Monthly Interest for 10 Lakh Fixed Deposit

The retired elderly individuals form the most extensive customer base for the 10 Lac fixed deposits to earn higher returns than savings. However, youngsters also consider FDs as a safe investment option to diversify their financial portfolio.

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Let us explore why fixed deposits are for everyone.

What are Fixed Deposits?

Fixed deposits are safe investment tools offered by financial institutions and the corporate parking lump sum funds for a specific period. The investor earns interest at varying rates offered on the invested sum based upon the tenor. 

As the monthly interest for a 10 Lac fixed deposit is high, the investors earn a higher monthly return. Every investor has a financial goal, and monthly interest for a 10 Lac fixed deposit explores supplemental income rather than long-term money growth.

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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*For annual premium upto ₹5 Lacs

Why is Monthly Interest for 10 Lac Fixed Deposit Advantageous?

For a non-cumulative 10 Lac fixed deposit, you can invest through banks, post offices, and NBFCs to fulfil your financial goals. While banks provide the most comprehensive product range of short and long-term fixed deposits, post offices and NBFCs offer higher interest rates. Let us check out the advantages:

  • Flexibility: Banks offer fixed deposit tenors to match your short-term and long-term financial objectives from seven days to ten years. On the other hand, post offices offer a single five-year tenor and NBFC between one year and five years. 

  • Higher Returns: Fixed deposit interest rates are higher than savings accounts, which practically keeps your funds idle. 

  • Guaranteed Returns: You are assured of guaranteed returns regardless of the downward revision in interest rates. It follows that the opposite is also true. 

  • Preferential Rates: Monthly interest for 10 Lac fixed deposits is ideal for the retired and presumably senior citizens. They enjoy an additional 0.25% to 0.50% interest over the card rates. 

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Interest Rates in Fixed Deposits

The following table illustrates the offered interest rates by banks, NBFCs, and Post offices.

Fixed Deposit Interest Rates
Maturity Tenors Interest Rates (%)
Bank Post Office NBFC 
Between 7 and 45 days 2.80
Between 46 and 180 days 3.70
Between 181 and 270 days  4.30
Between 271 days and 1 year 4.40
1 year  4.90
Between 1 and  2 years 5.00 5.51 to 5.65
Between 2 and  3 years 5.10 5.94 to 6.10
Between 3 and  5 years 5.25 6.31 to 6.50
5 years 5.25 6.6*
Between 5 and 10 years  5.25
Legend: *For PO Monthly Income Scheme for Last (Oct to December) Quarter 2021
#Effective for non-senior citizens deposits below Rs.2 Cr from 16/12/2020.
Senior citizens: Additional 0.50% above the card rates in Banks and 0.25% in NBFC. 
Source:
  • Bank of Baroda
  • India Post
  • Bajaj Finserv 

Fixed Deposit Payout Structure

Non-cumulative fixed deposits pay out whatever interest accrues and transfer to your active savings account linked to the deposit. Regardless of the tenure, you continue to receive interest credits to your account till maturity. Since the interest has been paid out, you are entitled to the principal amount on maturity. 

On the contrary, if you had invested in the cumulative fixed deposit, you would receive maturity benefit, comprising the principal and accumulated interest after compounding.  

You can choose from the monthly and quarterly payout in banks and NBFCs, while half-yearly and the yearly payout is available in the latter. On the other hand, the post office monthly income scheme explicitly suggests the payout in the name itself. 

FD interest rates India have fallen consistently over the last 12 years.
Invest in Plans that offer Guaranteed Returns for over 25 Years

Computing Monthly Interest for 10 Lac Fixed Deposit

After comprehending the various parameters in different financial institutions, illustrative computation of the monthly interest is essential to clear any lingering doubts.  Let us explore them one by one:

Bank: The tenor chosen is indicative. You must consult with the banks and explore your specific needs for financial comfort and peace of mind.

Computed Interest in Banks for 10  Lac Fixed Deposit
Maturity Tenors Monthly Interest  Quarterly Interest
Card Rate Payout# Total  Payout# Total 
12 months  4.90 4066.66 48800 2250.00 49000
18 months 5.00 4149.39 74688 12500.00 75000
24 months  5.10 4231.94 101567 12750.00 102000
36 months 5.25 4355.86 156811 13125.00 157500
Legend:
Card rate in %
Interest amount in INR

Post office: The MIS is uncomplicated with a single option regardless of the investment amount. The POMIS is a government-sponsored small savings scheme for which the applicable interest rates are declared every quarter with a matching validity. Accordingly, the monthly interest for 10 Lac fixed deposit in the POMIS is:

  • Principal investment Rs.10 Lac

  • Interest rate: 6.6% per annum ( last quarter of 2021)

  • Tenor: 5 years.

  • Monthly Interest: Rs.5466.75

  • Total Interest: Rs. 328185.00 (for the five years)

In this context, it is not out of place to mention that the interest rate for the cumulative fixed deposit in a post office is 6.7% for the same tenor. The cumulative interest for the same period comes to Rs 394.066. Here it is of academic interest to compare with the non-cumulative to highlight the difference between the two.

NBFC: The interest payout structure in NBFC also covers half-yearly and annual, but the illustration is confined to comparing the monthly and quarterly interest payout to match with the banks. 

Computed Interest in NBFC for 10 Lac Fixed Deposit
Tenor Monthly Payout  Quarterly Payout 
Card Rate Interest Amount  Card Rate Interest
Amount 
12  to 23 months 5.51 4670.58 5.53 13825.00
24 to 35 months 5.94 4925.50 5.97 14925.00
36 to 60 months 6.31 5230.68 6.35 15875.00
Legend:
Card rate in %
Interest amount in INR (Rs)

In Conclusion

You can now easily choose your option for Rs 10 Lac fixed deposit. While Post offices and NBFCs offer better interest rates and higher returns. banks offer flexibility. 

In addition, monthly interest in post offices offers a single option while banks and NBFCs offer multiple options to suit your financial goals. Compare all the pros and cons and make an informed decision for monthly interest for a 10 Lac fixed deposit.

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FAQs

  • How is the monthly interest for the 10 Lac fixed deposit disbursed?

    The monthly interest payout is transferred to the depositor’s savings account in banks and post offices, while the NBFCs use the NECS route in the absence of a savings account with them. 
  • Is TDS applied in the monthly interest accrual in fixed deposits?

    You pay TDS for the monthly interest if your annual interest exceeds Rs 40,000 and Rs 50,000 if you are a senior citizen. 
  • What is the interest compounding frequency for fixed deposits?

    Bank’s interest is compounded quarterly, while NBFC compounds interest annually.
  • Do banks offer fixed deposit accounts designed exclusively for tax savings?

    Yes, banks offer fixed deposits for tax savings, but the minimum tenor must be five years and locked till maturity. You can claim a tax deduction for the investment up to Rs 1.5 Lac under Section 80C of the Income Tax Act, 1961. (*Tax benefit is subject to changes in tax laws.)
  • Who is responsible for tax liability in the jointly held fixed deposit?

    The primary depositor is liable to pay income tax on the interest income at the applicable slab rate.

*All savings are provided by the insurer as per the IRDAI approved insurance plan. Standard T&C Apply
+ Trad plans with a premium above 5 lakhs would be taxed as per applicable tax slabs post 31st march 2023
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