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How to calculate Returns on your Fixed Deposits
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Disclaimer: This Article is for information purpose only. The views expressed in this Article do not necessarily constitute the views of Kotak Mahindra Bank Ltd. (“Bank”) or its employees. Bank make no warranty of any kind with respect to the completeness or accuracy of the material and articles contained in this Newsletter. The information contained in this Article is sourced from empaneled external experts for the benefit of the customers and it does not constitute legal advice from Kotak. Kotak, its directors, employees and the contributors shall not be responsible or liable for any damage or loss resulting from or arising due to reliance on or use of any information contained herein.
Access our online FD calculator and enter the amount and fixed interest rate offered to you. You will get the results within seconds.
The interest rate for fixed deposits with Kotak Bank varies with maturity period, deposit amount, type of depositor, etc. For instance, the rates on fixed deposits are higher for resident senior citizen individuals (age 60 years & above) compared to residing Indians under the age of 60 years, exception being FDs made through the feature of ActivMoney or Non-withdrawable FD, whereby senior citizen rate benefit is not offered)
At Kotak, you can start a fixed deposit with a minimum amount of Rs. 5,000.There isn’t any maximum limit for the fixed deposit amount.
Yes, we have an option for premature withdrawal from fixed deposit (Except for tax saving or Non-withdrawable FD)
However, As per the Terms & Conditions of the bank for premature withdrawal, interest will be paid at the rate prevailing on the date of deposit for the tenure the deposit or the withdrawn amount remained with the bank or at the contracted rate, whichever is lower, after deducting applicable penal charge for premature withdrawal
As per Terms & Conditions of Fixed Deposit Accounts of the Bank, the penal charge on premature closure of Fixed Deposits including partial closure has been fixed by the bank as below on Fixed Deposits booked/ renewed on or after 20th May, 2022.
Tenure of Fixed Deposit |
Penalty |
|---|---|
Less than equal to 180 days |
Nil |
Greater than 180 days to less than or equal to 364 days |
0.50% |
Greater than or equal to 365 days |
1.00% |
Applicable TDS rates are:
Tax Rate |
Health and Education Cess |
TOTAL |
|
Resident Individuals & HUF |
10% |
Nil |
10% |
Corporate Entity |
10% |
Nil |
10% |
NRO/ foreign companies |
30% |
4% |
31.2%* |
Firms |
10% |
Nil |
10% |
Disclaimers:
As per section 206AA introduced by Finance (No. 2) Act, 2009 w.e.f. 01.04.2010, every person who receives income on which TDS is deductible shall furnish his PAN, failing which TDS shall be deducted at rate of 20% in case resident individuals and domestic companies and 31.2% (plus surcharge wherever applicable) in case of NRO/ foreign company deposits. Tax laws are subject to change and amendments from time to time which may affect above rates.
*Rate may further be increased by the surcharge wherever applicable.
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Fixed deposits are one of the most popular and convenient investment options in the market, due to their assured returns. But, have you ever wondered how interest on fixed deposit amounts are calculated in banks? How are the interest rates calculated and what factors determine the final maturity amount? Here is a guide on how to calculate returns on your Fixed Deposits.
Reinvestment deposit interest compounded quarterly
The following formula is used for calculating maturity amount for your fixed deposits-
A = P (1 + (r/400))^n
Where “A” is the maturity amount, “P” the deposit amount, “r” is the rate of interest and “n” is the number of quarters for the chosen period.
For example, if you invest Rs.2 lakh for a period of 3 years at an interest rate of 10%, putting the values in the above formula would get you:
A= 200000 x (1+(10/400)^ (4 quarters x 3 years) = Rs.2,68,978
Thus, interest earned on the deposit for 3 years period on quarterly compounded basis is Rs.68,978/-.
For the ease of calculation you can take aid of our online financial calculator, where you just need to fill the values and tenor for which you propose to keep the funds with the bank; the calculator displays the maturity value along with the rate offered by the bank for the chosen tenor.
The factors affecting the interest earned and the maturity amount are -
If you choose to take monthly interest the rate of interest would be discounted at the same rate and hence, the interest quantum earned is slightly less than quarterly pay- out. If you choose quarterly interest pay out option, the formula to arrive at interest quantum I is PxTxR/(365@x100) where P is principal invested, T is term in days, R is rate of interest (@366 days in a leap year).
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