Financial stability is a top priority for every investor, and Monthly Income Investment Plans (MIPs) provide a steady cash flow while ensuring capital protection. Whether you’re a retiree, a working professional, or an investor seeking passive income, choosing the right monthly income plan is crucial for financial well-being.
This blog post, we will discuss best monthly income investment plans in India
Table of Contents
Best Monthly Income Investment Plans in India
Here’s a detailed comparison of the top monthly income plans available in India:
| Investment Plan | Type | Returns (Approx.) | Risk Level | Liquidity | Tax Benefits u/s 80C |
|---|---|---|---|---|---|
| Post Office Monthly Income Scheme (POMIS) | Government-backed | 7.4% p.a. | Low | 5-Year Lock-in | No tax benefit |
| Senior Citizens Savings Scheme (SCSS) | Government-backed | 8.2% p.a. | Low | 5-Year Lock-in | Up to ₹1.5L under 80C |
| Mutual Fund Monthly Income Plans (MIPs) | Debt-Oriented Mutual Funds | 7% – 12% p.a. | Moderate | High | LTCG after 3 years |
| Fixed Deposits (FDs) with Monthly Interest Payout | Bank/NBFC | 6.5% – 8% p.a. | Low | Moderate | Up to ₹1.5L under 80C |
| RBI Floating rate Bonds | Banks/ RBI website | 8.05% | Low | Low | No |
| Annuity Plans (LIC Jeevan Akshay, SBI Annuities) | Life Insurance | 5% – 7% p.a. | Low | Locked-in | Partial Tax Benefits |
| Corporate Bonds/Debentures | Debt Instruments | 8% – 10% p.a. | Moderate | High | No |
| Rental Income from Real Estate | Tangible Asset | 3% – 6% (Rental Yield) | Medium | Low | No |
| SWP From Mutual Funds | Equity – Based | 8% – 10% p.a. | Moderate to high | Low | Equity Fund – LTCG after 1 year Debt Fund – LTCG after 3 year |
| Dividend Stocks | Equity-Based | 3% – 6% (Dividend Yield) | High | High | No |
Senior Citizen Saving Scheme (SCSS)
The Senior Citizen Saving Scheme is the best investment option for senior citizens in India. SCSS is a safe, secure 5-year GOI scheme with a fixed interest rate.
The Government of India introduced this scheme in 2004, intending to provide regular and steady income to senior citizens in India. Any Indian aged 60 and above can buy SCSS.
SCSS account offers a competitive interest rate of 8.2 %(Jan March 2025) per annum.
Any Indian citizen 60 or above can buy SCSS Scheme through the post office, PSU banks, or and private banks also. ( bank list –https://bestinvestindia.com/senior-citizen-saving-scheme-scss/
you can deposit a maximum of 30 lakh rupees and take a quarterly payout from this money. The rate of interest in 2023 is the highest among the other fixed regular income schemes.
Senior Citizen Saving Scheme Benefits
- Senior Citizen Saving Scheme offers you principal security, fixed income, and return back of your principal amount after completion of 5 years.
- Tax Benefit U/S 80 C
- Premature withdrawal is possible
- Quarterly Income
- Scheme extention for the next 3 years after the completion of 5 years.
Disadvantages of Senior Citizen Saving Scheme /SCSS
Although SCSS is a Golden Scheme, however, there are few disadvantages like- penalty on premature withdrawal –
You can close your SCSS account prematurely after the completion of one year. You get your money back after deduction of penalty.
After completion of 1 year – Penalty of 1.5% of the deposit amount
After completion of 2 years – Penalty of 1% of the deposit amount
Example: Mr. Satish deposits Rs 10 lac and he decides to close his account after completion of one year.
Then as a penalty, he will have to pay on
Rs 10 lac*1.5% =Rs 15000
If he takes the money back after completion of 2 years then he will pay Rs 10000.
SCSS interest is fully taxable in the hands of the recipient. TDS is also applicable if the interest amount is more than 50000 in a financial year. The interest income up to Rs 50000 is not taxable for senior citizens.
Additional : SCSS calculator https://www.youtube.com/watch?v=OTiK3Qmk20E&t=7s
3. RBI Floating-Rate Bonds
The central GOI has replaced 7.75% bonds with RBI floating rate savings bonds 2020 ( Taxable) scheme. These bonds are available from July 1, 2020.
This time these bonds will have a floating rate interest rate which will change periodically. This also means that the interest rate will change with time.
The interest on the bonds will be payable at half-yearly intervals on Jan 1st and July 1st every year. There is no option to pay interest on a cumulative basis.
The interest rate will be reset starting from Jan2021 and thereafter every 1 July and 1 January. Right now the first coupon rate is fixed at @7.15%.
The interest rate in the future will be linked to the NSC interest rate +0.35%. If you want to redeem before completion of 7 years then special eligibility conditions apply.
If you are in the age bracket of 80 years or above, you can redeem after a Lock-in period of 4 years.
Age bracket 70 to 80 years, after the lock-in period of 5 years, and if you are in 60 to 70 years then you can withdraw after 6 years
#Penalty charges @ 50% of last coupon payment.
Please watch : https://www.youtube.com/watch?v=4jxQwpqO6-0&t=43s
Advantages of RBI Floating-Rate Bonds
The biggest advantage is safety and guarantee of RBI, Floating interest rate and interest rate is higher as compared to PO NSC. You can take regular income from RBI bonds.
#Additionally you can invest any amount you wish to. You will get your money back after completion of duration.
Disadvatage of RBI Floating-Rate Bonds
- Lock-in( for age lesser than 60 Yrs) of 7 years that means you cannot withdraw before completion of 7 years
If you are in the age bracket of 80 years or above, you can redeem after a Lock-in period of 4 years.
Age bracket 70 to 80 years, after the lock-in period of 5 years, and if you are in 60 to 70 years then you can withdraw after 6 years
#Penalty charges @ 50% of last coupon payment.
- The income received is taxable in nature
4. Post Office Monthly Income Scheme ( PO MIS)
Post Office Monthly Income scheme is a Five-year monthly income scheme. It is a 100% safe and secure scheme. The maximum deposit is only Rs 9 lakh in one name.
However, you can invest up to Rs 15 lakh jointly with your spouse. After completion of 5 years, you get back your invested money.
Although, you are free to reinvest this money again in the same scheme.
The current rate of interest is 7.4% ( Jan – march 2025). The interest is credited to your account on a monthly basis.
Post Office Monthly Income Scheme ( PO MIS) Benefits
- Govt. backed scheme
- fixed rate of interest
- Safe return
- No age criteria
- Guaranteed monthly income
Disadvantages of Post Office Monthly Income Scheme ( POMIS)
- Low returns comapred to inflation rate
- Limited investment amount.
- In case of premature withdrawal, you have to pay a penalty.
- Monthly income is taxable.
- No tax deduction on the deposited amount.
5.SWP Mutual Fund
A systematic withdrawal plan is the best way to take income from mutual funds.
SWP plans allow investors to withdraw from their MF investments at a regular interval.
Here you can choose withdrawal frequency. You can withdraw on a monthly/quarterly/half-yearly or yearly basis.
You can also choose to withdraw capital gains only and keep your principal money intact.
To gain maximum advantage through SWP mode, you can invest a certain amount in liquid/low-duration funds. Get assured fixed amount withdrawal for 5-10 years duration and invest the rest of the money in a mix of debt mutual funds, balanced funds, and diversified equity mutual funds.
Additional : SWP Mutual Fund Calculator – https://www.youtube.com/watch?v=0X-Lo7gBNTo
What you can expect from this option:
- You can expect rate of interest approx 7%-8% from this option if you opt for safer option like liquid mutual fund or low duration mutual fund or 7%-10% if opted for Debt balanced/dynamic asset allocation funds.
- Here you should be mentally prepared to have fluctuated maturity value.
- Little risk involved in the scheme. It is not 100% safe as Govt. Schemes.
- Rate of interest/return is not fixed such as Govt. schemes.
- Usually interest is little better than fixed deposits or at par with it.
- Money Payment starts from next month from date of deposition as it takes a month to set up a SWP.
Read mopre about SWP https://bestinvestindia.com/how-mutual-fund-swp-works-what-is-swp/
Conclusion
These are the few best investment options for regular income in India. However, Income Planning from your corpus should be exercised with great caution because one silly mistake may make your life stressful. Please consider all investment options for income generation.
Additional Reading
LIC Saral Pension Plan – Lifetime pension yojana
- https://bestinvestindia.com/rbi-floating-rate-savings-bonds-2020/
- https://bestinvestindia.com/senior-citizen-saving-scheme-scss/
- https://bestinvestindia.com/pmvvy-vs-senior-citizen-saving-scheme/
- https://bestinvestindia.com/top-5-post-office-tax-saving-scheme/
- https://bestinvestindia.com/how-mutual-fund-swp-works-what-is-swp/
- https://bestinvestindia.com/difference-between-sip-swp-and-stp/
To know how to invest Retirement Money/Corpus
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