Why headline yield misleads

Tax bends the number

A 7.5% FD in the 30% slab lands at about 5.2% post-tax. A 9% REIT with a 12% effective tax rate lands closer to 7.9%. An equity fund at a nominal 12% return, with LTCG at 12.5% above ₹1.25L, still delivers close to 12% — unless your corpus is large enough that the fixed exemption stops meaningfully shielding it.

Two identical portfolios can produce very different take-home yields for two different people, because their slab rates differ.

Timing bends the number

An FD compounding quarterly at a nominal 8% has an effective annual yield closer to 8.24%. A REIT that pays quarterly gives you cash to redeploy sooner than a bond that pays annually. Compounding frequency and payout timing both affect what actually shows up on your bank statement, even before tax.

Structure bends the number

InvIT and REIT distributions are a blend of interest, dividend, and return-of-capital. Each component is taxed differently. Two funds quoting the same 9% distribution can produce different net cash if the split of components differs — which is why treating it as a single "effective rate" is a reasonable simplification, but calling it "9% yield" without qualification is not.

The fix

Compare instruments on post-tax cash flow, not headline rate. Do it at your slab, not a generic one. Do it over the horizon you actually care about. That is what KitnaKaafi's calculators are trying to make quick to do.

The corollary matters too — a lower-headline instrument can win. A 7.3% blended portfolio can out-pay an 8% FD after tax. That is not a magic trick; it is what happens when you actually count the tax.