About the FD vs Debt Fund Calculator
What is the FD vs Debt Fund Calculator?
Since April 2023, gains on debt mutual funds bought after 1 April 2023 are taxed at your slab rate, just like FD interest, with no indexation benefit. The remaining differences are the return itself and when the tax is paid: FD interest is taxed every year, while debt fund gains are taxed only when you redeem.
Enter the amount, period, FD rate, the debt fund's expected return after expenses and your tax slab. This FD vs debt fund calculator shows each option's value after tax and which comes out ahead.
How to use the FD vs Debt Fund Calculator
- Amount to Invest (₹) (sample: 5,00,000)
- Holding Period (years) (sample: 3)
- FD Interest Rate (% per year) (sample: 7)
- Debt Fund Return After Expenses (% per year) (sample: 7.5)
- Your Income Tax Slab (sample: 30%)
- Press Compare FD and Debt Fund (results also refresh as you type). The result card shows the Better Post-Tax Option, along with FD value after tax, Debt fund value after tax, FD tax (paid every year on accrual) and Debt fund tax (paid only on redemption).
Formula used
Post-tax value = P + Gain × (1 − Slab × 1.04)
- FD gain = P × (1 + r ÷ 4)^(4t) − P
- Debt fund gain = P × (1 + fund return)^t − P
Deferring tax to redemption is an extra benefit of debt funds that this simple comparison does not fully capture.
Worked example
These are the sample values already filled in the calculator above, and the result it returns for them:
| Input | Sample value |
|---|---|
| Amount to Invest (₹) | 5,00,000 |
| Holding Period (years) | 3 |
| FD Interest Rate (% per year) | 7 |
| Debt Fund Return After Expenses (% per year) | 7.5 |
| Your Income Tax Slab | 30% |
| Result | Value |
|---|---|
| Better Post-Tax Option | Debt fund, by ₹3,735 |
| FD value after tax | ₹5,79,615 |
| Debt fund value after tax | ₹5,83,350 |
| FD tax (paid every year on accrual) | ₹36,105 |
| Debt fund tax (paid only on redemption) | ₹37,798 |
Tips for using the FD vs Debt Fund Calculator
- Debt funds offer daily liquidity without premature-withdrawal penalties, but returns are not guaranteed.
- Bank FDs are insured up to ₹5 lakh per bank by DICGC; debt funds are not.
- Check the fund's credit quality and duration before investing.