Fixed Deposit Monthly Income Scheme

What is Fixed Deposit Monthly Income Scheme? 

A Fixed Deposit Monthly Income Scheme is a type of fixed deposit investment that offers a regular monthly income to the depositor. Unlike traditional fixed deposits that provide a lump sum payment at maturity, a fixed deposit monthly income scheme provides a steady stream of income throughout the deposit's tenure. This makes it a popular choice for individuals who require a consistent cash flow for their regular expenses or retirement planning.

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

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

VIEW PLANS

*For annual premium upto ₹5 Lacs

Features and Benefits of Fixed Deposit Monthly Income Scheme 

Some of the benefits and features of the Fixed Deposit Monthly Income Scheme are:

1. Key Features of Fixed Deposit Monthly Income Scheme:

   • Regular Monthly Income: The primary feature of an FDMIS is the provision of a fixed monthly income throughout the tenure of the deposit. This income is typically calculated as a percentage of the principal amount.

   • Tenure Options: FDMIS offers various tenure options, ranging from a few months to several years. The longer the tenure, the higher the interest rate.

   • Interest Calculation: Interest on an FDMIS is calculated on a quarterly basis and is added to the principal amount. The monthly income is then derived from this accumulated interest.

   • Early Withdrawal: While most FDMIS allow for early withdrawal, there may be penalties associated with it. The penalty can vary depending on the bank or NBFC and the duration of the deposit.

   • Tax Implications: Interest earned on an FDMIS is generally taxable. However, there are certain tax benefits available, such as deductions under Section 80C of the Income Tax Act for senior citizens.

2. Benefits of Fixed Deposit Monthly Income Scheme:

   • Stable Income: FDMIS provides a consistent monthly income, making it ideal for individuals who require a regular cash flow.

   • Low Risk: Fixed deposits are generally considered low-risk investments. The principal amount is relatively secure, making FDMIS a suitable option for risk-averse investors.

   • Liquidity: While early withdrawal may incur penalties, FDMIS offers liquidity compared to other long-term investments like real estate or stocks.

   • Tax Benefits: Senior citizens can avail tax benefits under Section 80C of the Income Tax Act, reducing their overall tax liability.

   • Flexibility: FDMIS offers various tenure options, allowing investors to choose a plan that aligns with their financial goals and time horizon.

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:

*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 eligibility criteria for the FD Monthly Income Scheme are mentioned below: 

• Individuals or associations can open a fixed deposit (FD) for monthly income.

• Individuals must be at least 18 years old.

• Both Indian residents and Non-Resident Indians (NRIs) are eligible.

• Minors can open joint FD accounts with parents.

• Companies and Hindu Undivided Families (HUFs) can open the FD account.

• Associations or institutions are also eligible to open an account.

Documentation Required for FD Monthly Income Scheme 

The list of necessary documents to open an FD monthly income scheme is mentioned below:

• Application form for opening a fixed deposit account

• 2 copies of passport-sized photograph

• Identity and address proof: AADHAR card, PAN card, Voter's ID card, Driving License, etc.

Taxation on Fixed Deposit Monthly Income Scheme

The taxation on a Fixed Deposit Monthly Income Scheme (FDMIS) in India depends primarily on your income tax bracket and the tenure of the deposit.

Key Tax Implications:

1. Interest Income:

   • Interest earned on an FDMIS is generally treated as ordinary income and is subject to income tax according to your tax bracket.

   • The interest earned is typically added to your total income, and taxes are calculated based on your overall taxable income.

2. Tax Deductions:

   • Section 80C: Senior citizens (60 years and above) can claim a tax deduction of up to ₹3 lakh under Section 80C of the Income Tax Act on the interest earned from FDMIS. This deduction can help reduce their overall tax liability.

   • Other Deductions: Depending on your specific circumstances, you might also be eligible for other tax deductions or exemptions that can impact the taxable portion of your FDMIS interest.

How to Apply for Fixed Deposit Monthly Income Scheme?

Below are the steps on how to apply for Fixed Deposit Monthly Income Scheme:

1. Choose a Bank or Financial Institution:

   • Research different banks and financial institutions to compare interest rates, tenure options, and other terms.

   • Consider factors such as the bank's reputation, accessibility, and additional services.

2. Gather Required Documents:

   • Prepare the necessary documents, which typically include:

     • Identity proof (e.g., Aadhaar card, passport, driving license)

     • Address proof (e.g., utility bills, passport)

     • Income proof (if applicable)

     • PAN card (Permanent Account Number)

3. Visit a Branch or Apply Online:

   • In-person: Visit a branch of the chosen bank or financial institution.

   • Online: If the bank offers online banking, you can apply for an FDMIS through their website or mobile app.

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

4. Fill Out the Application Form:

   • Provide the required information, such as your name, address, contact details, desired deposit amount, and tenure.

   • Specify your preference for monthly interest payments.

5. Submit the Application:

   • Attach the necessary documents and submit the completed application form.

   • You may be required to provide additional information or sign documents.

6. Deposit the Funds:

   Deposit the desired amount into your new FDMIS account. The deposit can usually be made in cash, by cheque, or through online transfer.

7. Receive Confirmation:

   Once your application is processed, you will receive confirmation of the FDMIS account opening and its details.

How to Calculate Returns on Your FD Deposits?

To easily calculate the returns on your Fixed Deposit (FD), you can use an FD Calculator. An FD calculator is a simple online tool that helps you estimate the returns on your fixed deposit investment. By using this calculator, you can easily figure out how much interest you'll earn over a specific period based on factors like the deposit amount, interest rate, and tenure.

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