FD Rates 2026: How ₹1L–₹10L Grow in Top Indian Banks
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- Major Indian banks — HDFC Bank, SBI, ICICI Bank, and Axis Bank — offer FD rates between 6% and 7.25% annually, with senior citizens receiving an additional 50 basis points over regular rates
- Small finance banks tend to offer comparatively higher FD interest rates than major public and private sector lenders
- SBI sets the floor at 6.05% for regular FDs while IDFC First Bank leads at 7.1%; three-year FD rates across banks span 6.30% to 7.25%
- Repo rate changes do not alter interest on an active FD — the rate locked at the time of opening remains unchanged until maturity, though actual returns vary by the bank's compounding method (quarterly, monthly, or annually)
- FD interest is taxed under "Income from Other Sources" per the depositor's income tax slab, and under the old tax regime, 5-year FD contributions qualify for a Section 80C deduction up to ₹1.5 lakh
- Section 194A TDS is deducted at 10% (with PAN) once annual interest exceeds ₹50,000 for regular depositors and ₹1 lakh for senior citizens in FY 2025
- Form 121 (previously Form 15G and 15H, per the source) allows eligible depositors with nil tax liability to avoid TDS deduction, subject to specified conditions
Why it matters: The spread between SBI's 6.05% and IDFC First Bank's 7.1% on the same product materially changes post-tax earnings on ₹1 lakh–₹10 lakh investments—especially since TDS above ₹50,000 of annual interest (₹1 lakh for seniors) eats into returns and compounding frequency shifts final maturity value. Conservative depositors who fail to compare banks or submit Form 121 leave meaningful income on the table.
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