FD Real Return Calculator
Your FD's sticker rate is not what you earn. Tax takes a slab-sized bite every year, and inflation shrinks what the rest can buy. This calculator shows the two numbers that matter: your post-tax return, and your real return, which is the growth in what your money can buy.
Your fixed deposit
What you actually earn
| Sticker rate | — |
| Post-tax return (annualised) | — |
| Real return (annualised) | — |
| Maturity value (pre-tax) | — |
| Maturity value (post-tax) | — |
| Total tax paid | — |
| Maturity value in today's purchasing power | — |
| Purchasing power gained / lost | — |
Model: quarterly compounding; each year's accrued interest taxed at your slab (+4% cess) from the corpus; inflation applied via the Fisher relation. TDS is a timing effect and doesn't change the total.
The three layers of an FD return
Every fixed deposit return has three layers, and banks only advertise the first:
- The sticker rate, say 7%. This is the number on the poster.
- The post-tax rate. Interest is taxed at your slab every year on accrual. At the 30% slab (plus cess), 7% becomes roughly 4.8%, and that's the rate your money compounds at.
- The real rate. Subtract inflation (properly, via the Fisher relation, which this tool uses). At 5% inflation, that 4.8% lands near zero. A high-slab investor's FD can lose purchasing power while the rupee number grows.
None of this is a scandal; it's arithmetic. Most people just make long-term decisions using layer 1 while living in layer 3, and the gap compounds for decades.
What to do with this number
- If the real return is near zero or negative and this is long-term money, compare alternatives on the same post-tax basis: the FD vs bond calculator does it in a minute, and the beginner map ranks the safe options.
- If this is emergency or short-horizon money, a modest or even negative real return is the fair price of instant access; that's what FDs are for. (A T-bill ladder can still improve it.)
- If you're in a low slab, FDs look much better, so run your actual slab instead of assuming the worst.
- If you're 60+, the government's administered schemes beat bank FDs before you take any extra risk at all.
Why we compute tax annually, not at maturity
A common calculator shortcut applies tax once at maturity, which overstates returns. In reality accrued FD interest is taxed each financial year, which means the taxed portion never compounds. This tool simulates it the way it actually happens, which is also why its post-tax numbers are slightly lower (and more honest) than most banks' calculators.
Frequently asked questions
What is the 'real return' on a fixed deposit?
The return after both tax and inflation. Tax takes a slab-sized bite of the interest every year, and inflation shrinks what the remaining rupees can buy. Real return is the growth in your purchasing power. For high-slab investors, a 7% FD often ends up between 0% and 1.5% real.
Why is FD interest taxed every year even if I chose a cumulative FD?
Interest on FDs is taxable on accrual. Each financial year's accrued interest is added to your income and taxed at slab, whether or not it's paid out. Banks also deduct TDS above ₹50,000 of interest a year (₹1 lakh for senior citizens). That annual taxation is why FDs compound slower than the sticker rate suggests.
What inflation number should I use?
The calculator defaults to 5%, roughly the middle of the RBI's 2–6% tolerance band. Use your own number: urban lifestyle inflation (education, healthcare, rent) often runs hotter than headline CPI. The point of the tool is the mechanism rather than decimal precision, so try 4% and 6% to see your range.
Does this mean FDs are bad?
No. It means FDs are for safety and liquidity rather than growth. They're excellent for emergency funds and short-horizon money. The mistake is holding large long-term savings in an FD believing the sticker rate is what you earn. For that money, compare alternatives post-tax: government bonds, small-savings schemes or listed bonds. The FD vs Bond calculator does that properly.
Do senior citizens get a better deal?
Meaningfully: +0.50% typical rate premium, a ₹50,000 annual interest deduction under Section 80TTB, a ₹1 lakh TDS threshold, and access to SCSS at 8.2% (Jul–Sep 2026) which beats bank FDs outright. The senior citizens' guide covers the full menu.
Related tools & guides
Educational tool, last reviewed July 2026. Results are estimates based on your inputs and standard market conventions; actual traded prices, taxes and platform charges may differ. Not investment advice; see the disclaimer.