Monthly Interest for 5 Lakh Fixed Deposit

Fixed Deposit is a stable investment option and one of the most favored financial instruments in India. You can invest in Fixed Deposits in banks, post offices, and many NBFCs that offer a range of products under the umbrella category. Fixed Deposits represent a low-risk investment vehicle with assured returns aiding wealth creation and growth to meet your financial goals. You can invest in the scheme either through a lumpsum payment of less than or equal to Rs 5 lac.

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What is Monthly Interest for a 5 Lac Fixed Deposit?

Fixed Deposit is your lump-sum investment for a specific period to earn interest at a rate higher than idle funds in a savings account. The returns are guaranteed regardless of the changes in the interest rate. 

By calculating monthly interest on 5 Lac Fixed Deposit, you can also look for different ways to maximize your returns.

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

Classification Impacting Monthly Interest for 5 Lac Fixed Deposit

Fixed Deposits are broadly classified as non-cumulative and cumulative, depending on how the accrued interest is deployed. 

Monthly interest for 5 Lac non-cumulative FD is paid in a fixed frequency. On the other hand, the accrued monthly interest for 5 Lac cumulative FD is reinvested that helps earn extra interest.

The compounding effect helps your money grow till maturity letting you receive a hefty corpus. Banks offer a range of products within the ambit of this broad classification. Let us take a closer look. 

  • Short Deposit: Fixed Deposits contracted for tenors starting from seven days to six months are termed short deposits. 

  • Monthly/ Quarterly  Income Deposit: They are Fixed Deposits of varying tenors from one year to ten years where you receive accrued interest payouts either monthly or quarterly. You receive the principal amount on maturity in the non-cumulative Fixed Deposit. 

  • Double Benefit Deposit: The contracted tenor for the cumulative Fixed Deposit is one year to ten years, where you receive the principal plus the accumulated compounded interest as a maturity benefit. 

Interest Rates for 5 Lac Fixed Deposit

Fixed deposit interest rates in banks, post offices, and NBFCs differ to an extent. Take a closer look to know their comparative rates. 

Fixed Deposit Interest Rates
Tenors Interest Rates in %
Bank Post Office
7-45 days 2.80
45-180 days 3.70
181-270 days  4.30
271 days< 1 year 4.40
1 year  4.90
>1 year < 2 years 5.00
>2 years< 3 years 5.10
>3 years< 5 years 5.25
5 years 5.25 6.6*
5 years-10 years  5.25
Legend: *For PO Monthly Income Scheme for Oct to December quarter 2021 #Effective from 16/12/2020 for deposits below Rs.2 Cr for non-senior citizens. Senior citizens 0.50% over the above card rates. 
Source:
  1. Bank of Baroda
  2. IndiaPost

Note: In the above grid, the interest rates for banks are uniform across maturity buckets regardless of the Fixed Deposit class – non-cumulative or cumulative. 

fd return beater

However, since banks compound interest quarterly, maturity buckets below three months are deprived of the compounding benefit. On the other hand, the POMIS interest rate is exclusive to the scheme. 

NBFC Interest Rates in Fixed Deposits
Tenor Cumulative Non-cumulative
Maturity Monthly Quarterly Half-yearly Annual
12-23 5.65 5.51 5.53 5.57 5.65
24-35 6.10 5.94 5.97 6.01 6.10
36 6.50 6.31 6.35 6.40 6.50
Legend Tenor in months: Interest rates in % All interest rates for non-senior citizens. Senior citizens earn 0.25% higher than the above card rates.
Source: Bajaj Finserv  Effective from 12 May 2021

Note: Interest is compounded in the NBFC annually. Thereby interest rates described for each frequency are unique for the maturity brackets. However, the annual interest payout and the cumulative interest rate are the same, thereby bearing the annual interest compounding regimen. 

Monthly Interest for 5 Lac Fixed Deposit in Banks

Banks offer a flexible interest payment schedule to their customers in the non-cumulative Fixed Deposit class. Therefore, you can quantify the interest amount in banks for 5 Lac Fixed Deposit calculated at the stated rates. 

Interest amount in Banks for 5 Lac Fixed Deposit  
Tenors Card Rate Monthly Interest Quarterly Interest
1 year 4.90 2033.33 6126.00
1 year 6 months 5.00 2074.65 6250.00
2 years 5.10 2115.97 6.375.00
3 years to 10 years 5.25 2177.93 6562.50
Legend: Card rate in% Interest amount in INR

Monthly Interest for 5 Lac Fixed Deposit in Post Offices

The Post Office Monthly Income Scheme locks your funds for 5 years, and the current interest rate is 6.6% per annum. Thus, you earn Rs 2,750 per month in interest and the total interest payout per year is Rs 33,000 for a 5 Lac Fixed Deposit. 

It is not out of place to mention that the cumulative 5 Lac Fixed Deposit earns interest at 6.7% per annum with a maturity value of Rs 6,97,033. The total interest payout is Rs 1,97,033 compared to Rs 1,65,000 for the same tenor in the non-cumulative monthly interest payout 5 Lac Fixed Deposit. 

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

Monthly Interest for 5 Lac Fixed Deposit in NBFC

Interest amount in NBFC for 5 Lac Fixed Deposit  
Tenors Monthly Payout  Quarterly Payout 
Card Rate Interest Amount  Card Rate Interest Amount 
12-23 months 5.51 2285.29 5.53 6912.50
24-35 months 5.94 2462.75 5.97 7462.50
36 months 6.31 3615.34 6.35 7937.50
Legend: Card rate in% Interest amount in INR

In Conclusion

Investors look for monthly interest payout schemes to sustain their livelihood or supplement their income to meet various financial obligations. Retired individuals seek to invest their superannuation benefits in a lump sum to earn higher returns. Monthly interest for 5 Lac Fixed Deposits is ideal for their financial freedom without depending on their children. Learn more about your scheme from a professional before the final investment.

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FAQs

  • Is the monthly interest for 4 Lac Fixed Deposits taxable?

    Your interest income from Fixed Deposits is liable to taxation if the amount exceeds Rs 40,000 annually. The senior citizen’s limit is Rs50, 000.
  • What is the TDS rate applied in banks for interest on Fixed Deposits?

    Banks apply TDS at 10% of the accrued interest when disbursed if you have submitted your PAN card for records. Otherwise, you pay 20% of the accrued interest as TDS. 
  • Can you save on income tax by investing in Fixed Deposits?

    Yes, every bank offers a tax saving Fixed Deposits which allows you tax deduction up to Rs.1.5 Lac in a financial year. However, the investment is locked for five years. (*Tax benefit is subject to changes in tax laws.)
  • When should you submit the 15G or 15H Form for exemption from TDS?

    You must submit the 15G or the 15H Form for TDS exemption at the beginning of the financial year if your gross income is below the income tax amount threshold. (*Tax benefit is subject to changes in tax laws.)

*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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