Monthly Interest on ₹1 Lakh Fixed Deposit 

Fixed Deposits (FDs) are one of the safest and most popular investment options available in India that offer guaranteed returns. The earnings from an FD depend upon the tenure and the rate offered by the financial institution. 

Additionally, FDs offer flexibility with payout options, such as monthly, quarterly, half-yearly, annual or cumulative, so that you can align your investment with your financial needs. For instance, by investing in a ₹1 lakh fixed deposit, you can earn a monthly payout of ₹791 at an interest rate of 9.50%. 

Monthly Interest Payout for ₹1 Lakh Fixed Deposit

Here is the monthly interest payout for ₹1 lakh fixed deposit at various interest rates for an assumed tenure of 5 years:

Monthly Interest on ₹1 Lakh Fixed Deposit Offered by Banks and NBFCs

The table below illustrates the monthly interest payout on ₹1 lakh FD for a tenure of 5 years as offered by various banks and NBFCs:

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Yearly Interest Payout on ₹1 Lakh Fixed Deposit 

The following calculation illustrates the approximate yearly interest payout on ₹1 lakh fixed deposit for a tenure of 5 years:

Interest rate = 8.20%

Principal: ₹1,00,000

Interest earned in 5 years = ₹41,000

Yearly interest payout = ₹8,200 (interest payable yearly)

Total amount received on maturity = Principal + Interest = ₹1,00,000 + ₹41,000 = ₹1,41,000

Calculation of Monthly Interest Payout of ₹1 Lakh Fixed Deposit 

You can use fixed deposit calculators to calculate the monthly interest payout on your ₹1 lakh fixed deposit. An FD calculator needs details like the principal amount, interest rate and deposit tenure. 

Alternatively, you can consider the formula below to calculate monthly interest payout:

Monthly Interest Payout = Principal * Interest Rate/12

If you deposit ₹1 lakh in an FD at an 8% interest rate for 5 years, your monthly interest income will be ₹1,00,000 * 8%/12 = ₹666

TDS on ₹1 Lakh Fixed Deposit

Here are the conditions wherein Tax Deducted at Source (TDS) applies to the interest earned from ₹1 lakh fixed deposit:

• In case the interest payout is more than ₹40,000 for non-senior citizens, a 10% TDS applies.
• If the interest payout is more than ₹50,000 for senior citizens, a TDS of 10% is deducted.
• In case you do not submit your PAN details, a TDS of 20% applies.
• To avoid TDS deduction by banks and NBFCs, you can submit Form 15G (for non-senior citizens) or Form 15H (for senior citizens) at the beginning of a fiscal year.

Penalty for Premature Withdrawal of ₹1 Lakh Fixed Deposit 

Banks and NBFCs allow premature withdrawal of fixed deposits if the depositor faces an emergency. However, most financial institutions usually charge a penalty of 1% on the interest rate or a withdrawal fee for premature fixed deposit liquidation. The interest rate at the time of withdrawal depends on the tenure for which the FD remained booked. 

Here is an example to depict a premature FD withdrawal:

For instance, you invested ₹1 lakh in a fixed deposit for 3 years at an interest rate of 7.50%. If you plan to withdraw the fixed deposit after 2 years, the applicable interest rate will be 7% (assuming the interest rate for 2 years tenure is 7%). Additionally, the bank will charge a penalty of 1% as follows:

Choosing the right bank or NBFC can help you get the highest interest rate on a ₹1 lakh fixed deposit. However, make sure to choose a tenure that offers the highest interest rate. Opting for a cumulative return can help you get a lump sum of money at maturity. Nevertheless, you can opt for monthly, quarterly, half-yearly or even annual interest payout based on your convenience. 

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