- Giving Property on Rent
This is perhaps one of the most sought-after passive income sources, especially for those who own multiple properties. For instance, if you own two houses, you can put the unoccupied one on rent and earn. Your rental income can be substantial if you own a property in a prime location with good infrastructure and connectivity.
If you put a commercial property on rent, it can fetch you a hefty sum of money as rent. Hence, before you buy a property, look at the rental aspect should you require it in the future. To earn a decent amount of rent, maintain the property well, and carry out the needed repairs on time.
Utilize real estate portals to list your property for rent. You can give ads in local newspapers to attract potential tenants. The rent you earn is taxed under Section 24 of the Income Tax Act.
- Non-cumulative Fixed Deposits
Non-cumulative fixed deposits can serve as a potent source of passive income. In such deposits, the financial institution, bank, or NBFC does not withhold the interest but pays it regularly. The interest paid is either monthly or quarterly. In a few cases, it is semi-annually.
Unlike a cumulative fixed deposit, where you do not earn anything during the FD tenure, the case is different for a non-cumulative deposit. However, note that the interest in a non-cumulative deposit is slightly less than a cumulative one. Additionally, there is no option to reinvest in a non-cumulative deposit.
Investing in such a deposit is simple and easy. Walk into the bank’s branch with which you have an account, fill up the deposit form and you are done. You can also invest in a non-cumulative deposit with internet banking. On most occasions, you will get the deposit certificate on the same day.
- Dividend Options in Mutual Funds
Mutual funds need no introduction affordable luxury watch brands. They have evolved as a popular investment tool for many to build funds for their desired life goals. The mutual fund universe is large and offers different types of funds. The dividend option in mutual funds can be a source of good passive income.
In a dividend plan, the profits made are distributed among investors. They are not invested in the scheme. You get the dividends on a quarterly, semi-annually or half-yearly basis. Note that the dividend declared gets reduced from the fund’s NAV. If the fund’s NAV is INR 100 and the fund house declares a dividend of INR 20, the fund’s NAV comes down to INR 80.
