FD vs Mutual Fund Calculator
Compare fixed deposit and equity mutual fund returns after taxes over any investment period.
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Compound Interest Calculator
Example 1 โ Lump sum, no contributions
A = 1,00,000 ร (1.10)^10 โ โน2,59,374 โ more than 2.5ร growth
๐ What is the FD vs Mutual Fund Calculator?
Fixed Deposits and equity mutual funds are taxed completely differently in India, which means comparing their headline interest/return rates alone is misleading. This calculator runs both side by side with their actual respective tax treatments, so you see the real post-tax outcome, not just the pre-tax growth rate.
โ๏ธ How FD vs Mutual Fund is calculated
FD taxation โ taxed every year, regardless of withdrawal
FD interest is added to your taxable income and taxed at your income tax slab rate every single year it is earned, whether or not you withdraw it. A 30% tax bracket investor effectively loses 30% of every year's FD interest immediately.
Equity MF taxation โ taxed only on redemption, at a lower rate
Equity mutual fund gains are not taxed annually at all. Tax is only triggered when you actually sell, and the long-term capital gains rate (after the 2024 Budget changes) is 12.5%, with the first โน1.25 lakh of gains in a financial year exempt entirely.
Why this difference compounds significantly over time
Because FD tax is deducted every year, the base available to compound shrinks annually. Equity MF gains, left untaxed until redemption, compound on the full pre-tax balance for the entire holding period.
Equity LTCG tax (since 23 July 2024)
LTCG tax = max(0, gains โ โน1,25,000) ร 12.5%
FD: interest taxed annually at your income tax slab rate
๐งฎ Worked examples
Example โ โน5,00,000 over 10 years, 30% tax bracket
FD at 7% (taxed annually at 30% slab) vs equity MF at 12% (taxed only at redemption).
โ FD grows to โโน8.07 lakh post-tax. MF grows to โโน15.53 lakh pre-tax, with LTCG tax of โโน1.16 lakh, netting โโน14.37 lakh post-tax
Why the gap is larger than the rate difference alone suggests
The pre-tax rate gap is 5 percentage points (7% vs 12%), but the post-tax outcome gap is far larger.
โ Annual taxation on FD compounds the disadvantage every single year, on top of the lower starting rate
๐ก Original insights & how to use this calculator
Why FDs still make sense for short-term or capital-protection goals
Despite the post-tax disadvantage shown here, FDs remain appropriate for money needed within 1โ3 years or where capital protection matters more than growth.
Why high tax-bracket investors should weight this comparison most heavily
The annual-taxation drag on FDs is proportional to your tax slab โ a 30% bracket investor loses far more to annual FD taxation than someone in a 5% or 10% bracket.
Using both instruments together, not as an either/or choice
A common, reasonable approach uses FDs for near-term needs and emergency funds, while directing long-term goals (7+ years) toward equity mutual funds.
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๐ก Expert tips
FD interest is taxed at your income slab every year โ MF equity gains only at redemption.
For periods above 3 years, equity MF historically beats FD significantly.
The โน1.25 lakh LTCG exemption on MF equity gains makes moderate MF gains tax-efficient too.
๐ Learn more on WellFiLab
Visit โโ Common questions
Are FDs safer than mutual funds?
Yes โ FDs are insured up to โน5 lakh per bank by DICGC. Equity mutual funds carry market risk but historically deliver higher returns.
What is LTCG tax on mutual funds?
Long-term capital gains above โน1.25 lakh from equity funds held 1+ year are taxed at 12.5% (since the July 2024 Budget changes).
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