FD vs Debt MF Calculator
Compare post-tax returns of Fixed Deposits and Debt Mutual Funds
FD Tax Treatment: 10% TDS is deducted from interest annually. Additional tax (as per slab) is payable on interest accrued each year.
Debt MF Tax Treatment: Gains are accumulated and taxed only at redemption based on your tax slab.
Higher Post-Tax Returns Option
Debt Mutual Fund
+₹3,063XIRR Difference: 0.23% higher returns
Net Maturity Value
₹6,43,105
Post-Tax XIRR
5.03%
Net Maturity Value
₹6,46,169
Post-Tax XIRR
5.26%
Investment Amount
₹5,00,000
Fixed Deposit
Debt Mutual Fund
How Does a Bank Fixed Deposit (FD) Work & How Is Interest Compounded?
A Fixed Deposit (FD) is an investment product offered by commercial banks, post offices, and NBFCs, offering guaranteed fixed interest for a predetermined tenure ranging from 7 days to 10 years.
In Indian commercial banks, cumulative FD interest is compounded quarterly (four times a year). This means interest earned in the first quarter is added to your principal to calculate interest in the second quarter, delivering an effective yield higher than the stated annual rate.
Bank deposits up to ₹5 Lakh (including principal and interest) per depositor per bank are fully insured by the Deposit Insurance and Credit Guarantee Corporation (DICGC), an RBI subsidiary.
Fixed Deposit Rules, Limits & Senior Citizen Benefits
| Parameter | Details & Guidelines |
|---|---|
| Typical Interest Rates | 6.5% to 7.5% for general public; 7.0% to 8.0% for senior citizens (extra 0.50%). |
| Compounding Convention | Compounded quarterly across Indian commercial banks and post offices. |
| TDS Threshold (Section 194A) | TDS deducted at 10% if annual bank FD interest exceeds ₹40,000 (₹50,000 for senior citizens). |
| Tax Saver FD | 5-year lock-in qualifies for Section 80C deduction up to ₹1.5 Lakh (interest remains taxable). |
| Premature Withdrawal | Permitted with a 0.5% to 1% interest rate penalty. |
Fixed Deposit (FD) vs Debt Mutual Funds vs RD
Fixed Deposit (FD)
Guaranteed nominal returns backed by DICGC up to ₹5 Lakh. Compounded quarterly with fixed tenure discipline.
Recurring Deposit (RD)
Same bank interest rate and quarterly compounding as FD, but deposited in monthly installments from regular cash flow.
Try RD Calculator →Arbitrage / Debt Funds
Mutual funds providing FD-like stability with superior post-tax returns for individuals in the 30% tax bracket.
Try SIP Calculator →