₹8,750 a month or ₹21.22 lakh later: what Biju gives up
If Biju takes ₹8,750 every month for 5 years, he collects ₹5,25,000 of interest and gets his ₹15 lakh back at the end. The cumulative FD in the table earns ₹6,22,167 over the same 5 years, about ₹97,167 more, because each quarter's interest earns interest too. Many banks also use a slightly discounted rate for monthly payout, so the credit can be a few rupees under ₹8,750. Keep in monthly payout only what you really need every month.
Two more things at this size. Below 60, TDS starts once one bank's interest crosses ₹50,000 in a year, and here it is ₹1,05,000, so about ₹10,500 would be cut. If his total tax for the year will be nil and the interest stays within ₹4 lakh, he can give the bank Form 121 in April to stop it. And DICGC deposit insurance covers only ₹5 lakh per person per bank, interest included, so three FDs of ₹5 lakh in three banks keep all of it covered. A payout FD helps here, as the interest leaves every month and the deposit stays at ₹5 lakh.
Frequently asked questions
What is the monthly interest on a ₹15 lakh FD?
About ₹8,750 a month at a 7% example rate, which is ₹1,05,000 a year. At 7.5%, a rate many banks give senior citizens, it is about ₹9,375 a month. A monthly payout FD may credit slightly less because banks often use a discounted rate for it.
How much quarterly interest does ₹15 lakh earn?
About ₹26,250 a quarter at 7%. Quarterly payout uses the full rate, so over a year it pays a touch more than monthly payout at the same bank. In both cases the ₹15 lakh itself does not grow.
₹15 lakh FD for 1 year and 3 years: how much?
At 7% compounded quarterly, about ₹16,07,789 after 1 year and ₹18,47,159 after 3 years. For 2 years it is about ₹17,23,323. These figures assume you take nothing out till maturity.
Will the bank cut TDS on ₹15 lakh FD interest?
Yes, if your total interest at one bank crosses ₹50,000 in a tax year (₹1 lakh if you are 60 or above). On ₹15 lakh at 7% it is ₹1,05,000, so about ₹10,500 is cut. TDS is only an advance, your actual tax depends on your slab.
