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Returns, Tax & Bank Comparison

Cumulative vs Non-Cumulative FD

Cumulative FD: Interest compounds and is paid along with principal at maturity. Best for wealth building. Higher effective returns due to compounding.

Non-Cumulative FD: Interest paid periodically — monthly, quarterly, or annually. Best for regular income needs like retirees and senior citizens.

FD Tax & TDS Rules 2026

FD interest is taxed under "Income from Other Sources" at your income tax slab rate.

TDS Rule: Bank deducts TDS @10% if annual interest from all FDs in one bank exceeds ₹40,000 (₹50,000 for senior citizens).

No TDS? Submit Form 15G (if income below taxable limit) or Form 15H (for senior citizens) at the start of every financial year.

ELSS vs FD: ELSS gives ₹1.5L deduction under 80C. FD gives 80C benefit only for 5-year tax-saver FDs.

FD Ladder Strategy — Explained

Instead of putting ₹5 lakh in one 5-year FD, split into 5 × ₹1 lakh FDs maturing in 1, 2, 3, 4, 5 years:

• When 1-year FD matures → reinvest in a new 5-year FD
• Every year, one FD matures for liquidity
• You always have money maturing soon if needed
• You benefit from higher long-term rates
• Protection against interest rate fluctuations

Which Bank FD is Best in 2026?

Among PSU Banks: SBI, Bank of Baroda, and Union Bank offer 6.5–7.25% for 1-3 years.

Among Private Banks: HDFC, ICICI, and Axis offer 7.0–7.40% for 1-3 years.

Among Small Finance Banks: Unity SFB, Suryoday SFB, and Jana SFB offer highest rates at 8.5–9.5% — but come with slightly higher risk (covered by DICGC up to ₹5 lakh).

Post Office FDs offer 6.9–7.5% with sovereign guarantee — safest option.