Lesson 7 of 28 · What your FD really earns · 3 min read · Reviewed 15 Oct 2026
FD interest is added to your income and taxed at your slab rate. A 7% FD in the 30% slab gives about 4.8% after tax and cess. With prices rising 6% a year, your money loses about 1.1% of its buying power every year.
An FD rate is the headline. Interest is added to your income every year and taxed at your slab rate, even if you don’t withdraw it.
Take inflation off what is left and you get the real return: how much more you can actually buy. In the higher slabs, it is often below zero.
Key idea: Real return after tax = FD rate × (1 − your tax rate), minus inflation.
Try the calculator and the one-question quiz on this page to check your own numbers.
Yes. Interest is taxable in the year it is earned, even on a cumulative FD that pays out only at maturity.
Yes, for money you need on a fixed date or cannot risk, such as an emergency fund or a fee due next year.
Most banks pay seniors about 0.25% to 0.5% more, and the tax-free limit for interest is higher for them. Check your bank’s current rates.
For learning only, not investment advice. Designed and built by people who have worked at India’s leading wealth management firms.