Post Office Monthly Income Scheme: POMIS

Post office monthly income scheme gives your interest every month on investments. The postal department has a variety of systems that offer a fixed return on investment.

These systems are flexible with a state guarantee; the state supports these investment opportunities (government-backed).

Therefore, investing in these schemes is safer than equities and several fixed-income systems.

Post office monthly income scheme, among others, like Recurring Postal Deposits, Post Office Time Deposit, is one of the most productive schemes with an interest rate of 6.6%.

As the name implies, scheme interest is paid monthly. Like other postal services, this scheme has been recognized and supported by the Ministry of Finance, the government of India.

What is Post Office Monthly Income Scheme?

The Post office monthly income scheme is a savings plan where you invest a certain amount and receive interest on investment every month. You can invest in this scheme from any post office.

Individuals can invest up to Rs 4, 50, 000, and jointly you can invest 9, 00,000. The investment period for POMIS is 5 years. The main goal of the scheme is capital protection. The interest rate from 01-04-2020 for this scheme is 6.6% per year and is paid monthly.

The scheme is a suitable investment option for investors in middle and low-income groups as the plan provides tax benefits on the investments under section 80C of the Income Tax Act.

Any Indian can open an MIS account at any post office. He will get the account opening application there or download it from the Post office’s official website.

Fill out the application form and submit it along with the necessary documents and the initial amount of Rs. 100. An account will be created under POMIS.



Post Office Monthly Income Scheme Account Opening Method

POMIS account opening is easy and convenient. However, you must have a savings account to invest in the scheme in the post office. Once you open a savings account at the post office, you can invest in this scheme.

If you do not have savings account in the post office- you can follow the steps below to open the account:

  • Get the POMIS form at your nearest post office.
  • After getting the form, submit it with the following documents:

                  photocopy for identity proof (PAN, Aadhaar, Driving License, Passport, Voter ID)

                  address proof photocopy (PAN, Aadhaar, Driving License, Passport, Voter ID)

                  2 passport photos

  • Submit the originals of the documents mentioned above for verification.
  • Witnesses or beneficiaries collate signatures.

You can invest the capital amount in this scheme with a dated check. The date of the cheque is considered the opening date of the account. The investment interest is paid one month after the account’s opening date.

After opening the monthly post office income scheme, the account holder can appoint a nominee.

Post Office Monthly Income Scheme Eligibility

  • Residents of India are eligible to open a monthly income scheme account
  • NRIs cannot open a POMIS account
  • Any Indian adult can invest in this monthly savings plan
  • Parents or guardians can open monthly income accounts with the post office on their minor’s name above ten years. They can use the money after the age of 18.
  • After a minor becomes mature, he can apply for account conversion on his name.

What is the current interest rate of MIS in post office?

The interest rate for POMIS from 01-04-2020 is 6.6% and is paid yearly.

  • Interest is paid one month after the opening till maturity.
  • If the account holder does not claim every month’s payable interest, this interest will not earn additional interest.
  • If the depositor makes an additional deposit, the additional deposit will be returned. Only interest from the savings account will be applied from the opening of the account until the date of return.
  • Interest may be withdrawn by automatic credit to a savings account at the same post office or ECS. If you have an MIS account at the CBS post offices, you can withdraw monthly interest into savings at any CBS post office.
  • Interest shall be taxed in the hands of the depositary.

Also Read: Post Office Bank Account Opening: Explained

Post Office Monthly Income Scheme Features

Lock-in Period

When you open a monthly income account with the post office, you cannot withdraw the amount deposited from that account before five years.

Maximum Limit

You can invest up to Rs. 4.5 lakh maximum in the scheme. Even if you have grasped the scheme at many post offices, your deposit amount should not exceed Rs. 4.5 lakh.

Even in the case of joint accounts, your share of the investment must be within set limits. The maximum limit for a minor’s account is Rs. 3 lakh. For any individual Rs, 1500 is the minimum amount to be invested.

Transferrable

If you move to another city anywhere in India, you can transfer your POMIS account to an appropriate post office. Corpus of your monthly investment and interest payments will be sent to that post office.

Joint Account Facility

Up to 3 people can open a joint account for the POMIS scheme. In the case of joint accounts, each investor has an equal right over the account. The maximum investment limit for joint accounts is Rs. 9 lakes, and the limit for a solo account is Rs. 4.5 lakh.

Minor Account

You can open a minor account on his name under this scheme. The age limit for the POMIS account for minors is above ten years. After 18 years of age, they can claim to convert their minor account to an adult account.

Eligible Residence

Every Indian citizen has the right to open a POMIS account; however, the NRIs cannot open POMIS.

Auto Withdraw

You can save monthly interest on your investment by automatically transferring it to your savings account using PDC or ECS. Your interested amount can be directed towards any other CBS-centric savings account if your POMIS account is with the CBS post office.

Penalty

If you want to withdraw your investment before the end of the lock-in period, then you have to pay the penalty on the withdrawn amount, depending on the time of such redemption.

If you withdraw in the first and third years, a penalty of 2 percent is charged. If you withdraw your investment in the 3rd and 5th years, you will have to pay a fine of 1 percent.

Investment amount

All amounts multiplied by One hundred (100) are eligible investments.

Tax Benefits

There is no tax deduction at source (TDS) on earned interest. However, the interest amount is taxable under section 80C.

The following table shows the maximum investment amount limit for the monthly post office income scheme.

   Account Type Maximum Limit
   Single Account    Rs. 4.5 lakh
   Joint Account    Rs. 9 lakh
   Minor Account    Rs. 3 lakh

What is the Benefit of MIS in Post Office?

Investing in POMIS has two main advantages. As it is not a market investment plan and is guaranteed by the government, it is a choice for many low-risk investors. POMIS’s benefits are: 

Stable Returns

You get a steady supply of income from your investment corpus every month, regardless of market fluctuations. The interest rate is 7.6% per year is fixed by the post office.

Suppose Mr. Madan invested Rs. 4 lakh in POMIS on 01.04.14, then Mr. Madan’s every month interest income from the invested amount would be Rs. 2533.

Reinvestment

You can invest the earned interest in high returns on securities such as stocks mutual funds; however, there is a much greater risk associated with these investment opportunities.

Hybrid funds, which include equity funds and fixed income investments, are

  • a viable option for equity market participation,
  • developing a diverse investment portfolio,
  • achieving relatively higher returns and less risk compared to equities and mutual funds.

You can also reinvest your funds in the Post Office Recurring Deposit scheme, a feature recently added by the post office.

POMIS vs Other Saving Schemes

 Saving Scheme Rate of Interest TDS
 Post Office Monthly Income Scheme 7.6 %              No TDS is Deducted
 Post Office Recurring Deposit 7.2%              No TDS is Deducted
 Post Office Time Deposit (1,2,3 years) 6.9 %              No TDS is Deducted
 Post Office Time Deposit (5 years) 7.7%              TDS is Deducted
 National Saving Certificate 7.9%              TDS is Deducted
 Senior Citizen Saving Scheme 8.6%              TDS is Deducted
 Public Provident Fund 7.9%              TDS is Deducted

It is always better to use accumulated investments in such schemes or mutual funds to earn benefits rather than saving accounts.

Initially, low-risk schemes such as the Post Office Monthly Income Scheme in India give a person the certainty to take more risk in the future and achieve a higher return with adequate capital.

Conclusion

Post office monthly income scheme gives an investor a monthly income on his investments. The plan provides an auto credit facility of interest. Investments under this scheme are tax-free, but the interest earned is taxable.

Any Indian resident can open this account, and minors can also open MIS accounts in any post office and invest. MIS can be a good saving option for middle and low-income groups. 

FAQs.

Is MIS Scheme Tax Free

Post office Monthly income scheme provides tax redbait on investments, but the interest earned under this plan is taxable. 

Can I open POMIS Online?

You have to visit the post office in person and fill out the application and other necessary documents to open a POMIS account. 

Who Can Invest in Post Office MIS?

Only Indian residents can open an MIS account by submitting applications and necessary documents. Minors above ten years of age can also invest in POMIS.

How Do I Open a POMIS Account Online?

There is no facility yet to open a POMIS account online. Interested persons can visit a post office in person to open an account under this scheme. 

What is Post Office MIS 2021 Interest?

From 01-04-2020 interest rate for MIS (monthly income scheme) is 6.6% and is paid yearly.  

What is the Maximum Limit for MIS in Post Office?

The maximum investment amount for a single account is 4.5 lakhs. For joint, it is nine lakhs, and for a minor account, the amount is three lakhs.

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