FD Interest Calculator NepalWhat your FD pays after the 6% TDS.

How the calculator works

An FD pays a quoted annual rate, but what you keep depends on two things the rate does not tell you: how often the bank posts interest, and the tax it takes before posting. The calculator accrues interest each month at the annual rate divided by 12 on the current balance. At every posting date it adds that interest to the deposit, less the 6% TDS, so the next period earns interest on the net amount. A tenure that ends mid-cycle, such as a seven-month FD posted quarterly, gets its part-period interest at maturity. The effective yield is the single compound annual rate that turns your principal into the maturity value over the tenure, which puts deposits of different lengths and posting schedules on one comparable number.

Why 6%, not 5%

Section 88(3) of the Income Tax Act 2058 requires a bank or financial institution to withhold six percent of the interest it pays a natural person. The rate was 5% until the Finance Act 2080 raised it from FY 2080/81, the year that began in mid-July 2023. The budget-year tax summary records the change as "6% (Previously 5%)" and applies it to deposit interest paid by banks, financial institutions and cooperatives alike. Section 92(1)(e) then makes that withholding final, so the interest is not added to your salary and taxed again at your slab. A saver in the 1% band and one in the top band both give up exactly 6% of their interest.

Plenty of FD calculators online still deduct 5%. On Rs 5 lakh at 4% for a year the gap is about Rs 200, which is small on one deposit, but it means every net interest figure, maturity value and yield those tools show is overstated.

Quarterly, monthly, or paid out

Quarterly posting is the common cycle for individual FDs. Kumari Bank's FD Plus says accrued interest is "posted and accumulated on a quarterly basis", and Muktinath Bank's rate sheet effective Kartik 2083 lists every individual FD tenure as paid quarterly, while noting that FD interest can also be paid monthly. The other common arrangement pays the interest out to a linked savings account instead of adding it to the deposit.

That last choice matters more than the posting frequency, because paid-out interest stops compounding inside the FD. On Rs 10 lakh at 4% for five years, quarterly posting with TDS ends at about Rs 12.06 lakh; paying the interest out leaves Rs 11.88 lakh of principal plus interest, roughly Rs 17,800 less, before counting whatever the savings account pays on those payouts. The second table under the results runs all four schedules on your own inputs.

Reading the yield

The after-tax effective yield is the number to compare against inflation and against the alternatives. A 4% FD posted quarterly yields about 3.81% a year after TDS. If prices rise faster than that, the balance grows while its purchasing power shrinks; the where to park money now guide runs that comparison with recent NRB figures. A recurring deposit at the same quoted rate earns noticeably less, because most of its money is in for only part of the term.

What this calculator leaves out

• Breaking the FD early. Banks re-price a broken deposit at a lower rate and may add a penalty; the premature withdrawal guide has the loss math.
• Renewal at a new rate. A deposit that auto-renewsis booked at that day's rate sheet, not your original rate. Rerun the numbers at renewal.
• The Rs 25,000 exemption. Section 11(12A) exempts up to Rs 25,000 a year of interest on deposits at micro-finance institutions, rural development banks, postal saving banks and certain cooperatives. Commercial bank FDs are not on that list, so the calculator applies TDS from the first rupee.
• Non-individual depositors. The 6% is the rate for natural persons. Companies, other institutions and non-residents are taxed under different rules.