Financial Calculators
FD vs Equity Fund Calculator
One is taxed every year at your slab. The other, once, on the gain. The difference compounds.
Post-tax difference in favour of equity
₹12,44,795
- FD after yearly tax
- ₹16,13,448
- FD post-tax return
- 4.9%
- Equity fund after LTCG
- ₹28,58,242
- Equity post-tax return
- 11.07%
- LTCG tax paid at the end
- ₹2,47,606
FD interest is taxed at your slab every year, whether you withdraw it or not, so only the after-tax part compounds. An equity fund is taxed once, on the gain, when you sell. The comparison assumes the equity return is achieved; it is not guaranteed, and the FD is.
These figures are for illustrative purposes only and are not investment advice. Please consult your investment adviser for investment related advice.
Same rupees, different tax treatment
Fixed deposit interest is added to your income each year and taxed at your slab, even in a cumulative deposit where you never see the cash. Only the after-tax remainder compounds. An equity fund pays nothing until you sell, then pays long-term capital gains tax on the gain above an exemption, at a rate well below the top slab.
The result is that the gap between the two after tax is wider than the gap between their headline returns, and it widens with every year you hold. This calculator makes that visible, on the assumption that the equity return is actually achieved.
Two tax paths
FD: each year balance += balance x rate x (1 - slab)\nEquity: gross = amount x (1 + r)^years\n tax = max(0, gross - amount - exemption) x LTCG rateWorked example: Rs 10,00,000 for 10 years: a 7% FD at the 30% slab ends at Rs 16,13,448, a post-tax return of 4.9%. An equity fund at 12% grows to Rs 31,05,848 gross and Rs 28,58,242 after Rs 2,47,606 of LTCG tax, a post-tax return of 11.07%. The difference is Rs 12,44,795.
Frequently asked questions
The FD is guaranteed and equity is not. Is this a fair comparison?
It is a fair comparison of tax treatment, not of risk. The equity return is an assumption; the FD return is a contract. Use it to decide how much of your long-term money deserves the equity path, not whether all of it does.
What about a debt mutual fund instead of an FD?
Debt fund gains are now taxed at slab too, but only on redemption, so they defer tax rather than avoid it. That deferral alone is worth something over long periods.
Senior citizens get higher FD rates and a tax deduction on interest. Does that change things?
It narrows the gap. Enter the higher rate, and if your interest falls within the senior-citizen deduction, enter a lower effective slab.
Does the exemption apply every year?
The LTCG exemption is per financial year. Selling in tranches across years can use it more than once; the calculator assumes a single sale.
Let tax decide where the long-term money sits.
We split a portfolio between guaranteed and growth by when the money is needed, and by how each part is taxed.