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FD Returns After Tax and Inflation: What You Really Earn
3 Oct 2026A 7% FD sounds fine. But tax and inflation take a big share.
₹10 lakh FD at 7%, inflation 5%
Interest in year 1 is about ₹71,859 with quarterly compounding.
| Your tax slab | Tax on interest | Post-tax return | Return after inflation |
|---|---|---|---|
| 5% | ₹3,737 | 6.81% | +1.73% |
| 20% | ₹14,947 | 5.69% | +0.66% |
| 30% | ₹22,420 | 4.94% | −0.05% |
In the 30% slab, your money does not grow in real terms at all. Check your own case in the FD Post-Tax Return Calculator.
What this means
- FDs are good for safety and short-term goals, not for growing wealth over many years.
- Your tax slab matters as much as the interest rate.
- If your income is low, you can submit a form to avoid TDS where you qualify.
Other options to compare
- Debt mutual funds, with different tax rules.
- PPF and other small-savings schemes, for tax-free or higher rates. See NSC vs PPF vs FD.
- Equity for long-term goals, with market risk.
Tax rules change, so check the latest rules or ask a tax professional.
Try the FD Post-Tax Return Calculator