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Post Office Monthly Income Scheme (POMIS)

The Post Office Monthly Income Scheme is a reliable investment option for a regular income stream or for creating a substantial investment corpus. It is considered a safe investment option as it is backed by the government. ...Read More

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Post Office Monthly Income Scheme (POMIS)

All About Post Office Monthly Income Scheme (POMIS)

Post Office Monthly Income Scheme
June 25, 2024

Table of Content

 

What is the Post Office Monthly Income Scheme?

The Post Office Monthly Income Scheme (MIS) is a safe savings option that offers a steady monthly income. With an interest rate of 7.4%, this scheme pays interest every month, helping investors receive regular payouts. Individuals can invest up to Rs. 4.5 lakhs, while joint accounts can hold up to Rs. 9 lakhs. One of the main benefits of this scheme is capital protection, making it a secure choice for savings. At maturity, the principal amount can be withdrawn. This scheme is perfect for anyone looking for a reliable way to grow savings while enjoying monthly income.

Characteristics of Post Office Monthly Income Scheme

The POMIS Scheme is a risk-free investment option designed to generate a monthly income. The key characteristics of the MIS Scheme in post office are:

  • Safety and Reliability: The Post Office Monthly Income Scheme is backed by the government, assuring capital protection. Market fluctuations do not impact the investment, and the returns are guaranteed. Conservative investors and retirees prefer this monthly income scheme.Complementing this with life insurance can provide an added layer of financial security for your loved ones.
  • Deposit Limit: The POMIS permits an investment of up to Rs. 9.00 lakhs individually and Rs.15.00 lakhs jointly. The minimum amount of Rs. 1000/- stipulated makes this savings scheme open to a broader range of investors.
  • Tenure: The post office MIS has a lock-in period of 5 years, which defines the timeline for financial planning. At the end of 5 years, the investor can either withdraw the principal amount or reinvest in the scheme.
  • Guaranteed Returns: The POMIS Scheme is backed by the government and ensures a fixed return. The investment is not subject to market risks. The income is higher when compared to other fixed income investment options.
  • Tax Implications: The interest earned on the investment in the MIS scheme in post office is taxable as per the investor’s income tax slab. However, the principal amount invested in the scheme is not eligible for tax deduction under Section 80C of the Income Tax Act 1961*. The investor has to consider these factors before investing in POMIS.
  • Interest and Monthly Payouts: The government determines the interest rate for POMIS and declares it at quarterly intervals. The interest disbursement is monthly, which makes it a preferred investment avenue for earning a regular fixed income.
  • Nomination: The post office MIS provides for a nomination facility. The depositor can nominate one or more beneficiaries who can receive the proceeds in case of any eventuality.
  • Transfer of funds: The POMIS Scheme allows the transfer of the monthly interest to an RD account to maximise the returns. The monthly income deposited in RD accounts will earn further interest and enhance the returns.
  • Multiple Account Facility: You can open multiple accounts under the POMIS Scheme. But the maximum investment remains at Rs.9.00 lakhs individually and Rs. 15.00 lakhs jointly.
  • Transaction Convenience: The monthly interest earned can either be credited to your savings account or reinvested in other investment options like SIP, RD, etc, for further returns. 

Advantages of Post Office Monthly Income Scheme

The Post Office Monthly Income Scheme is one of the most lucrative fixed-income options. The benefits of POMIS are:

  • The minimum amount required to open an account under the MIS Scheme in post office is Rs.1000.
  • A parent/guardian can open an account under this savings plan on behalf of a minor over 10 years. The minor can access the funds on turning 18.
  • The monthly fixed returns from the deposit scheme can be transferred to the RD account to maximise the returns.
  • Several accounts can be opened under the scheme subject to a maximum investment of Rs. 9 lakhs individually and Rs. 15.00 lakhs jointly. To further secure your financial future, consider adding a life insurance policy to cover unforeseen circumstances.
  • The interest earned can also be transferred directly into the SB account of the depositor every month.
  • A nomination facility is provided for the account. A provision to assign more than one nominee is also available.
  • The proceeds in the account continue to earn interest for up to 2 years if the amount is not withdrawn after maturity. The interest rate will be the same as applicable to post office savings accounts.

Eligibility Criteria to Open a Post Office Monthly Income Scheme Account

The eligibility criteria to open an MIS account in post office are as follows:

  • The investor should be a resident Indian.
  • Individuals above 18 years are eligible to open an account under the scheme.
  • Parents/guardians can open an account under the post office monthly income scheme on behalf of minors above 10 years.
  • At 18 years of age, the minor can opt to convert the account to his/her name.

Documents Required for POMIS

To establish the identity and contact details the applicant has to submit the following documents to open an account under the post office monthly income scheme.

  • Identity Proof

The applicant has to submit xerox copies of government-issued IDs like Aadhar Card, Voter’s ID Card, Passport, Driving Licence, etc.

Copies of any government-issued IDs like Driving Licence, Passport, Voter’s ID Card. etc., or the latest utility bills should be submitted along with the application form.

  • Photographs

Passport-size photographs also need to be submitted along with the other documents.

How to Start a POMIS Account?

Follow the simple procedure given below to open an account under the MIS scheme in post office.

  • Having a post office savings account is mandatory. If you do not have one, open one at the post office.
  • You can download the application for the Post Office Monthly Income Scheme from the post office's official website or obtain the application form from the nearest post office.
  • Submit the completed application form along with the necessary documents at the nearest post office.
  • Remember to carry the originals of the documents submitted for verification.
  • If you are opting for a nomination facility, mention the name, date of birth, and mobile number of the nominee.
  • Make the initial deposit in cash or by cheque. If the initial amount is made by cheque, the account opening date will be the date the cheque is realised.
  • Once the account is opened, you will get the account details.

Results of Withdrawing Early

The post office monthly income scheme has a lock-in period of 5 years. The principal amount can be withdrawn upon completion of the term, i.e., upon maturity. However, provision for premature withdrawal in case of emergencies is provided subject to the following conditions:

  • The amount cannot be withdrawn before completion of 1 year from the date of opening the account.
  • If the amount is withdrawn after 1 year but before the 3rd year, a 2% penalty is charged.
  • For premature withdrawal between the 3rd and the 5th year, a 1% penalty is charged.

Understanding the Post Office Monthly Income Scheme (POMIS) and Other Monthly Income Plans

The following information outlines key aspects of the Post Office Monthly Income Scheme (POMIS) and other monthly income plans, focusing on their unique features and suitability based on different parameters.

POMIS

Monthly Income Mutual Insurance

Monthly Income Mutual Fund

TDS not applicable

TDS is applicable on Annuity

TDS is applicable

Guaranteed income at 7.40% interest p.a.

Monthly annuities are paid. The annuity depends on the term and the premium paid

No guaranteed income as funds invested in a 20:80 ratio in equity/debt

Returns at a fixed rate

Not applicable

The return rate is market-linked

Low-risk investment

Has both investment and insurance component

Suitable for individuals with high-risk appetite

Premature withdrawal is permitted after the completion of 1 year.

A long-term investment and so high surrender charges will apply

Exit charges are applicable for premature withdrawal

The maximum investment limit is Rs. 9 lakhs individually and Rs. 15 lakhs jointly

No investment limit

No investment limit

The Highest Amount You Can Invest in Post Office MIS

The post office monthly income scheme does not pose restrictions on the number of accounts to be opened under the scheme. However, there is a cap on the maximum investment:

  • A maximum of Rs. 9.00 lakhs can be invested in an individual account.
  • In the case of joint accounts a maximum of Rs. 15 lakhs can be invested. The number of joint account holders is restricted to three. 

The Latest Interest Rates for the Post Office Monthly Income Scheme

The rate of interest for POMIS is determined by the government and announced quarterly. The interest rate for the April 24 to June 24 quarter is 7.40%.

Given below is the rate of interest for the past five years:

Period

Interest Rate

1st January 2018 to 30th September 2018

7.30%

1st October 2018 to 31st December 2018

7.70%

1st January 2019 to 31st March 2019

7.70%

1st July 2019 to 30th September 2019

7.60%

1st October 2019 to 31st December 2019

7.60%

1st January 2020 to 31st March 2020

7.60%

1st April 2020 to 30th September 2020

6.60%

1st October 2022 to 31st December 2022

7.10%

1st January 2023 to 31st March 2023

7.10%

1st April 2023 to 30th June 2023

7.40%

1st October 2023 to 31st December 2023

7.40%

1st January 2024 to 31st March 2024

7.40%


Overview of Post Office Monthly Income Scheme (POMIS) and Other Post Office Savings SchemesThe following information highlights key features of the Post Office Monthly Income Scheme (POMIS) and other savings schemes offered by the post office, focusing on interest rates and TDS applicability.

Savings Scheme

Interest Rate

TDS

Post Office Monthly Income Scheme

7.40%

Not applicable

Post Office Recurring Deposit Scheme

6.70%

Not applicable

Post Office Time Deposit

(1,2,3 years)

6.90%, 7.00%, 7.10% respectively

Not applicable

Post Office Time Deposit (5 years)

7.50%

TDS is applicable

National Savings Certificate

7.70%

TDS will be deducted

Senior Citizen Saving Scheme

8.20%

TDS is deducted

Public Provident Fund

7.10%

TDS is applicable


Understanding POMIS, Bank FD, and NSCThe following information outlines key aspects of POMIS, National Saving Certificate (NSC), and Bank Fixed Deposits (FDs), focusing on their features and suitability based on different parameters.

POMIS

National Saving Certificate

Bank Fixed Deposit

Fixed interest rate at 7.40% (presently)

Fixed interest rate at 7.70% (presently)

Fixed interest rate but varies with each bank

Guaranteed Returns

Guaranteed Returns

Guaranteed Returns

TDS not deducted

TDS is not deducted

TDS is deducted

No limit on investment

No maximum investment limit

No cap on maximum investment.

Low-risk investment

The risk attached is low

A low-risk profile

Premature withdrawals are permitted with a penalty

Premature withdrawals are permitted only in special cases.

Premature withdrawals are permitted with a penalty

Investment does not qualify for tax deduction

Eligible for deduction under Section 80C

Tax savings deposit with a 5-year lock-in-period is eligible for tax deduction under Section 80C*

Tenure is 5 years

Two tenures are available, i.e., 5 years and 10 years

Tenure ranges from 7 days to 10 years

Summary

The Post Office Monthly Income Scheme is a government-backed investment scheme ideal for individuals with a low-risk appetite. Conservative investors and retirees seeking a regular income stream can invest in the POMIS Scheme. The capital protection feature is the USP of the scheme and makes it a popular choice for individuals looking for predictable returns.Additionally, complementing POMIS with life insurance can provide comprehensive financial security, ensuring peace of mind for you and your family.

FAQs

Q. Which scheme is best for monthly income in the post Office?

The MIS scheme of post offices is the best for those looking for a regular income stream. It is a government-backed scheme with assured returns. With a low-risk profile, this monthly income scheme is ideal for risk-averse investors.

Q. What is the monthly interest of 1 lakh in the post office?

The monthly interest of Rs. 1 lakh in the post office is the regular monthly income for a proportionate investment at a 7.40% fixed interest rate.

Q. Which is better, MIS or FD?

Both MIS and FD are low-risk investments with guaranteed returns. They are both investment options for capital preservation and stable returns. However, the key difference is the maximum investment limit. You can invest only up to Rs. 9.00 lakhs individually and Rs. 15.00 lakhs jointly in MIS, but there is no maximum limit for investment under FD. The choice of investment depends on the risk appetite and financial goals of the investor.

Q. Who is eligible for the post office monthly income scheme 2024?

A resident Indian over 18 years of age is eligible to open a Post Office Monthly Income Scheme account. A parent/guardian can open the MIS account in the name of minors over 10 years of age. The minor can get the account converted in his/her name upon attaining 18 years.

Q. How many MIS can be opened?

Any number of MIS accounts can be opened with a maximum limit of Rs. 9.00 lakhs individually and Rs. 15.00 lakhs jointly.

Q. Which post office scheme gives 8% interest?

The Senior Citizen Savings Scheme offers 8.2% interest p.a. 

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Francis Rodrigues Francis Rodrigues

Francis Rodrigues has a decade long experience in the insurance sector, and as SVP, E-Commerce and Digital Marketing, HDFC Life, manages the online sales channel, as well as digital and performance marketing. He has had hands-on experience in setting up sales channels and functional teams from scratch over a career spanning 2 decades.

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Vishal Subharwal heads the Strategy, Marketing, E-Commerce, Digital Business & Sustainability initiatives at HDFC Life. He is responsible for crafting and ensuring successful implementation of the overall organisation strategy.

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* Tax benefits & exemptions are subject to conditions of the Income Tax Act, 1961 and its provisions. Tax Laws are subject to change from time to time. The customer is requested to seek tax advice from his Chartered Accountant or personal tax advisor with respect to his personal tax liabilities under the Income-tax law.

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