LabsTMF Yield Lock-in

TMF Yield Lock-in Calculator

Exact post-tax return if you hold a Target Maturity Fund to maturity — and how it compares to an FD at the same rate.

Analysis tool — not investment advice. Results are estimates for educational purposes only and do not constitute a recommendation to buy, sell, or hold any security. Past performance is not indicative of future results. For personalised advice, consult a SEBI-registered investment advisor.

Who this is for

Investors in the 20–30% tax bracket who want FD-like safety but better after-tax returns. TMFs have been able to beat FDs post-tax for high-bracket taxpayers because of indexation (pre-2023) and the way gains compound untaxed till maturity.

Target Maturity Fund (TMF)

A debt fund with a fixed maturity date. It holds government bonds/PSU bonds until they mature. If you hold to maturity, you get a predictable yield with no interest rate risk.

YTM (Yield to Maturity)

The annualised return you'll earn if you hold the fund's bonds to maturity. This is the "locked in" rate — it doesn't change unless you sell early.

FD vs TMF tax difference

FD interest is taxed every year at your slab rate (TDS applies). TMF gains are taxed only at redemption — meaning your gains compound tax-deferred for years, giving TMFs an edge.

Select Fund (or Custom)

Parameters

Gross locked-in yield if held to maturity

(2 yr)

Post-tax CAGR (hold to 2028)

5.27%

Real (after inflation): -0.69%

Maturity breakdown

Investment today₹10.0L
Maturity value (7.45% YTM × 2 yrs)₹11.5L
Total gain₹1.5L
Tax at 30% slab-₹46,365
After-tax value₹11.1L
After-tax net gain₹1.1L

TMF vs FD at same 7.45% rate

TMF (tax-deferred to maturity)₹11.1L

5.27% post-tax CAGR

FD (taxed annually at slab)₹11.1L

5.21% post-tax return

TMF advantage (tax deferral)+₹1,166

TMF defers tax to maturity; FD pays tax annually, reducing the compounding base each year.

Important: Post Apr 2023 amendment, new debt MF investments lose indexation benefit — gains taxed at slab rate. YTM is guaranteed only if you hold to maturity without exiting early. Early exit subjects you to mark-to-market NAV risk.