₹1 Lakh FD for 3 Years: Real Returns
A ₹1 Lakh fixed deposit at 6.5% compounds to ₹1.21 L in 3 years, and tax and inflation decide what you keep. FD interest is taxed at your income slab; within the new regime's ₹12 lakh rebate limit you pay nothing on it. The tables below show what you keep at the 0%, 5%, 20%, and 30% slabs, the monthly payout, and the real (inflation-adjusted) value.
₹1.17 L
₹21,064
−₹4,213
5.33% p.a.
₹98,110
Your FD matures to ₹1.17 L but is worth only ₹98,110 in today's purchasing power. Your real return is -0.6% per year: you're losing money to inflation.
FD Growth Over Time
Chart from year 1 to year 3. Maturity Value changes from ₹1.1L to ₹1.2L. Principal changes from ₹1L to ₹1L. After Inflation changes from ₹99.4K to ₹98.1K.
| Metric | Amount |
|---|---|
| Principal | ₹1.00 L |
| Maturity (6.5%, pre-tax) | ₹1.21 L |
| Total Interest | ₹21,341 |
| Monthly Interest Payout | ₹542/month |
| Your Tax Slab | Tax on Interest | Post-Tax Maturity | Real Value (6% inflation) |
|---|---|---|---|
| No tax (income ≤ ₹12L / Form 15G) | − | ₹1.21 L | ₹1.02 L |
| 5% (typical) | −₹1,067 | ₹1.20 L | ₹1.01 L |
| 20% | −₹4,268 | ₹1.17 L | ₹98,297 |
| 30% | −₹6,402 | ₹1.15 L | ₹96,505 |
At a 5% slab, tax of ₹1,067 leaves ₹1,20,274
The bank advertises ₹1.21 L at maturity. But FD interest is fully taxable at your slab. Many ₹1 Lakh depositors sit in the lower brackets: at a 5% slab, tax of ₹1,067 leaves you ₹1.20 L, and if your total income is within the ₹12 lakh rebate limit you keep the full amount. After 6% inflation over 3 years, the 5% figure is worth about ₹1.01 L in today's money. Use the slab table above to find the figure for your own bracket.
On a ₹1 Lakh FD at 6.5%, the monthly payout is ₹542 before tax
If you want regular income instead of compounding, a non-cumulative ₹1 Lakh FD at 6.5% pays roughly ₹542 per month (before tax). The principal stays locked until maturity. This suits retirees who need predictable cash flow more than capital growth.
₹1,20,274 in 3 years buys what ₹1,00,984 buys today
An FD guarantees your money in nominal terms but rarely in real terms. At a 6.5% rate, the post-tax return clears 6% inflation only at the 0% and 5% slabs: at 20% the 5.20% falls below inflation, and at 30% the 4.55% falls further behind. The deposit is "safe" from market swings, yet can quietly lose purchasing power. For goals 5+ years away, equity SIPs have historically preserved real value far better.
The right FD term ends close to the date you need the money
For a goal a few years away, the right term ends close to the spending date, and breaking the deposit early reduces the return. Check the premature-withdrawal penalty before committing to the term.
The ₹12 lakh rebate keeps the full ₹1,21,341
- Stay within the ₹12L rebate: under the new regime, if your total taxable income (including FD interest) is up to ₹12 lakh, the Section 87A rebate makes your tax zero: you keep the full maturity.
- Use a lower slab: at 5% or 20% you keep substantially more than the 30% figures shown here.
- Form 15G / 15H: if your total income is below the taxable limit, submit it to stop TDS.
- Senior citizens: get a higher rate (≈0.5% extra) and a larger ₹1,00,000 TDS threshold.
- Spread across financial years: splitting tenure or laddering can smooth annual interest.
Frequently Asked Questions
How much will a ₹1 Lakh FD give in 3 years?
What is the monthly interest on a ₹1 Lakh FD?
Is the interest on a ₹1 Lakh FD taxable?
What is the real value of a ₹1 Lakh FD after 3 years?
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Written by Amir Khan, a contributor to RupeeReality: free financial calculators for Indian investors. All calculations use standard financial formulas cross-referenced against established platforms. Numbers updated for FY 2026-27. Not financial advice.