Similar headline returns can leave different proceeds
Suppose three products each start with ₹5 lakh. A bank FD may create annual interest-tax liability. A fund may defer tax until redemption. Even with similar gross annual returns, the timing of tax changes how much money remains invested.
Classification matters
The debt-fund case in this calculator assumes a specified debt fund acquired on or after 1 April 2023. It uses the entered marginal slab at exit. That assumption must not be generalised to every fund labelled conservative, hybrid or non-equity.
The arbitrage case assumes a qualifying equity-oriented fund. Its equity tax scenario distinguishes one year or less from a longer holding period and uses only the entered remaining annual LTCG allowance. The allowance is shared with qualifying gains elsewhere; it cannot be claimed separately for every investment.
Read the comparison’s boundaries
The FD path applies annual tax drag; the fund paths show pre-tax annual balances and estimated net proceeds at the selected exit. Cess is included; surcharge, basic exemption adjustment, loss offsets and grandfathering are not. Expense ratios must already be reflected in the fund-return assumption.
Tax efficiency is one input, alongside credit risk, duration risk, liquidity, mark-to-market movement and deposit terms. Entering a larger expected fund return does not establish that it will occur. Stress-test weaker returns and verify the actual product’s classification before using this estimate.