The Answer
₹7.43 Lakh
at 8% p.a. (quarterly compounding)

Calculate the exact maturity value of a ₹5 lakh fixed deposit at 8% interest, compounded quarterly over 5 years, including TDS implications.

By Aditya GuptaAccounting & Finance EducatorLast reviewed May 31, 2026Source: RBI directions

Why FD Returns Matter for Conservative Savers

Fixed deposits remain the default savings instrument for millions of Indian households despite the rise of mutual funds. A ₹5 lakh FD at 7.1% interest compounded quarterly grows to about ₹7.10 lakh in 5 years — a 42% absolute return that feels safe but barely beats inflation. Senior citizens get 0.5% more, taking the same FD to roughly ₹7.32 lakh.

The reason FDs feel attractive is psychological: guaranteed nominal returns, deposit insurance up to ₹5 lakh per bank, no market drama. The reason they’re a poor wealth-building tool is real returns. With CPI averaging 5-6% in India, a 7.1% FD gives 1-2% real return — barely positive. Compare that to a 12% equity SIP, where even after taxes and volatility, real returns are 5-7%.

Where FDs do shine: for emergency funds (3-6 months of expenses), short-term parking (under 2 years), senior citizens prioritising income certainty, and tax-saving 5-year FDs that qualify for 80C deduction in the old regime. Just don’t use them for goals more than 5-7 years out.

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FD Maturity Calculator

Maturity Amount
Total Interest Earned
Estimated TDS Deducted
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How We Calculated This

Principal: ₹5,00,000
Interest rate: 8% p.a. (typical bank FD rate, 2025)
Compounding: Quarterly (4 times/year)
Tenure: 5 years (20 quarters)
TDS: 10% deducted if annual interest exceeds ₹40,000
No premature withdrawal penalty

Frequently Asked Questions

Is FD interest fully taxable?+
Yes — FD interest is added to your income and taxed at your slab rate. If you’re in the 30% slab, your effective post-tax FD return is only ~5.5% on an 8% FD, compared to equity MF LTCG at 12.5%.
Can I get more than 8% on FD in 2025?+
Small finance banks and NBFCs often offer 9–10.5% on FDs. However, these carry slightly higher risk and may not be covered by DICGC insurance beyond ₹5 lakh per depositor.
Is FD better than PPF for a 5-year horizon?+
For 5 years: FD offers more liquidity and potentially similar returns. PPF has a 15-year lock-in but is completely tax-free including interest, making it better for long-term planning.
What is TDS on ₹5 lakh FD at 8%?+
Annual interest = ₹40,000. This is right at the ₹40,000 threshold — just above it, TDS of 10% = ₹4,000/year (₹20,000 total) would be deducted. You can submit Form 15G/H to avoid TDS if income is below taxable limit.
Can I do FD for a senior citizen at a higher rate?+
Most banks offer 0.25–0.50% extra for senior citizens. At 8.5%, ₹5 lakh grows to ₹7.60 lakh in 5 years. Also, senior citizen FD TDS threshold is ₹50,000/year.