Monthly Interest for ₹1 Lakh in Fixed Deposit in Different Banks and NBFCs in 2024

The table below shows the monthly interest earnings on a ₹1 Lakh FD with some of the banks and NBFCs in 2024. The interest rates are given in percentage per annum (p.a.).

The monthly interest for a ₹1 Lakh Fixed Deposit varies across institutions. It's crucial to consider these variations when selecting a bank or NBFC for your FD.

Important Things to Consider When Investing ₹1 Lakh in FD

Interest Rates

Compare the interest rates provided by different banks and NBFCs. Higher rates lead to higher monthly interest.

Tenor

The duration of the FD affects the interest rate. Longer tenors often offer better rates. For instance, a 5-year FD might have a higher rate compared to a 1-year FD.

Payout Frequency

Monthly interest payouts are ideal for regular income needs. Some may prefer quarterly, half-yearly, or annual payouts. This choice depends on their financial planning.

Premature Withdrawal

Check the penalty for early withdrawal. It varies across institutions. Some may charge a penalty for premature withdrawals. Others might reduce the interest rate.

Tax Implications

Consider the tax impact on your earnings since the interest earned from a fixed deposit is taxable. Planning for tax liabilities is essential to avoid any surprises at the end of the financial year.

Reinvestment Options

Some banks and NBFCs offer reinvestment options where the interest earned is reinvested. This leads to compounding benefits. This can be a good option for those who do not need regular income.

Benefits of Monthly Income Fixed Deposits

Regular Income

Monthly payout FDs provide a steady income stream. This is helpful for retirees and those needing regular cash flow. This can be especially beneficial for individuals without a regular salary.

Safety

FDs are low-risk investments. They protect the principal amount. In times of economic uncertainty, FDs are considered a safe haven.

Predictability

FDs offer predictable returns. Investors know how much they will earn each month. This predictability helps in better financial planning.

Flexibility

Investors can choose the tenor and payout frequency that suits their needs. This flexibility makes FDs an attractive option for a wide range of investors.

Better Rates

Some banks and NBFCs offer higher rates for monthly payout FDs. This can lead to better returns. It offers more benefits compared to other savings tools like savings accounts.

Who is Eligible for Monthly Income FDs?

Most individuals can open a monthly payout FD. This includes:

Residents

Any resident Indian can invest in FDs. Whether salaried or self-employed, FDs are a suitable investment for all.

Minors

Parents or guardians can open an FD on behalf of a minor. This can be a good way to start saving for a child’s future.

Senior Citizens

Often, senior citizens get higher interest rates. This makes FDs a preferred investment option for retirees seeking regular income.

NRIs

Non-resident Indians can also open FDs, subject to certain conditions. NRIs should check the specific regulations associated with NRE and NRO FDs. They should also be aware of the benefits of these types of deposits.

TDS on Rs. 1 Lakh Fixed Deposit

Interest earned on FDs is subject to Tax Deducted at Source (TDS).

Threshold Limit

If the interest earned in a financial year exceeds ₹40,000 (₹50,000 for senior citizens), TDS is applicable.

TDS Rate

The TDS rate is 10% if PAN is provided. Without PAN, it is 20%. Ensure your PAN is updated with the bank to avoid higher TDS.

Form 15G/15H

Individuals with no taxable income can submit Form 15G (or Form 15H for senior citizens) to avoid TDS. This form is a declaration that your total income is below the taxable limit.

Tax Filing

Even if TDS is deducted, the interest earned must be declared in the income tax return. Ensure to include the interest income while filing your returns. This will help avoid any discrepancies.

Conclusion

Monthly income fixed deposits are a good savings tool. They are ideal for those seeking regular income. Compare the interest rates from various banks and NBFCs. This helps investors maximise their earnings. Consider factors like tenor, premature withdrawal penalties, and tax implications when investing. Monthly payout FDs offer benefits such as safety, predictability, and flexibility. They are suitable for a wide range of investors, including residents and minors. Senior citizens and NRIs can also benefit from these investments.

Monthly payout FDs are not only reliable but also straightforward investments. Their ease of understanding makes them an excellent choice for novice investors. The simplicity in returns appeals to seasoned investors as well. By choosing the right bank or NBFC, investors can ensure a stable income stream. Understanding the associated terms and conditions further guarantees regular income.