Monthly Interest for 1 Lakh in Fixed Deposit
Planning to invest your money in a fixed deposit for your monthly income? I would say its a great idea!
Fixed deposits (FDs) not only preserve your capital but also promise stable returns. But similar to other investment decisions, it is important to consider aspects like its benefits, eligibility criteria, taxation, and more.
Many banks provide monthly interest for ₹1 lakh in fixed deposits. In this blog, we will look at the different interest rates various banks offer on FDs, the benefits of FDs, their eligibility, and tax implications.
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Monthly Interest for 1 Lakh in Fixed Deposit in Different Banks 2023
Here are the monthly interest provided by 12 banks in India.
Bank Name | Yearly Interest Rate | Monthly Interest |
State Bank of India | 6.80% | ₹566 |
Axis Bank | 6.70% | ₹558 |
ICICI Bank | 7.10% | ₹591 |
HDFC Bank | 6.60% | ₹550 |
Bajaj Finance Ltd. | 7.40% | ₹616 |
Central Bank of India | 6.75% | ₹562 |
RBL Bank | 7.00% | ₹583 |
Punjab National Bank | 6.75% | ₹562 |
Bank of Baroda | 6.75% | ₹562 |
AU Small Finance Bank | 6.75% | ₹562 |
Bank of Maharashtra | 6.50% | ₹541 |
Indian Overseas Bank | 6.50% | ₹541 |
*Interest rates are taken for fixed deposits with a tenure of 1 year and are applicable to the general public.
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Important Things to Consider When Investing 1 Lakh in FD
While investing ₹1 lakh in FD is secure, there are several things you should consider, including the following:
- Interest Rates: As you have noticed, different banks offer different interest rates on FDs. In fact, the interest rate varies as per the tenure of the deposit. FDs maintained for at least a year typically have a higher rate. Therefore, compare the different rates and terms before choosing one.
- Safety: Fixed deposits are insured by DICGC for a maximum of ₹5 lakh per depositor. So, they are considered highly safe. However, it is essential to choose a reputable and trustworthy bank.
- Tenure: Consider the tenure of your FD. Most banks offer FDs with different tenure options, ranging from some days to years. Therefore, consider your financial goals and choose a tenure that aligns with your needs.
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Benefits of Monthly Income Fixed Deposits
There are several benefits to investing in fixed deposits. Let us look at some of them.
- High Liquidity: All types of fixed deposits are highly liquid, apart from tax-saving FDs. You can easily open and close your monthly income FD in a matter of minutes through your bank’s website or app.
- Flexible Tenure: FDs come with different tenures. You can choose one that is most convenient for you. You can also extend the period without any problem.
- No Maximum Investment Limit: There is no maximum amount that you can invest in a monthly income FD. You can invest as much as you want for as long as you want.
- Low Risk: FDs are risk-free investments. You don’t have to worry about losing your savings since they are insured by DICGC.
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Who is Eligible for Monthly Income FDs?
The following people are eligible for monthly income FDs:
- People above the age of 18
- Hindu Undivided Family (HUF)
- Associations
- Companies
- Minors with guardians
- NRIs
- Institutions
TDS on Rs 1 Lakh Fixed Deposit
Whether your monthly income for ₹1 lakh in fixed deposit is subject to TDS or not depends on your interest and total income. Here are some key points related to TDS on FDs:
- Your bank will only deduct TDS if your interest income from all FDs with that specific bank increases by ₹40,000 a year. If your interest income exceeds this, the bank will deduct 10% TDS.
- If you do not submit your PAN details to the bank, they can deduct 20% TDS.
- If your overall income is less than the taxable income (₹2.5 lakh), no TDS will be deducted. However, in this case, you have to submit Form 15G or 15H to your financial institution.
Conclusion
There you go! Now that you know everything about monthly income fixed deposits, you can make an informed decision. While opening an FD in the bank where you already have an account is beneficial, you should consider other options as well.
Compare different interest rates, tenure, schemes, and liquidity before deciding on one that best matches your needs.