Comprehensive Fixed Deposit Calculator – I: Total and Advance Tax Liability

If you are holding fixed deposits, you could use this calculator to compute:

  • tax you need to pay each financial year after accounting for TDS
  • advance tax instalments to be paid (if applicable)

This calculator is a spin-off my recurring deposit calculator which was featured in OneMint. The calculator was requested by Anshu and is based on discussions with Praveen Kumar regarding advance tax.

Of all the calculators I have made, RD and FD calculators would rank among the toughest. This is because of the nature of compounding and nature of taxation.

Tax on FDs and Rds:

Almost everyone agrees that tax on FDs should be paid each financial year. However when it comes to RDs some claim it has to be paid each year while others claim that there is a choice: either pay each year or upon maturity.

The source of this confusion is (like always) the kind of information available. According to Indian tax laws, an investor can choose the method of taxation (pay each financial year or on maturity) for certain sources of income. Bemoneyaware has written a wonderful article on this (you could also refer to this livemint article).

In a more recent directive, the tax man explicitly states that tax on cumulative deposits has to be paid on accrual basis (that is each financial year). This automatically includes RDs. I would like to go with this understanding since it the most recent resource I could find on the subject.

Does this mean for non-cumulative FDs (ones which pay out interest periodically) you could choose to pay tax each financial year or upon maturity?! Arguably yes. Nitin Soni a CA is of the view that “In the absence of a specific provision in the IT Act, any income earned in a year is taxable within that year”. This makes sense to me (although it would be comforting to find a source to ratify this statement!).

If I ever hold a RD or FD I will pay tax each financial year simply because it took some doing getting this idea onto Excel!

Tax Googlies:

  • There plenty of articles available on the WWW which advice people on how to avoid TDS for FDs. Utter nonsense. Stay away from all of them. Bottom line: FD interest is taxable as per slab. If your slab is 10% then bank does all the work and need not pay any more tax (on FD income!). If it is higher than 10% then you need to compute the difference and pay. This is where this FD calculator will help.
  • In general, “no TDS applicable” is nothing more than a sales pitch. It does not mean ‘no tax applicable’.

If you are young and are accumulating wealth there are plenty of tax-friendly ‘debt’ options. There is no need for you to use FDs and break your head about how much tax to pay and when to pay it.

Download the FD calculators  

(Day-duration computations are lengthy. So after entering data in each green cell, give a few seconds gap for Excel to complete calculations).

Note: Advance tax is applicable only if the total taxable income from all sources exceeds Rs. 10,000 in a financial year. Here is a good read on the subject.

Why the ‘I’ in the title is there a part II?   Coming Soon: Comprehensive Fixed Deposit Calculator – II: Why it’s a dumb idea to invest your money in your spouse’s name!

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14 thoughts on “Comprehensive Fixed Deposit Calculator – I: Total and Advance Tax Liability

  1. Rakesh

    Thanks a ton Pattu, My family invests in FD's. I have used this sheet to compare with the returns provided by the banks and they are accurate.

  2. Ravindra

    can you please provide me fixed deposit calculator which include date feature i.e starting date of the fixed deposit and closing date.

    1. pattu

      May I ask why you need this? It can be done. Exact match with the bank statement will be tough esp If a general calculator is made. If you are sure about the number of days then perhaps something can be worked out. Let me see what I can do.

  3. Ravindra

    I have fixed deposits maturing at various dates. These deposits are taken over a period of time. In case i want to cancel (premature closer) a deposit for immediate requirement of funds manually i am verifying and sleeting deposits with min loss. Further, interest calculation also i have seen banks are making mistakes (Sunday and holiday interest was not credited to my account because bank server was not on for those dates). So basically i need to cross check interest credit in the bank statement. I shall be glad if you could provide solution to some of the issues. Ravindra

    1. pattu

      This will be tough to implement in excel. Have you tried the FD-days calculator? You can use it for any duration less than 30 days, and it will give you the total interest. Let me know if this is not useful to you and why.

  4. ashish madhav

    I have a 6 year FD (started in the year June 2013) in United bank, the interest for which will be credited in my account at the end of 6th year (June 2019).
    For the 1st year, the total interest accrued is 39000 for which 3900 TDS has been deducted.
    My question is that since I am not getting that interest amount now, how can I file this interest amount and the TDS in my ITR.(Do I need to show the interest amount under 'Income from other Source')

    1. pattu

      For TDS you will need to use the receipt from the bank. You will need to show the interest from June to Mar 31st 2014 as income from other sources.

  5. Montu Sona

    Hi Pattu,
    As per my personal experience, FDs are the most peaceful option for the peaceful part of the portfolio.
    Debt funds now have lost tax advantage and also too much dependent on the interest rates defined by RBI.

  6. Pingback: Fixed Deposits: Annual Yield vs. Annual Interest

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