Kotak Bank FD Interest Rates, Compounding & TDS Guidelines
Fixed Deposits (FD) remain one of the most reliable capital-preservation tools for Indian investors. Leading private and public sector banks such as Kotak Mahindra Bank, SBI, and HDFC Bank offer structured interest slabs depending on deposit tenure and depositor category.
1. Kotak Mahindra Bank FD Interest Rate Structure
Kotak Mahindra Bank offers competitive interest rates with higher return brackets on specific tenures:
| Deposit Tenure | Regular Citizen Rate (% p.a.) | Senior Citizen Rate (% p.a.) |
|---|---|---|
| 390 Days (12 Months 25 Days) | 7.40% | 7.90% |
| 23 Months | 7.30% | 7.80% |
| 1 Year to 389 Days | 7.10% | 7.60% |
| 5 Years Tax Saving FD | 7.00% | 7.50% |
2. How Quarterly Compounding Works
In accordance with Reserve Bank of India (RBI) regulations, interest on cumulative fixed deposits is compounded quarterly (every 3 months). The mathematical compounding formula used by this calculator is:
Maturity Value (A) = P × [1 + (r / 400)]^(4 × t)
Where P is the principal deposit amount, r is the annual interest rate in percent, and t is the tenure in years. Because interest is added to the principal every quarter, your effective annual yield is higher than the nominal interest rate.
3. Tax Deductions (TDS) Under Section 194A
Fixed Deposit interest is fully taxable under the head Income from Other Sources at your applicable income tax slab rate:
- TDS Threshold: If your total interest from all FDs across branches of a bank exceeds ₹40,000 in a financial year (or ₹50,000 for senior citizens), the bank will deduct 10% TDS.
- No PAN Penalty: If PAN is not provided, TDS is deducted at 20%.
- Form 15G / Form 15H: If your total estimated taxable income for the year is zero, submit Form 15G (Form 15H for senior citizens) at the beginning of the financial year to receive interest without TDS deduction.