FD returns: Your bank offers 6.35% interest, but how much do you actually earn after tax? Check returns across top banks

Bank fixed deposits may appear attractive, but the interest earned is not the amount investors ultimately take home. Compare how taxation affects FD returns across HDFC Bank, ICICI Bank, SBI and PNB, and what investors should consider before locking in their money.

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%.

How much do you earn from a five-year FD after tax?

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.

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.

What are the FD returns across different tenures?

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%.

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.

Have bank FD rates changed after RBI rate cuts?

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%.