Post Office Monthly Income Scheme

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.

  1. An investor invests some amount.
  2. He will get a monthly income.
  3. 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.

  1. People who want regular guaranteed monthly income.
  2. People who have retired.
  3. Aged people and senior citizens.
  4. 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

  1. Interest rate is 8.4% per year.
  2. POMIS pays monthly interest.
  3. It matures in 5 years.

Interest Income

  1. The investor has to get his interest in cash every month.
  2. 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.
  3. If he does not withdraw his monthly income, the amount will not earn any additional interest.

Investment

  1. A person can invest in multiples of INR 1500
  2. 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

  1. A resident can open a POMIS account.
  2. A non-resident Indian cannot open a POMIS account.
  3. A Hindu Undivided Family (HUF) cannot open a POMIS account.
  4. The investor may add a nominee to his POMIS account.
  5. A person can open a POMIS account in the name of a minor.
  6. Two or three adults can open a Joint Account.

POMIS Account Details

  1. A person can open any number of accounts in any post office. But he has to maintain overall investment limits.
  2. He can transfer his money from one post office to another.

Premature Encashment

An investor can prematurely encash his Post Office Monthly Income Scheme:

  1. After 1 year but before 3 years at a discount of 2%
  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

  1. There is no tax benefit under Section 80C.
  2. Interest income is taxable.
  3. There is no tax deducted at source (TDS).
  4. The amount deposited in POMIS is exempt from Wealth Tax.

Conclusion

Post Office Monthly Income Scheme is therefore a very safe investment option with assured monthly returns.

The main benefits of POMIS are that:

  1. The investment is safe.
  2. It offers fixed monthly income.
  3. It has higher interest than other debt products.
  4. 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.

You may also like

Reference

Subhodeep Mukhopadhyay

I am a Management Consultant in the Education Sector. In my previous corporate career, I have worked in Banking, Private Equity and Software industry. I am an MBA in Finance/ Computer Engineer and enjoy doing equity research and financial analysis in my free time.

6 thoughts on “Post Office Monthly Income Scheme

  • July 27, 2015 at 12:01 pm
    Permalink

    This website is an exact representation of skills. I appreciate the blogger for posting the most excellent thought. This topic posted by you is trustworthy. I like you recommendation.Your recommendation is of well use to people :)

    Reply
    • July 27, 2015 at 6:52 pm
      Permalink

      Thank you Soumadeep. I am gad you enjoyed the post. :) Do keep reading and posting comments, and share with people who might like it. Thanks !

      Reply
  • October 8, 2015 at 5:38 pm
    Permalink

    Hello Sir,
    Is the investment safe?
    Is the monthly interest guaranteed?

    Thanks and regards
    Sanjay

    Reply
  • December 23, 2015 at 12:12 am
    Permalink

    Hi Subhodeep

    Glad to see this post. I have invested in this scheme, and I affirm to the readers that it is 100% safe to invest in this scheme.
    For additional benefits/returns, I suggest the subscribers of this scheme to invest the returns earned (Rs. 1500/- of your example above) from the term deposit in to a recurring deposit (that is in case they can afford to) and earn RD interest on the deposit.

    Best
    Itinder

    Reply

Leave a Reply

Your email address will not be published. Required fields are marked *

You may use these HTML tags and attributes: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <s> <strike> <strong>