Understanding Fixed Deposit Returns in Sri Lanka
A fixed deposit (FD) is one of the most straightforward savings instruments available in Sri Lanka. You deposit a lump sum with a bank for a fixed period, and at the end of that period you receive your principal plus the agreed interest. This calculator helps you estimate exactly how much you will earn before committing your money.
How FD Interest is Calculated
Most Sri Lankan banks use simple interest for standard fixed deposits. The formula is:
For example, if you deposit LKR 500,000 at 9% per annum for 12 months: Maturity = 500,000 × (1 + 0.09 × 1) = LKR 545,000. Your interest earned is LKR 45,000.
Advance Income Tax on FD Interest
Interest income from fixed deposits in Sri Lanka is subject to Advance Income Tax (AIT) at 10%, deducted at source by the bank before the interest reaches your account. This replaced the earlier 5% withholding tax on resident individual interest income for interest paid on or after 1 April 2026, under the Inland Revenue (Amendment) Act No. 2 of 2025.
By default this calculator shows you the net figure — what the bank actually credits after the 10% deduction — because that is the number that matters when you are comparing offers. Switch the tax treatment above to see gross returns at the advertised rate instead.
Two important exceptions. Interest on foreign currency accounts is outside this deduction, and resident individuals whose assessable income for the year does not exceed Rs. 1,800,000 can file a self-declaration with each bank to stop the deduction at source. The declaration must reach the bank before the interest is paid; it is not applied retrospectively. Our full guide to AIT on FD interest walks through who qualifies and how to file.
Monthly vs. Maturity Interest Payout
Banks in Sri Lanka typically offer two main interest payout options:
- At maturity: You receive the full interest at the end of the tenure. This usually attracts the highest rate and is ideal if you do not need interim income.
- Monthly payout: Interest is credited to your account each month. Useful for retirees or those needing regular income. Some banks offer a slightly lower rate for this option.
Tips to Maximise Your FD Returns
- Compare across tenures: The highest rate is not always on the longest tenure. Use this calculator to compare 6-month, 12-month, and 24-month returns for the same amount.
- Ask about promotional rates: Banks occasionally run promotional FD campaigns with rates higher than their standard published rates.
- Senior citizen rates: If you are aged 60 or above, most Sri Lankan banks offer an additional 0.5% to 1.0% per annum on top of the standard rate.
- Ladder your deposits: Instead of placing all your money in one FD, split it across multiple tenures (e.g., 3 months, 6 months, 12 months). This gives you regular maturity dates to reinvest at prevailing rates.
- FD as loan collateral: Most banks allow loans up to 90% of your FD value. This means you can access liquidity without breaking your deposit.
Which Bank Offers the Best FD Rate?
The best FD rate depends on your tenure, deposit amount, and risk preference. Private banks typically offer slightly higher rates than state banks, while state banks (BOC, NSB, People's Bank) carry stronger implicit government backing. Use the results above to compare all banks for your specific tenure and make a well-informed decision.
This calculator uses simple interest as applied by most Sri Lankan banks for standard FDs. Results are indicative only. Always verify current rates and terms directly with your bank before making any investment decision.