Fixed Deposit Monthly Income Scheme

The monthly income scheme of Fixed Deposit has gained popularity among investors. It is considered liquid as it allows depositors to withdraw money as needed. The monthly income scheme in banks helps to take loans against it. It offers tax exemption benefits as well.

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Consumers can earn interest on the money invested in a fixed deposit. The highest interest rate that you can earn from a bank fixed deposit is around 6.25%. Senior citizens are offered different interest rates than normal people. 

What is Fixed Deposit Monthly Income Scheme? 

A fixed deposit monthly income scheme is effective for risk-averse investors. It offers a certain amount of money as a monthly return on investment based on the amount kept as a fixed deposit. In this way, it offers a  guaranteed return. 

The fixed deposit monthly income scheme is liquid. Since it allows the investors to withdraw money at any time. The withdrawal cost is less than 1% of the capital invested. The fixed deposit monthly income scheme does not charge any account opening or management fees. Therefore, it is comparatively less costly than other available monthly income schemes.

Comparison Between
Fixed Deposits, Guaranteed Return Plans & Debt Mutual Fund
Guaranteed Return Plans, Fixed Deposits &
Debt Mutual Fund
Guaranteed Return Plans
Returns Before Tax
7.5% (TAX-FREE)
Returns After Tax
7.5%
Guaranteed Returns
Yes
Life Cover
Yes
Tax on Profit
Tax Free*
Risk
No Risk
awards
Still Better than FD’s and Debt Mutual Fund
Fixed Deposits
Returns Before Tax
7% (TAXABLE)
Returns After Tax
4.8%
Guaranteed Returns
Yes
Life Cover
No
Tax on Profit
Taxable
Risk
Low Risk
Debt Mutual Fund
Returns Before Tax
8% (TAXABLE)
Returns After Tax
5.5%
Guaranteed Returns
No
Life Cover
No
Tax on Profit
Taxable
Risk
High Risk
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Features and Benefits of Fixed Deposit Monthly Income Scheme 

The fixed deposit monthly income scheme has specific features and benefits which have made it one of the keys secured investment options. Some of the benefits and features of this scheme are:

  1. Features of FD Monthly Income Scheme:

    • The bank MIS FD Scheme does not limit the maximum deposit amount.

    • Some banks provide this scheme for long tenure like 10 years. A longer duration is a substantial time for getting an income as interest and on monthly basis. 

    • Compared to other monthly income schemes, this scheme is more liquid in nature. An investor can withdraw their cash anytime to meet their financial requirements. 

    • There are no processing fees.

    • The earnings of a monthly income scheme FD are higher than the earnings of a normal FD.

    • Investors get monthly returns irrespective of the market fluctuation. 

  2. Benefits of FD Monthly Income Scheme:

    • Withdrawal: The depositors can withdraw money from the fixed deposit account without paying any fees. It makes the investment opportunity highly liquid. 

    • Nomination: The bank MIS FD scheme offers a nominee facility. The depositors can become nominees of a specific person so that in the absence of the depositor, that person will get the benefits of the monthly interest FD scheme.

    • Loan Facility: The bank MIS FD scheme offers a loan facility. The depositors can take loans against this type of fixed deposit scheme.

    • No Processing Fee: Unlike other mutual investment accounts, managing FD monthly income schemes does not require paying any processing fees. 

    • Monthly Income: The key benefit offered by the monthly interest FD scheme is its monthly income facility. Based on the return of the fixed deposit amount, the depositors get a monthly payout of a certain amount as applicable.

The Interest Rate Of The Fixed Deposit Monthly Income Scheme 

Different fixed deposit schemes offer different interest rates. The FD interest rates for some of the top banks and financial institutions for this scheme are discussed below:

Bank Tenure Interest Rate
HDFC Bank FD 7 days to 10 years 2.5% to 5.5%
SBI Bank FD 7 days to 10 years 2.9% to 5.4%
Axis Bank FD 7 days to 10 years 2.5% to 5.75%
Kotak Bank FD 7 days to 10 years 2.5% to 5.3%
IDBI Bank FD 7 days to 10 years 2.7% to 5.4%
IDFC Bank FD 7 days to 10 years 2.75% to 5.75%
Punjab National Bank FD 7 days to 10 years 2.90% to 5.25%

*The FD interest rates are subject to change. Please check the bank's website for the latest FD rates.

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The Interest Rate Of The Monthly Income Scheme For Senior Citizens

Bank Tenure Interest Rate
HDFC Bank 7 days to 10 years 3.00% to 6.25%
SBI Bank 7 days to 10 years 3.4% to 6.2%
Axis Bank 7 days to 10 years 2.50% to 6.25%
Kotak Bank 7 days to 10 years 3% to 5.8%
IDFC First Bank 7 days to 10 years 3.25% to 6.25%
Bank of Baroda 7 days to 10 years 3.30% to 5.75%
Punjab National Bank 7 days to 10 years 3.40% to 5.75%
IDBI Bank 7 days to 10 years 3.20% to 5.75%

*The FD interest rates are subject to change. Please check the bank's website for the latest FD rates.

Eligibility Criteria for FD Monthly Income Scheme 

The interested individuals or associations must meet the eligibility criteria to open the FD monthly income scheme. The eligibility criteria are mentioned below.

  • The individuals or associations can open a fixed deposit account to get a monthly income facility.

  • The individuals must be at least 18 years old.

  • They may be citizens residing in India or non-resident Indians.

  • The minors can open the account. However, they must open the account as joint accounts with their parents.

  • Companies and Hindi-United-Families can open the MIS FD account.

  • Any association or institution can open an account.

Documentation Required for FD Monthly Income Scheme 

To open the account, the depositors must submit the necessary documents. The list of necessary documents to open an FD monthly income scheme is mentioned below:

  • Application form for opening fixed deposit account

  • 2 copies of passport-sized photograph

  • Identity proof such as AADHAR card, PAN card, Voter's ID card, Driving License, etc.

  • Address proof such as AADHAR card, Voter's ID card, Driving License, etc.

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Taxation on Fixed Deposit Monthly Income Scheme

  • The fixed deposit account offers tax exemption up to INR 1,50,000 in a financial year if you invest in a tax saver fixed deposit account.

  • Bank deducts TDS of 10% if the monthly income or return exceeds INR 40,000 in a financial year.

  • Bank deducts TDS of 20% if the depositor does not have any PAN card.

  • Bank deducts TDS of 10% for the senior citizen if monthly income or return exceeds INR 50,000 in a financial year.

How to Apply for Fixed Deposit Monthly Income Scheme?

To open a fixed deposit monthly income scheme with a bank, the depositor must be an account holder of that bank. Otherwise, the person must visit the nearest bank branch to open a savings account. 

  • They must submit the required application form for a fixed deposit monthly income scheme. 

  • They must submit address proof and identity proof for the KYC process. 

  • They must submit two copies of the photo. 

  • The operation instruction for the proposed account must match the debited account.

  • The savings bank account should not be dormant. It must be open for internet banking operations.

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FAQs

  • How is the Monthly Interest FD Scheme different from a recurring deposit account?

    In a recurring deposit account, a certain installment of money is deposited every month. The principal amount and accrued interest amount are returned to the depositor on maturity. In FD monthly income scheme a lump sum amount is deposited. The interest earned on the deposited amount is paid as monthly income on maturity.
  • Which scheme is the best for monthly income?

    Several schemes offer monthly income facilities. However, the best scheme is the fixed deposit monthly income scheme. It has a withdrawal facility. The account helps to take loans. It also offers monthly income earned from the interest return.
  • How much shall I get monthly income from the fixed deposit scheme?

    The monthly income is offered from the interest earned from the amount deposited. A certain percentage of interest is provided based on the market performance. It gives as low as 2% and as high as 7% as the interest rate. The interest rate is compounded annually. But, it offers monthly payouts.
  • How much can I deposit in the monthly income FD account?

    Different banks and financial institutions offer different limits to deposit amounts in monthly income FD accounts. Some banks have no limit for investment. However, some banks allow investing a maximum of INR 1,00,00,000 in monthly income FD accounts.

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