Fixed Deposit: Earn ₹10,000 Every Month from FD! Here’s How Much You Need to Invest

FD Calculator: While the government offers numerous schemes in the market, Fixed Deposits (FDs) hold a very special significance. People place their complete trust in this scheme, as it not only ensures the safety of their investment but also promises substantial returns in the future. For this very reason, FDs are regarded as a highly reliable investment option.

Furthermore, FDs can provide a steady monthly income stream even after retirement. The question then arises: how much money must one deposit in a bank to generate a monthly income of ₹10,000? If you aim to earn ₹10,000 in interest every month through your investment, this translates to an annual income of ₹1.20 lakh. To achieve this, investors typically opt for a “Non-Cumulative FD.” You can find essential details regarding FDs outlined below.

How ​​Much Interest Do FDs Offer?

By opening a Fixed Deposit account with a bank, you can earn a decent amount of interest. Generally, an investment of approximately ₹20 lakh is required to generate a significant return. However, did you know that if the interest rate stands at 7%, the required investment amount drops to approximately ₹17.14 lakh? If the interest rate is 7.25%, you would need to invest around ₹16.55 lakh. With an interest rate of 7.5%, an investment of approximately ₹16 lakh—and at an 8% interest rate, an investment of around ₹15 lakh—can generate a monthly income of up to ₹10,000 through an FD.

Smaller finance companies often offer higher interest rates compared to major commercial banks. Senior citizens typically enjoy the benefit of an additional interest rate—up to 0.50% higher—compared to general investors. Post-retirement, many individuals choose to utilise FDs as a stable and reliable source of income.

Understanding the Taxation of FDs

The interest earned from a Fixed Deposit is considered taxable income under the category of “Income from Other Sources.” This interest income is added to your total annual income and is taxed according to the applicable income tax slab rates. Under the old tax regime, senior citizens can avail of a tax exemption on interest income of up to ₹50,000 under Section 80TTB. One can easily avail of a tax deduction benefit of up to ₹1.5 lakh under Section 80C on a 5-year Tax-Saving Fixed Deposit (FD).

When is TDS Deducted?

In this context, if the interest earned from an FD during a financial year exceeds the prescribed threshold, the bank deducts TDS. For the Financial Year (FY) 2025, this limit has been set at ₹50,000 for general investors and ₹1 lakh for senior citizens.

Furthermore, if a PAN is available, a TDS of 10% is typically deducted. Individuals whose total tax liability is nil can avoid TDS deduction by fulfilling the necessary conditions and submitting Form 121 instead of Forms 15G or 15H.