Bank FD rates in October 2026: How pre- and post-tax fixed deposit returns differ across HDFC, ICICI, SBI and PNB

Bank FD rates in October 2026: How pre- and post-tax fixed deposit returns differ across HDFC, ICICI, SBI and PNB. (AI-generated image for representational purposes only)AI Quick ReadFixed deposits (FDs) offer predictable returns, but the interest earned is taxable as per the depositor’s applicable income tax slab. Therefore, investors should compare both pre-tax and post-tax returns before choosing a bank or deposit tenure.

According to FundsIndia’s October 2026 report, FD interest rates across large banks vary by tenure, affecting the returns investors retain after tax. Here’s what depositors need to know.

Interest earned on bank FDs is taxable under “Income from Other Sources” and added to the depositor’s taxable income. The applicable income tax slab determines the final tax liability.

Banks may deduct tax at source (TDS) when interest exceeds the applicable threshold. For bank deposits, the threshold is ₹50,000 in a financial year for non-senior citizens and ₹1 lakh for senior citizens. TDS is generally deducted at 10% when the depositor’s PAN is furnished.

However, TDS is not the final tax liability. Depositors may have to pay additional tax or may be eligible for a refund when filing their income tax return (ITR), depending on their actual tax liability.

The following table compares pre-tax and post-tax FD rates across HDFC Bank, ICICI Bank, State Bank of India (SBI), and Punjab National Bank (PNB) for different tenures.

Source: FundsIndia October report. FD rates for deposits below ₹3 crore, as of 7 October 2026. Post-tax returns are calculated assuming a 30% tax rate.

Suppose an investor deposits ₹5 lakh in a five-year FD at an annual interest rate of 6.40%. Assuming quarterly compounding, the deposit would grow to approximately ₹6,86,822 at maturity, including ₹1,86,822 in interest before tax.

If the investor falls in the 30% tax slab and earns a post-tax return of 4.64% as given in the table, the interest earned after tax would be around ₹1,29,718, taking the total value to around ₹6,29,718.

This is ₹57,104 lower than the pre-tax maturity value. The figures are illustrative, and actual post-tax returns may vary depending on the investor’s tax liability and the calculation methodology.

Disclaimer: This is purely for educational/informational purposes and should not be taken as any sort of investment advice. Always consult a SEBI-registered advisor before making any investment decisions.

Sheetal Goel is a Content Producer at Livemint, where she covers corporate developments, personal finance, business trends, markets, and SEBI-related updates. She focuses on simplifying complex financial concepts and presenting them in a clear, reader-friendly manner, thereby helping audiences better understand investment trends, personal finance, and market developments. Her writing focuses on making finance more accessible to everyday readers while maintaining clarity, accuracy, and relevance. <br><br> She holds a degree in Economics (Hons.) along with an MBA in Finance, which has helped her develop a strong foundation in financial analysis, market understanding, and business reporting. Before joining journalism, she worked with finance and broking firms, where she closely followed market developments, investment strategies, and evolving industry trends. This practical exposure strengthened her understanding of financial markets. She has also written content across multiple formats and platforms, including YouTube, LinkedIn, and Instagram. <br><br> Over time, she has developed expertise in covering market-linked stories, investor-focused topics, and regulatory updates in a simplified yet informative style. She also enjoys reading and listening to Hindi poetry, reflecting her appreciation for literature and creative expression beyond the world of markets and numbers.

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