Understanding Monthly Interest on Rs. 2 lakh Fixed Deposit (FD)

Understand how much interest you will earn monthly on a Rs. 2 lakh Fixed Deposit (FD).
Rs. 2 lakh FD
4 mins
12 Jan 2024

Fixed deposits are one of the most popular investment options for risk-averse individuals in India. They are considered to be a safe and secure investment instrument, as they guarantee a fixed rate of return on the investment, regardless of the market fluctuations. Fixed deposits are offered by various banks and financial institutions in the country, and they come with a wide range of tenures, ranging from a few months to several years.

One of the key advantages of fixed deposits is the low risk associated with them. Unlike other investment avenues, fixed deposits interest rates do not change with market fluctuations. This makes them a preferred choice for those who want to protect their capital and earn a steady income. Furthermore, fixed deposits are also easily accessible, and the process of investing in them is simple and hassle-free.

The monthly interest income generated from a Rs. 2 lakh fixed deposit is an important factor to consider, as it can provide a regular source of income for the investor. Therefore, it is essential to calculate the monthly interest earned on a fixed deposit before investing in one, in order to evaluate its potential returns and determine whether it aligns with the investor's financial goals.

Pro tip

Enjoy higher interest rate with Bajaj Finance Digital FD. Unlock returns of up to 8.85% p.a. by investing for 42 months via our website and app.

Benefits of getting monthly interest on your investment

Monthly interest income can provide a regular source of income for people who depend on their investments for their livelihood. It can be especially useful for retirees who no longer have regular employment or earning opportunities. Monthly interest can also be a useful tool for individuals who need a steady income to manage their household expenses or pay for their children's education.

Investing in a fixed deposit with a higher monthly interest rate can provide greater returns and long-term financial benefits. NBFC’s like Bajaj Finance offer on the highest returns of up to 8.85% p.a. on their FD.

For example, investing in a fixed deposit with a monthly interest payout of 8% on Rs. 2 lakh investment, you can get a monthly income of Rs. 1,333.

Monthly Interest for Rs. 2 lakh Fixed Deposit

Amount

Interest rate(p.a.)

Interest per month

Rs. 2 lakh

6%

Rs. 1,000

Rs. 2 lakh

6.50%

Rs. 1,083.3

Rs. 2 lakh

7%

Rs. 1,166.7

Rs. 2 lakh

7.50%

Rs. 1,250

Rs. 2 lakh

8%

Rs. 1,333.3

Rs. 2 lakh

8.50%

Rs. 1,416.7

Rs. 2 lakh

9%

Rs. 1,500

Rs. 2 lakh

9.50%

Rs. 1,583.3

Rs. 2 lakh

10.00%

Rs. 1,666.7


TDS on FD interest income

Under the Income Tax Act, Banks and NBFC’s is required to deduct TDS on interest income earned on fixed deposits, if it exceeds a certain threshold limit, which currently stands at Rs. 40,000 per annum for individuals and Rs. 50,000 for senior citizens.

The TDS rate on FD interest income is 10%, which is levied and deducted by and NBFC’s at the time of credit of interest income in the investor's account. This means that the actual amount of interest income that the investor receives in hand may be lower than the stated interest rate due to TDS.

Documents required for a Rs. 2 lakh fixed deposit

  • Pan card
  • Any KYC document like Aadhar card, Passport, Driving license, Voter ID

Conclusion

Fixed Deposit provides a secure investment avenue with predictable monthly returns. The importance of understanding interest rates, taxation, and necessary documents cannot be overstated. For investors who are looking for stable growth, fixed deposits can be a good choice. It's important to consider TDS before making any investment in FD. Always consult with financial experts before making investment decisions.

Frequently asked questions

What is the Digital FD offered by Bajaj Finance?

Bajaj Finance has launched a new FD variant called "Bajaj Finance Digital FD" for a period of 42 months. Bajaj Finance is providing one of the highest interest rates of up to 8.85% p.a. for senior citizens and for the customers below the age of 60 they are providing up to 8.60% p.a. The Digital FD can be opened and managed only through the Bajaj Finserv website or app.

How do monthly interest payouts benefit investors?

Monthly interest payouts from a fixed deposit can serve as a regular source of income, making them particularly useful for retirees or those who depend on investments for livelihood.

How can I calculate the monthly interest on a Rs. 2 lakh fixed deposit?

Monthly interest can be calculated using the formula: (Principal amount x Interest rate) / 12.

How does TDS impact the actual interest income received by investors?

The TDS rate on FD interest is 10%, deducted at the time of credit. This means the actual interest received by the investor may be lower than the stated interest rate due to TDS.

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Disclaimer

As regards deposit taking activity of Bajaj Finance Ltd (BFL), the viewers may refer to the advertisement in the Indian Express (Mumbai Edition) and Loksatta (Pune Edition) furnished in the application form for soliciting public deposits or refer https://www.bajajfinserv.in/fixed-deposit-archives
The company is having a valid Certificate of Registration dated March 5, 1998 issued by the Reserve Bank of India under section 45 IA of the Reserve Bank of India Act, 1934. However, the RBI does not accept any responsibility or guarantee about the present position as to the financial soundness of the company or for the correctness of any of the statements or representations made or opinions expressed by the company and for repayment of deposits/discharge of the liabilities by the company.

For the FD calculator the actual returns may vary slightly if the Fixed Deposit tenure includes a leap year.