Post Office Monthly Income Scheme (POMIS) – Complete Details
POMIS, Post Office Monthly Income Scheme, Benefits, How it Works, Key Features, Eligibility Criteria, How to Avail Benefits, How to Apply, Revised Interest Rate, Limitations of POMIS, Complete Details
Post Office Monthly Income Scheme
Are you looking for an investment plan that is safe, earns a substantial return with a small fixed period, which does not say for equity and is absolutely riskless? Well, then think about investing in the Post Office Monthly Income Scheme (POIS).
Monthly Income Scheme (MIS) is an investment scheme of the Indian Postal Service. It promotes returns on the investor 8.5% per annum as a fixed monthly income. Experienced investor MIS is considered one of the best options for money because it gives you three qualities – maintains your capital, gets better returns than debt instruments and gives assurance of a fixed monthly income.
Urban investors are often reluctant to invest in POMIS. It looks like a very old world, but as you know it was the post office, which used to offer banking services in India and still provide the largest banking service in the country. Being administered by the Ministry of Finance, it claims greater credibility than any other investment.
Benefits of Post Office Monthly Income Scheme
The maturity period for MIS is 5 years. Ideally, you should withdraw the amount after 5 years. At the end of this period, you will withdraw all the money you have invested. Needless to say, you keep getting your fixed monthly income for this entire period.
However, if you have to withdraw money before 5 years, then here’s what happens.
- Withdraw money deposited within 1 year – you will not get anything
- In 1-3 years, withdraw the deposited money – you get your deposit after a nominal 2% deduction (as a penalty)
- Take back the deposit after 3 years – you withdraw your deposit after a nominal 1% deduction (as a penalty)
How does It Work?
Making an investment in POMIS is very easy and requires minimal documentation. The investor needs to submit a copy of address proof and identity proof (passport / PAN card/ration card/voter identity card) and passport size photo.
To get started, the investor has to open an account. It can either choose a personal account or a joint account. The table below shows the minimum and maximum amount, which can be invested in POMIS.
How It Works?
Mr. Kumar opts to invest in MIS. They invest Rs 1,00,000 in the maturity period of 5 years. At an annual interest rate of 8.5%, they get a fixed payment of Rs 708 per month (this figure can be easily understood on the online POIS calculator). At the end of the investment period, deposited money will be returned
Money can be withdrawn in two ways, either directly from the post office or by the ECS in its savings account. Money is usually withdrawn on a monthly basis. However, the investor can deposit it in a few months and then withdraw it, but this is not too much use because passive money will not earn you any interest.
In order to make POMIS more effective on giving returns, a new feature was added to it. The investor has the option of combining this recurring deposit with which the interest you earn on a monthly basis is invested in recurring deposits. This, in turn, lets your money make more money.
- POMIS account is transferable from one post office to another. The best part is that it can be done completely for free
- To deposit each post office, you have to open a separate account. The good thing is that a person can open the number of ‘n’ accounts (definitely up to the upper limit)
- The maturity amount received at the end of the period can be reinvested in POMIS.
- The investor can also nominate a nominee for his POMIS account, therefore, in case of his unfortunate death, his nominee gets entitled to his money.
- The good news is that there is no TDS (tax deduction at source) here to eat your money.
- The bad news is that so many earned interest is taxable.
Who should invest in MIS?
MIS is designed for risk-based investors, with a large number of equity instruments, for the source of fixed monthly payments. It is best suited for the needs of senior citizens and retirees who are still registered in the Not-Pay-Pack Area and are ready to invest in one-time with the sole purpose of maintaining a safe lifestyle so that their lifestyle To maintain. Simply put, POMIS is for those who are looking for a long-term regular source of income.
Who is Eligible for MIS?
The only pre-requisite is that the investor should be an Indian resident. NRIs can not invest in POMIS. The best thing about this post office scheme is that entry age is fixed at 10 years. So, even a 10-year-old minor can also open a POMIS account in his name. The maximum amount that a minor investment can make is Rs. 3,00,000.
What’s not Good?
POMIS does not offer any tax exemption under section 80C. Simply the amount invested in POMIS is not tax exempt. If the monthly payment is not withdrawn, then they are worthless and do not give any interest. There is no TDS on post office MIS, but interest income is taxable in your hands.
Revised Interest Rate
Post Office Monthly Income Scheme is facing a huge reduction in the interest rate of 8.40% to 7.80%, before interest rate was 8.40% before April 1, 2016. Here, it is important to know that income earned through interest through this scheme is taxable. Apart from this, a person can charge a maximum of Rs 450,000 in the Post Office Monthly Income Plan. This amount includes his share in the joint accounts. Minimum deposit of Rs 1500 and deposit amount is accepted in multiples of Rs 1500.