Post Office Monthly Income Scheme is a guaranteed monthly income product by government of India. It is also known as Post Office MIS or POMIS.
The features of POMIS are as below.
- An investor invests some amount.
- He will get a monthly income.
- At the end of 5 years, he will get back his initial investment.
As an example, Ravi invests INR 150000 (1.5 lakhs) in POMIS. He gets a monthly income of INR 1050. After 5 years, he gets back his investment of INR 150000.
Post Office MIS is an example of a small saving scheme. A small saving scheme gives a safe and secure investment choice to the public. At the same time it helps to mobilize resources for the development of the country.
Who is Post Office Monthly Income Scheme for?
Post Office MIS is a safe product with regular income.
It is suited for the following type of people.
- People who want regular guaranteed monthly income.
- People who have retired.
- Aged people and senior citizens.
- People who do not want to take risks.
POMIS is thus suitable for those who are looking for a long term regular source of income.
Interest Rate and Maturity
- Interest rate is 8.4% per year.
- POMIS pays monthly interest.
- It matures in 5 years.
- The investor has to get his interest in cash every month.
- He can also open a post office savings account. He has to then ask the Post Office to transfer the money to his account instead.
- If he does not withdraw his monthly income, the amount will not earn any additional interest.
- A person can invest in multiples of INR 1500
- He can invest a maximum of INR 4.5 lakhs in a single account and INR 9 lakhs in joint account.
Eligibility for Post Office Monthly Income Scheme
- A resident can open a POMIS account.
- A non-resident Indian cannot open a POMIS account.
- A Hindu Undivided Family (HUF) cannot open a POMIS account.
- The investor may add a nominee to his POMIS account.
- A person can open a POMIS account in the name of a minor.
- Two or three adults can open a Joint Account.
POMIS Account Details
- A person can open any number of accounts in any post office. But he has to maintain overall investment limits.
- He can transfer his money from one post office to another.
An investor can prematurely encash his Post Office Monthly Income Scheme:
- After 1 year but before 3 years at a discount of 2%
- After 3 years at a discount of 1%
Discount here means deduction from the deposit.
- For example, if Ravi breaks his POMIS between 1 to 3 years, he has to pay a penalty of INR 3000 and will get back INR 147000 only.
- If he breaks his POMIS after 3 years, he has to pay a penalty of INR 1500 and will get back INR 148500 only.
Tax Aspects of Post Office Monthly Income Scheme
- There is no tax benefit under Section 80C.
- Interest income is taxable.
- There is no tax deducted at source (TDS).
- The amount deposited in POMIS is exempt from Wealth Tax.
Post Office Monthly Income Scheme is therefore a very safe investment option with assured monthly returns.
The main benefits of POMIS are that:
- The investment is safe.
- It offers fixed monthly income.
- It has higher interest than other debt products.
- There is no TDS in POMIS. But wherever applicable, the investor must pay his taxes.
For all these reasons, Post Office Monthly Income Scheme is very popular among senior citizens, retired people and risk-averse investors.
A Few Last Words
I hope you found this article useful. If you have something to add please leave a comment in the post. Please feel free to contact me.
Before making any investment decision, please contact your financial adviser. I have provided this article for educational purpose only.
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