New Delhi, Sept. 16 -- For investors choosing between bank fixed deposits (FDs) and debt mutual funds, taxation may no longer provide the clear advantage it once did. Both are generally taxed at the investor's applicable slab rate. This means the decision now depends more on how much certainty an investor wants, how quickly the money may be needed and how comfortable they are with fluctuations in value.

The two products may both fall within the fixed-income bucket, but they work very differently. An FD offers a predetermined interest rate for a chosen tenure, while a debt fund's returns depend on the bonds in its portfolio, interest-rate movements and credit conditions.

Rhishabh Garg, CEO, FundsIndia, said investors should not directly ...