How to make passive income in India legally?
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1. Fixed Deposits (FDs) and Recurring Deposits (RDs)
Banks and post offices offer fixed interest on deposits.
Safe and stable option for conservative investors.
Interest rates: 6%–7.5% per annum (varies by bank).
Taxes: Interest is taxed under “Income from Other Sources.”
2. Dividend Income from Stocks and Mutual Funds
Invest in dividend-paying stocks or Dividend-Yielding Mutual Funds.
Companies distribute part of their profits as dividends.
No active investment is required once invested.
Risk depends on market performance.
3. Rental Income from Properties
Buy residential, commercial, or co-living spaces for rent.
Regular monthly income without much investment.
Platforms like NestAway, MagicBricks, and NoBroker help find tenants.
Taxes: 30% standard deduction available on rental income.
4. REITs (Real Estate Investment Trusts)
Invest in real estate through publicly traded REITs.
Lower capital requirements compared to purchasing properties.
Example: Embassy Office Parks REIT, Mindspace REIT.
Income is earned in the form of dividends or interest distributions.
5. Peer-to-Peer (P2P) Lending
Platforms like Faircent and LenDenClub allow lending money directly to borrowers.
Return: 10%–15% per year, higher than fixed-term deposits.
Risk: Borrower default, but the platforms use risk ratings.
It’s important to check if the platform is registered with the Reserve Bank of India (RBI).
6. Intellectual Property Royalties
If you create books, music, courses, software, or patents, you can earn royalties.
Example: Self-publishing on Amazon Kindle, creating online courses on Udemy.
Once published, the content continues to generate passive income. 7. Digital Products and Affiliate Marketing
Create ebooks, templates, stock photos, or apps and sell online.
Create a website, blog, or YouTube channel and monetize with affiliate links or ads.
Income continues to flow as long as the content remains relevant.
8. Government Schemes
The Senior Citizen Savings Scheme (SCSS), Post Office Monthly Income Scheme (POMIS), and Sovereign Gold Bonds (SGB) offer secure passive income.
Regular interest or dividend payments.