The post office monthly income scheme or POMIS is a scheme where a person can invest money and earn a fixed amount of interest each month. The scheme is offered by the Indian postal service and is backed by the government of India. It is a small saving scheme that allows the investor set aside a specific amount of money each month and guarantees a return in the form of fixed monthly income.
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Post Office Monthly Income Scheme
Features of Post Office Monthly Income Scheme:
The key features of the POMIS scheme are mentioned below:
- The post office monthly income scheme can be held jointly or individually.
- An individual can opt to open a POMIS account with a minimum amount of Rs 1,500. The individual can also opt to invest a higher amount which should be in multiples of Rs 1,500.
- The maturity period of this scheme is 5 years from the date of opening the account.
- In case of a joint account, each holder has equal share.
- The account holder can also add a nominee.
- The POMIS account can be freely transferred from one post office to another.
- There is no specified limit on the number of POMIS accounts held singly or jointly. The accounts are subjected to maximum cumulative balance criteria. Cumulative maximum balance for individual account is Rs 4.5 lakhs and jointly held accounts are Rs 9 lakhs.
- The credit proceeds directly to the post office savings account on monthly basis.
- The post office monthly income scheme does not fall under section 80C and the income and the maturity amount is subjected to taxation.
- The POMIS scheme continues to earn interest after the maturity period, if the amount is not withdrawn by the account holder.
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Benefits of Post Office Monthly Income Scheme:
The benefits that can be availed under the POMIS scheme are discussed below:
- Capital protection: the amount of money invested in the scheme is safe as it is a scheme backed by the government.
- Guaranteed returns: an investor is guaranteed a return in the form of interest each month. The returns received are higher than fixed deposit interest.
- Low-risk investment: As a fixed income scheme, the money invested is not subject to market risks and is safe.
- Fund movement: the account holder can move the funds to a recurring deposit account.
- Option to reinvest: the POMIS scheme comes with the benefit to reinvest the corpus post maturity in the same scheme for another 5 years to get double the benefits.
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How to open a POMIS Account?
Opening a post office saving account is quite a simple task provided the individual willing to open a post office account follows the step by step procedure provided in the following section:
- Visit the nearest post office and open a post office savings account if you don’t have one.
- Collect the application form for the POMIS scheme from the post office.
- Fill the form with the required details and submit the form.
- Also fill the details of the nominee and get the nominee’s signature before submitting.
- Attach copies of your identity and residence proof and 2 passport size photos along with the application form.
- Carry the originals of the documents attached for verification at the post office.
- Make the initial deposit either by depositing cash or through a cheque.
Comparing Post Office MIS with other Monthly Income Plans:
Post office monthly income scheme
Monthly income scheme (mutual funds)
Monthly income plan (insurance)
The POMIS scheme guarantees a fixed monthly income at a 7.7% annual rate
Invested in 20:80 equity-debt ratio and hence no guaranteed income
Monthly annuities rates vary based on premiums and period
TDS is applicable. However the interest earned is taxable.
TDS is not applicable
The annuity paid monthly is taxable
The returns are fixed at 7.3%
The returns are not fixed
The motive of the monthly income plan is to insure and secure the capital rather than getting returns
It is a type of low risk investment
It is a high risk investment
This type of scheme has double benefits of investment and insurance
Post office monthly income scheme interest rate 2018:
The interest rate of the post office monthly income scheme for the year 2018-19 is as follows. The details of the interest rates are provided on the basis of quarterly changes:
- From 1st January 2018 to 31st March 2018 the POMIS interest rate is 7.3%
- From 1st April 2018 to 30th June 2018 the rate is 7.3%
The rates are subject to changes.
Post office monthly income scheme tax benefit:
The scheme does not offer any tax benefit as the POMIS scheme does not come under Section 80C of the income tax act. The interest earned and the maturity amount is subjected to taxation.
Post office monthly income scheme rules:
- You can open the account by paying cash or cheque and in case of cheque the date of realization of the cheque in the Government account shall be day of starting the account.
- The POMIS account can be transferred from one post office to another.
- Any number of accounts can be opened in any post office subject to maximum investment limit.
- Account can be opened in the name of minor and a minor of 10 years and above can open and operate the account.
- Joint account can be opened by two or three adults.
- Single Post Office MIS account can be changed into Joint and vice versa.
- If the account is started for your child, you can change the account to the child’s name after applying for conversion.
- The account maturity tenure is five years.
- The MIS account can be cashed ahead of time after completion of one year. But if you are doing it before three years, there will be a 2% deduction from the deposit and after three years, it will be 1% deduction from the deposit.
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