Finance & Investment · Returns
Equity vs Debt Calculator (Post-tax)
Compare what a lump sum becomes after tax in an equity mutual fund, a debt mutual fund and a fixed deposit, using current Indian tax rules: long-term equity gains at 12.5 % above ₹1.25 lakh, debt-fund gains and FD interest at your slab rate. Also shows the equity return needed just to match the debt options.
Your inputs
Quick start — try a typical case
₹ 10 lakh
Your marginal rate under the new regime (4 % cess is added automatically).
Your result Live
Most After Tax — Equity Fund
₹16,12,251
₹3,35,295 more than the debt fund after 5 years
- Equity Fund After Tax
- ₹16,12,251 · 10.02% a year
- Debt Fund After Tax
- ₹12,76,956 · 5.01% a year
- Fixed Deposit After Tax
- ₹12,65,138 · 4.82% a year
- Equity Return Needed to Match Debt
- 5.38% a year before tax
- Equity Gains Taxed As
- Long-term: 12.5 % above ₹1,25,000
Side by side
3 rowsEquity returns aren't guaranteed and swing widely from year to year; over short periods equity can lose money. Debt funds carry interest-rate and credit risk; bank deposits are insured by DICGC up to a limit per bank.
The equity exemption is per financial year; selling in stages across years can use it more than once. Surcharge and the 87A rebate aren't modelled.
An estimate from the assumptions you entered, not a guaranteed outcome.
How this is calculated
Equity: V = A(1+e)ⁿ − 12.5 %×1.04×max(0, gain − ₹1.25 L) · Debt fund: V = A(1+d)ⁿ − slab×1.04×gain · FD: V = A(1 + f(1 − slab×1.04))ⁿ
- e, d, f
- Pre-tax yearly returns of the equity fund, debt fund and FD
- slab
- Your marginal income-tax rate; 1.04 adds the 4 % cess
Since April 2023, debt mutual funds lost indexation and long-term treatment: gains are taxed at your slab rate, like FD interest — but only when you sell, so the tax is deferred. Equity funds held over 12 months pay 12.5 % on gains above ₹1.25 lakh a year. The higher your slab and the longer you hold, the bigger equity's tax advantage.
Assumptions & sources
- Tax rules as in force from 23 Jul 2024 (checked 2026-10-10); debt funds bought on/after 1 Apr 2023.
- Lump sum invested once and sold all at once at the end; constant returns.
- FD interest taxed every year on accrual, reducing what compounds.
- 1Capital gains on listed equity shares and equity-oriented mutual funds — Income Tax Department
- 2Taxation of specified mutual funds (Section 50AA) — Income Tax Department
- 3Investor education material — SEBI — Securities and Exchange Board of India
Calculator ID FIN-INV-EQDEBT-001 · version 1.0.0
Common questions
Are debt funds still better than FDs after tax?
Slightly, through deferral: FD interest is taxed every year, while debt-fund gains are taxed only when you sell. Both are taxed at your slab rate.
How is equity taxed if I sell within a year?
Short-term gains on equity funds are taxed at 20 % (plus cess), with no exemption.
Should I choose based on tax alone?
No. Equity is volatile and suits long horizons; debt and FDs suit money you need soon. Use this to compare the after-tax outcome once the risk fits your goal.