Fixed deposits remain one of the most preferred investment options for people looking for stable and predictable income. Many retirees and conservative investor rely on ban FDs to generate a regular monthly cash flow without exposing their savings to market-linked risks.
If you want to generate a monthly income of ₹10,000 from your fixed deposits, the total interest earned in a year should amount to ₹1,20,000. Most banks offer different interest payout options on FDs, including monthly, quarterly, half-yearly, or annual payouts.
In non-cumulative , the interest is paid out periodically instead of being reinvested with the principal amount. At the same time, the principal remains also intact while interest is paid to the depositor’s account, making it ideal for retirees or those who require a steady stream of income.
How much do you need to invest to get ₹10,000 monthly income?
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How much should I invest in a fixed deposit to earn ₹10,000 monthly interest?⌵
To earn ₹10,000 monthly interest from a fixed deposit, the investment required depends on the interest rate offered. For example, at a 7% interest rate, you would need approximately ₹17.14 lakh, while at an 8% interest rate, the required investment reduces to about ₹15 lakh.
What is the annual interest needed to receive ₹10,000 per month from an FD?⌵
To receive ₹10,000 per month from a fixed deposit, the total annual interest earned should be ₹1,20,000. This is based on the assumption that interest is withdrawn periodically rather than being reinvested.
How is FD interest taxed, and are there any deductions available?⌵
FD interest is taxed under ‘Income from Other Sources’ based on your income tax slab. Senior citizens can claim a deduction of up to ₹50,000 under Section 80TTB. Investments in 5-year tax-saving FDs qualify for a deduction up to ₹1.5 lakh under Section 80C.
When is TDS deducted on FD interest, and how can it be avoided?⌵
TDS is deducted on FD interest if it exceeds ₹50,000 annually for regular depositors or ₹1 lakh for senior citizens. You can avoid TDS by submitting Form 15G or Form 15H to your bank if your total income is below the taxable limit.
What are the key differences between fixed deposits and Senior Citizens Savings Scheme (SCSS)?⌵
Fixed deposits offer periodic interest payouts and can be non-cumulative, while SCSS provides quarterly interest payouts and is government-backed for safety. Both offer tax benefits under Section 80C for 5-year tenures, but SCSS is specifically designed for senior citizens.
If an individual wants to earn ₹10,000 every month from a non-cumulative fixed deposit, the investment required depends on how much interest rate a particular bank or financial institution is offering.
Among major lenders in India, including HDFC Bank, the States Bank of India (SBI), ICICI Bank, and Axis Bank, fixed deposit interest rates generally range between 6 and 7.25% on an annual basis, with usually receiving an additional 50 basis points over the regular rates. Meanwhile, many small finance banks tend to offer comparatively higher FD interest rates.
Hence, based on some prevailing FD interest rates, here is an estimate of how much investment may be required to generate a monthly income of ₹10,000 through interest payouts:
- 6% interest rate: The investor would need to invest around ₹20 lakh in an FD to generate ₹10,000 every month.
- 7% interest rate: The required investment comes down to nearly ₹17.14 lakh.
- 7.25% interest rate: An investor would need to put around ₹16.55 lakh in a fixed deposit.
- 7.5% interest rate: An investment of around ₹16 lakh would be needed.
- 8% interest rate: The required investment reduces further to about ₹15 lakh.
Since the investor wants ₹10,000 every month as payout income, the interest is assumed to be withdrawn regularly instead of being compounded. However the principle amount remains intact and can be withdrawn as per your wish.
How does taxation works on FD payouts?
Interest income from FDs are classified under “Income from Other Sources” and taxed based on your total income tax slab. Section 80TTB allows a maximum deduction of ₹50,000 under the old regime for senior citizens who earn interest income from savings account or deposits.
Under the old tax regime, amount contributed towards a FD for a period of 5 years can be claimed as a deduction under section 80C, given that the total amount of deduction does not exceed ₹1.5 lakh.
Additionally, as per section 194A of the Income Tax Act, banks deduct on interest earned from FDs once the interest crosses the prescribed threshold limit. The TDS rate is generally 10% if PAN details are available, while a higher rate may apply in the absence of PAN.
For FY 2025, TDS is applicable if annual interest income exceeds ₹50,000 for regular depositors and ₹1 lakh for senior citizens. Eligible depositors whose total tax liability is nil can submit Form 121 (previously Form 15G and 15H) to avoid TDS deduction, subjected to specified conditions.
FD interest can be checked on any of the following.
- Bank statements
- Form 26AS
- Annual Information Statement (AIS)
- Taxpayer Information Statement (TIS)
Disclaimer: This story is for educational purposes only. The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before making any investment decisions.