FD returns: Your bank offers 6.35% interest, but how much do you actually earn after tax? Check returns across top banks
A bank fixed deposit may offer an interest rate of 6.35%, but the amount you eventually earn can be considerably lower once tax is accounted for. For investors in the 30% tax bracket, the post-tax return on a five-year bank FD averages just 4.60%, according to the November 2026 Wealth Conversations report by FundsIndia.
The report compares fixed deposit rates offered by HDFC Bank, ICICI Bank, State Bank of India (SBI) and Punjab National Bank (PNB) for deposits below ₹3 crore. The rates are based on information available on the respective banks' websites as of 8 November 2026. FundsIndia has calculated post-tax returns assuming a 30% tax rate.
The difference between the advertised interest rate and the post-tax return is important when comparing FDs. While the average five-year FD rate across the four banks is 6.35%, the corresponding post-tax return is 4.60%.
ICICI Bank offers the highest five-year FD interest rate among the four banks at 6.60%. After accounting for tax at 30%, the return comes down to 4.79%.
HDFC Bank offers 6.40% for the same tenure, translating into a post-tax return of 4.64%. PNB's five-year FD rate stands at 6.35%, with a post-tax return of 4.60%. SBI offers 6.05%, which translates into 4.38% after tax.
|
Five-year pre-tax rate |
Post-tax return |
|
| HDFC Bank | 6.40% | 4.64% |
| ICICI Bank | 6.60% | 4.79% |
| SBI | 6.05% | 4.38% |
| PNB | 6.35% | 4.60% |
| Average | 6.35% | 4.60% |
| Source: FundsIndia Research, based on respective bank websites as of 8 November 2026. Post-tax rates assume a 30% tax rate. |
The gap between the highest and lowest post-tax returns is 0.41 percentage points. While the difference may appear small, it can matter when investors are comparing deposits across banks and deciding where to lock in their money.
The difference between pre-tax and post-tax returns is visible across shorter and longer deposit tenures as well. For six-month deposits, the average interest rate is 5.13%, but the post-tax return is 3.57%.
For one-year deposits, the average pre-tax rate is 6.29%, while the post-tax return is 4.40%. The average rate rises to 6.36% for two-year deposits, translating into 4.49% after tax.
Three-year deposits offer an average pre-tax rate of 6.40%, with the post-tax return at 4.56%. For five-year deposits, the average pre-tax rate is 6.35%, and the post-tax return is 4.60%.
|
FD tenure |
Average pre-tax rate |
Average post-tax return |
| 6 months | 5.13% | 3.57% |
| 1 year | 6.29% | 4.40% |
| 2 years | 6.36% | 4.49% |
| 3 years | 6.40% | 4.56% |
| 5 years | 6.35% | 4.60% |
The figures show why investors should look beyond the headline FD rate. The post-tax return gives a more relevant estimate of what an investor in the assumed tax bracket retains from the interest earned.
The report notes that FD rates remained unchanged after RBI rate cuts. Its comparison of rates across the four banks captures the rates available as of 8 November 2026.
However, the post-tax figures should not be confused with inflation-adjusted returns. The report does not calculate the real return on these deposits after accounting for inflation. The purchasing power of the money earned will depend on inflation over the investment period.
FundsIndia's debt-market takeaways offer a broader perspective. The report says debt investments have delivered returns above inflation over the long term, defined as 10–15 years. It also puts the long-term return expectation for debt at inflation plus 1–2%.
The report further recommends that high-credit-quality, shorter-duration debt funds form part of an investor's core debt portfolio.
For FD investors, the key takeaway is to compare the interest rate with the post-tax amount they are likely to retain. A 6.35% headline rate does not mean an investor in the 30% tax bracket earns 6.35% on the deposit after tax. On the five-year average in FundsIndia's comparison, that return is 4.60%.
Kirti jha
Kirti Jha is a Senior Content Producer at Mint, where she writes on mutual funds, taxation, personal finance and macroeconomic developments. Her reporting focuses on helping readers understand complex financial developments through data-driven, research-backed stories that explain how policy changes, market trends and regulatory decisions affect investors and households. <br><br> Before joining Mint, Kirti worked at ET Money, where she specialised in mutual fund research and investment analysis. She tracked portfolio disclosures, fund manager strategies, sectoral allocation shifts and investment trends, distilling large datasets into investor-focused insights. Her work combined quantitative analysis with consumer-centric storytelling, enabling readers to better understand fund positioning, portfolio changes and long-term investment opportunities.<br><br> Kirti holds a Bachelor's degree in Economics from Indraprastha College for Women, University of Delhi, and a Master's in Finance from the Jindal School of Banking & Finance at O.P. Jindal Global University. Her academic training emphasised analytical thinking, quantitative research and financial decision-making, providing a strong foundation in understanding capital markets, financial systems and economic policy. With a combined experience in investment research and financial journalism, she is committed to producing accurate, accessible and insightful journalism that empowers readers to make well-informed financial decisions.
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