Post Office Monthly Income Scheme (POMIS) – Features and Benefits
The Post Office Monthly Income Scheme (POMIS) ) is a popular savings scheme offered by the Indian Postal Service that aims to provide a fixed monthly income to investors seeking a regular source of income. POMIS scheme facilitates lump sum investments, wherein investors can deposit money in one go and enjoy monthly income in the form of interest upon maturity. You can open a POMIS account with just Rs.1,000. The lock-in period (maturity period) is 5 years and the current interest rate stands at 7.10%.
Read this blog to know the benefits of parking your money in the Post Office MIS scheme?
POMIS Union Budget 2023: Finance Minister Nirmala Sitharaman has proposed to increase the maximum investment limit in POMIS from Rs.4.5 lakh to Rs.9 lakh for a single account and up to Rs.15 lakh for a joint account.
Post Office Monthly Income Scheme
Post Office Monthly Income Scheme is a savings scheme launched by the Department of Post. Depositors/investors can open a POMIS account with a deposit of Rs.1,000. The current interest rate of POMIS stands at 7.10% interest rate. The interest is paid at the end of each month from the account’s opening date until it achieves maturity.
Post Office MIS Details
| Interest Rate | 7.10% |
| Minimum Amount | Rs.1,000 |
| Maximum Amount | Rs.4.5 lakh (for a single account)*Rs.9 lakh (for joint account) |
| Lock-in Period | 5 years |
| Tax Benefits | Nil |
| Penalty Fee or Premature Withdrawal | 1% – 2% (depending on the timeframe) |
How Does the Post Office Monthly Income Scheme Work?
Investors pay a specific amount of money towards this scheme every month with the minimum amount being Rs.1,000. However, the maximum balance in a single POMIS account is capped at Rs.4.5 lakh. For a joint account, the maximum amount is Rs.9 lakh. Three types of accounts are available under this scheme – single account, joint account and minor account.
Interest is added to this savings amount and paid back to the investor on a monthly basis. You can become a part of this plan by visiting your nearest post office and filling out the relevant application form.
Upon opening the account type of your choice, the instalments are to be paid every month.
Following the standard Post Office MIS tenure of 5 years, investors have two options: leave the accumulated sum in the account or withdraw the entire amount for reinvestment or spending purposes.
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Features of Post Office Monthly Income Scheme
Some of the features of POMIS are as follows:
1. Deposit Amount
Minimum deposit of Rs.1,000 and maximum or Rs.4.5 lakh (single account)
2. Nature of Interest Payment
Interest paid on a monthly basis. Current interest rate stands at 7.10%.
3. Easily Transferable
This scheme can be transferred from one Post Office to another without any extra charges.
4. Nominee Facilities
Investors can assign nominees to their savings accounts. In the event of their unfortunate demise, the sum saved under this scheme will be disbursed to the nominee.
5. Safer Investment Option
As the Government of India backs the investment model, you can be rest assured that there’s minimal risk.
6. Maturity Period
As per rules, from December 1, 2011, the POMIS scheme comes with a maturity period of 60 months or five years, calculated from the account opening date.
7. Type of Accounts
The three types of accounts are single, joint, and minor.
8. Penalty Charges
If you withdraw the funds before the five-year lock-in period, you will be charged a penalty fee.
Benefits of Post Office Monthly Income Scheme (MIS)
Here are some of the benefits of POMIS:
1. Account Flexibility
There is no limit on the number of accounts you can create under the Post Office MIS. Keep in mind that you cannot exceed the maximum cumulative balance across all accounts.
2. Assured Returns
With the Post Office Monthly Income Scheme, you are assured of a steady income independent of the market’s state and its related fluctuation..
3. Diversification and Reinvestment
You can diversify your portfolio with monthly income scheme investments. Given that the scheme offers a steady income, it works as a great tool to build capital for reinvestment.
How to Open a POMIS Account?
You can follow these steps to open a Post Office Monthly Income Scheme account:.
- Step 1:
A prerequisite to enrol in this scheme is a post office savings account. In case you do not have a Post Office savings account, create one.
- Step 2:
Next, visit a post office and ask for a POMIS account application form. You can also download the application form online. Click here to do so.
- Step 3:
Fill out and submit the form. At the time of submission, you are also required to submit certain copies of official documents such as Aadhaar for verification purposes. These copies need to be self-attested. Additionally, you will also need to carry the original documents for verification.
- Step 4:
In case you want to add a nominee to your plan, mention their correct details in the form.
- Step 5:
Arrange for the signatures of the nominees and witnesses.
- Step 6:
To initiate the services, make your first deposit through cash or cheque. The minimum deposit that needs to be made is Rs.1,000. The interest on this amount will be provided one month after the account’s opening date.
Current MIS Interest Rate in Post Office
Post Office Monthly Income Scheme interest rates are subject to change. For instance, from January 2023 to March 2023, the Post Office MIS interest rate is set at 7.1% per annum. However, between October 2022 and December 2022, the interest rate was 6.70%, and between April 2021 to September 2022, it was fixed at 6.60%.
In fact, the current value of 7.1% is lower than the interest rates between 2017 and 2018, where it averaged at 7.4%.
Want to know the returns on Post Office MIS investment? You can use the POMIS calculator to get quick and accurate results. All you need to do is select the investment amount and interest rate to check the returns on your investment.
Documents Required for Opening an POMIS Account
As mentioned above, you are required to submit certain documents while applying for the scheme. They are:
1. Identity Proof
Government-issued ID such as Aadhar, passport, voter ID, and driving licence can be submitted.
2. Address Proof
Certain government-issued IDs that contain your address can be submitted. Else, you can provide your recent utility bills.
3. Passport-size Photographs of Applicants
In case of a joint account, documents and photographs of all three individuals are required.
Post Office MIS Eligibility Criteria
- Nationality: Indian resident
- Age: Above 18 years. However, you can also open a minor account for kids aged 10 years or above. Note that for a minor account, the amount can only be withdrawn once they turn 18.
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Premature Withdrawal
You will be charged a penalty fee if you withdraw the funds before the 5-year lock-in period. Between the first and third years, a penalty of 2% is charged, while a 1% penalty fee is levied if the withdrawal occurs between the fourth and fifth years. Withdrawal before the first year will fetch you no benefits.
Final Word
The Post Office Monthly Income Scheme is a safe and dependable investment option. The monthly interest payouts and the flexibility in terms of account transfer through the widespread post office network in India make it an easy financial model to understand and operate.
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FAQs
Yes, you can transfer your Post Office Monthly Income Scheme to a post office of your choice and convenience with no additional charges.
Post Office Monthly Income Scheme does attract any Tax Deducted at Source. The scheme also does not extend any tax benefits under Section 80C of the Income Tax Act.
Yes, all Indian citizens above 18, including senior citizens, can invest in the Post Office Monthly Income Scheme.
To start a Post Office Monthly Income Scheme account, your deposit should be at least Rs.1,000.
The maximum investment amount varies depending on the account. For a minor’s account, it is Rs.3 lakh, and for individual accounts, the limit is Rs.4.5 lakh. For joint accounts, the limit is set at Rs.9 lakh.
