Post Office Monthly Income Scheme

The Post Office Monthly Income Scheme (POMIS) is a government-backed savings scheme offered by the Post Office that provides regular income to investors. It offers one of the highest interest rates than similar schemes such as Post Office Savings Account, Post Office Time Deposit or Post Office Recurring Deposit.

The Post Office Monthly Income plan provides steady and guaranteed monthly income to investors. You can invest a maximum amount of ₹9 Lakhs in a single account and up to ₹15 Lakhs in a joint account for a period of 5 years. With the interest rate being 7.40% as of April - June 2023, the scheme becomes a great low-risk and high earning investment.

MIS Interest Rate in Post Office

The Post Office MIS interest rate is decided by the Central Government of India and revised every quarter. Currently, the interest rate for Q3 FY 2023-2024 is 7.40%. The interest will be disbursed every month into the investor’s account, after which you can withdraw. However, the interest in the POMIS scheme will not be compounded.

According to the rules of the scheme, the interest will be rounded off to multiples nearest to 1 rupees.
For example: any interest amount of 50 paise will be taken as 1 rupee and interest amount below 50 paise will be ignored.

Below is an overview of the different interest rates that the scheme has offered:

Eligibility to Open Post Office MIS Account

The Post Office MIS scheme eligibility requirements are:

• Any single Indian can open an account.
• Up to 3 people are eligible to open a joint account.
• Parents or guardians can open an account for minors or a person of unsound mind.
• A minor who has attained 10 years of age can open an account on his name.

Documents For Post Office Monthly Income Scheme

Certain documents are required for identity verification and address verification, these include:

• Voter’s ID, Driver’s Licence, Passport or Aadhaar card for identification proof.
• Rental Agreement, recent Utility Bills or other Government issued ID as address proof.
• Passport Size Photographs.

Features & Benefits For Post Office Monthly Income Scheme

The Post Office Monthly Income Scheme provides significant features and benefits to investors. These are:

• Security:This scheme is backed by the government, making it a secure investment opportunity. With a lock-in period of 5 years, the scheme offers a low-risk way of doubling your money.
• Flexible deposit amount:You can deposit any amount of money between 1000 to 9 lakhs in accordance with your affordability for a single account. For a joint account, the maximum deposit is 15 lakhs and for a minor account, the maximum deposit is 3 lakhs. This helps to include and encourage investors from any economic background.
• Interest payout:The interest for the scheme is one of the highest amongst other schemes. It is paid out every month and credited to your account, offering regular income to depositors.
• Nomination facility:The investor can add a nominee to the account who will be eligible for the account’s benefits, in the case that the account holder passes away before the maturity of the term.
• Tax implications:The scheme does not have any tax benefits under Section 80C of the Income Tax Act nor does it incur Tax Deduction at Source (TDS).
• Funds transferability:According to a recently added feature, the deposit amount can be transferred to a Recurring Deposit account (RD). The Post Office Monthly Income scheme account can also be easily transferred from one post office to another.
• Accessibility:The account can be opened in any Post Office branch in the country, making the savings scheme highly accessible.
• Own multiple accounts::Investors can have multiple accounts, however the total deposit amount in all the accounts cannot exceed more than the maximum limit which is 9 Lakhs.
• Renewal:At the time of maturity, the amount can be reinvested in the scheme for another 5 years.

How To Deposit Money into the Account

Depositing money into the account is a straightforward process. All you need to do is follow the steps below:

• Visit the nearest post office where you have a POMIS account.
• Fill up the deposit slip with details such as the account number, name and amount to be deposited.
• Submit the deposit slip along with the cash or cheque.
• Once the transaction is complete, the money will be deposited into the account.

Premature Closure of Post Office Monthly Income Scheme Account

Premature closure of a POMIS account before the maturity period can lead to penalties or receive reduced returns compared to the full maturity value. Here are the consequences of closing the scheme account before the maturity period:

• Withdrawals on the deposits are only allowed after the completion of 1 year after account opening.
• If the account is closed after the completion of 1 year but before the 3rd year, 2% will be deducted from the principal amount.
• If the account is closed after the completion of 3rd year but before the 5th year, 1% will be deducted from the principal amount.

Tax Benefits of Monthly Income Scheme Account

The Post Office Monthly Income plan does not offer any tax benefits under Section 80C. The deposit on the scheme is also not applicable for TDS.

Post Office Monthly Income Scheme Vs Other Post Office Saving Schemes

The Post Office Monthly Income Saving Scheme is a great investment option. However, depending on various factors such as your financial requirements and the risk you are willing to take, understanding the other saving schemes offered by the post office may be helpful.