Fixed Deposits (FDs) are one of India's most popular investment instruments, offering guaranteed returns and safety of capital. However, the actual returns from your FD investment can be significantly impacted by two crucial factors: tax liability and inflation. This calculator helps you understand your real returns by considering both these factors.
Interest earned from Fixed Deposits is fully taxable according to your income tax slab. For example, if you're in the 30% tax bracket, nearly one-third of your interest earnings go towards taxes. This calculator factors in your tax rate to show you the actual post-tax returns you'll receive from your FD investment.
While FDs offer guaranteed nominal returns, the real value of your investment can be eroded by inflation. For instance, if your FD offers 6% interest and inflation is at 5%, your real rate of return is only 1%. Our calculator adjusts your returns for inflation to show you the true purchasing power of your maturity amount.
The calculator provides three crucial values:
Many investors focus only on the nominal interest rate while investing in FDs. However, to make informed investment decisions, it's crucial to consider both tax implications and inflation impact. For instance, a 7% FD might seem attractive, but if you're in the 30% tax bracket and inflation is at 6%, your real returns could actually be negative.
Use this calculator to:
Note: This calculator assumes a constant interest rate and inflation rate throughout the tenure. Actual rates may vary over time. For specific tax advice, please consult a tax professional.