7 Amazing passive income Ideas in India in 2024: Find Out

Passive income provides you with the ability to make money while you sleep. And in India, there are several amazing passive income ideas that you can explore in 2024. From investing in real estate to becoming a vlogger, there are plenty of ways to generate passive income. And the best part is, you can start today; even you can start right away.

This blog discusses 7 amazing passive income ideas through which you can start building your financial freedom today!

What is Passive Income?

Passive income is a form of income that is often lauded for its ability to generate financial returns with limited time and effort. It is attractive for individuals seeking to build wealth and achieve financial independence. 

Today, more than half of Indians have a passive income as a YouTube-er, blogger, vlogger, social media influencer, etc. It is something that’s considered a side hustle – an alternative to the primary job – to help people earn extra cash beyond their regular earnings.

Other examples of passive income would include rental income from a property, dividend income from investments in stocks or mutual funds, interest income from savings accounts or bonds, and income from royalty payments for books or music. 

List of Passive Income Options in India: 

Whether you are looking to diversify your income streams, achieve financial independence, or simply enjoy extra money benefits, passive income options offer wealth-creation opportunities for all individuals.
Here are some options available to earn passive income in India: 

• Real Estate Investments

In India, earning money via renting out a home or other property is rather typical. Additionally, among other streams of revenue, it is one of the least labour-intensive ones. Renting out your house and making sure the tenant is paying the rent on time are all that is required. Your rent may go up yearly or in accordance with the lease.

• Dividend Stocks

Investing in dividend-paying stocks is another popular passive income idea in India.  Dividend stocks are basically company stocks that regularly distribute a part of their profits to shareholders in terms of dividends. By investing in dividend stocks, you can earn a regular income through the dividends received, which can be reinvested or used for your expenses. 

• Peer-to-Peer (P2P) Lending 

Peer-to-peer lending allows investors to loan money to creditworthy borrowers who will subsequently repay the loan along with interest in the form of EMIs. You can profit from the interest payments. However, there is a significant risk of losing money if the borrower defaults.

• Systematic Investment Plans (SIPs) 

Mutual funds are a type of investment that is professionally managed and allows multiple investors to pool their money together to invest in a variety of stocks, bonds, or other securities. On the other hand, SIPs enable investors to invest at regular intervals, which could be monthly or quarterly.

• Fixed Deposits and Bonds

While fixed deposits and bonds are not entirely passive income sources, they can be considered relatively low-risk investment options that can provide interest as regular income. Fixed deposits with banks or post offices, as well as government or corporate bonds, can provide a predictable source of income.

• Invest in Real Estate Investment Trust (REIT)

Property rentals are another way to make passive income. Assume that you would want to avoid the substantial down payment or up-front time commitment that comes with owning real estate property. In that case, you might think about investing in a real estate investment trust.

Real Estate Investment Trust (REIT) lets you invest money into a business that owns and manages real estate. Commercial real estate, such as offices or other commercial spaces, usually involves an upfront investment that covers both the cost of the real estate and the time spent finding reputable tenants.

• Affiliated Marketing

If you have some following on social media or have a popular blog up and running, you can leverage your follower base to earn additional income by promoting the products of different companies. Let us say you have a blog which generates decent traffic. Product companies could reach out to you to list your products on your blog as an ad. You can earn a commission from the concerned company for every click or purchase made via your blog.  

Importance of Having Passive Income Source:

Here are some key points on why it is important to have a passive income source:

• Financial stability: Passive income provides a stable stream of income that doesn't require constant effort or time investment. It can help you pay bills, cover expenses, and meet your other financial needs, even if you're unable to work actively or face unexpected emergencies.
• Diversification of income streams: Relying solely on active income, such as a regular job, can be risky. Having a passive income source diversifies your income streams and reduces dependency on a single source of income, providing a safety net in case one income stream falters.
• Time freedom: Passive income allows you to earn money while having more time to pursue other interests. It can provide you with flexibility and freedom to enjoy life on your terms without being tied down to a traditional 9-to-5 job.
• Retirement planning: Having a passive income source is crucial for retirement planning. It provides you with a means to generate income during retirement when you may not have the physical ability or desire to work actively. It can help you maintain your lifestyle and enjoy a comfortable retirement.
• Entrepreneurship and business ownership: Passive income can be generated through business ownership or entrepreneurship. Building a successful business that can be a source of passive income provides you with financial independence and create a legacy for the future generation.

How Many Passive Income Sources Should You Have? 

The number of passive income sources you should have depends on your financial goals, personal circumstances, and risk tolerance. There is no one-size-fits-all answer to this question. However, having multiple sources of passive income can help diversify your income streams and provide a more stable financial foundation.

It is important to consider the time, effort, and resources required to generate passive income from each source.

Things to Know About Earning Passive Income

Here are some key points to know about earning passive income for beginners:

• Initial effort and investment: While passive income can generate money without ongoing effort, it usually requires an initial investment of time, money, or both. For example, purchasing a rental property or creating a digital product may require upfront costs and effort in the beginning.
• Research and education: It is crucial to thoroughly research and educate yourself about different passive income streams before diving in. Understand the risks, rewards, and potential returns of each option.
• Tax implications: Passive income may have tax implications, and it's crucial to understand the tax laws and regulations in your jurisdiction. Some passive income may be subject to taxes, such as rental income, while others may have tax advantages, such as dividend stocks.
• Time and patience: Earning passive income takes time and patience. It's not a get-rich-quick scheme. It may take months or even years to start seeing significant returns. It is important to have realistic expectations and be willing to put in the effort and wait for the results.

Tax on Passive Income: 

The following table highlights the tax structure on passive income in India:

FAQs: 

Q1 What are the examples of passive income?

Ans. The most common passive income ideas include owning a business, renting a property, private equity, holding shares in a stock market and peer-to-peer lending.

Q2 What are the three forms of passive income?

Ans. People generally generate passive income in three main ways: investing, asset building and asset sharing.

Q3 How do you generate passive income?

Ans. There are multiple ways of earning passive income, including investing in stocks, writing a book, renting a property or car, affiliate marketing programs, etc.

Q4 How can I start passive income with no money?

Ans. You can earn passive income with minimal investment by building a passive income business, investing in stocks, investing in cryptocurrencies, investing in real estate, becoming an online creator, building single-use software and apps, affiliate marketing and owning digital real estate.

Q5 Is passive income legal in India?

Ans. Yes, except for specific types of passive income, all other sources of income are subject to taxation per the Income Tax Act of 1961.