Everything About Post Office Monthly Income Scheme (POMIS) - Hackatrick - Technology With Security

10 January 2021

Everything About Post Office Monthly Income Scheme (POMIS)

The Post Office Monthly Income Scheme is a very good monthly income investment option in India to get guaranteed returns each month. One can deposit a maximum of 4.5 Lakh in single account and Rs 9 lakhs in joint account for two people. The interest acquired is taxable as per the income slab of the person.

The account matures in 5 years from the date of opening and interest is mostly charged at 8.4% per Annum. The interest is payable monthly from the next month of account opening. If one has a PO savings account, then the cash can be directly deposited in that account each month.

This is considerably different from a Recurring Deposit scheme. In a recurring deposit scheme, the interest rates are lower than post office MIS and also, the modus operandi is different. You have to invest a fixed amount every month in the RD scheme for the pre-fixed tenor. The interest that is earned will be added to the amount invested and there will be compounding that takes place.

RDs are a good way to earn high short-term returns. When it comes to comparing between post office MIS and Recurring Deposits, make sure you take professional advice and do your homework before taking a final decision.

How to open a Post Office Monthly Income Scheme Account:

However, to invest in the scheme, you need to have a Post Office Savings Account. After opening a savings account with the Post Office – if you did not already have one – you can adhere to the following procedure –

1.Procure a POMIS Form from your nearest post office.

2.Submit the form along with the following documents – photocopy of ID proof, photocopy of address proof, 2 passport-sized photographs.

3.Submit the originals for the documents mentioned above for verification purposes.

4.Collate signatures of witnesses or beneficiaries.

5.Proceed to make initial deposits (Minimum Rs.1500/-) via cash or cheque

Current Interest Rates on Post Office Monthly Income Scheme:

The Rate of interest is fixed and resettled by the Central Government and Finance Ministry every quarter depending on the returns yielded by Govt. bonds of the same tenure. The interest rate of POMIS for Q1 FY20-21 (April – June 2020) is 6.60%. The following are the historical Post Office MIS Interest Rates* :

Period Interest Rate on Post Office MIS (annual)
1st April 2020 – 30th June 2020 6.60%
1st April 2018 – 30th June 2018 7.3%
1st January 2018 – 31st March 2018 7.3%
1st October 2017 – 31st December 2017 7.5%
1st July 2017 – 30th September 2017 7.5%
1st April 2017 – 30th June 2017 7.6%

*Rates subject to change as per government notification. Interest payout on POMIS occurs monthly.

Key Features of Post Office Monthly Income Scheme

Following are the key features of Post Office MIS plan:

1.Minimum and Maximum amount of deposit – The minimum limit for the amount of deposit in Post Office MIS plan is Rs. 1500 (and thereafter in multiples of 1,000)

The maximum limit for the amount of deposit in Post Office MIS plan is as follows:

Type of Account Maximum Limit
Single Account Rs. 4.5 Lakh
Joint Account Rs. 9 Lakh

2.Maturity Period – Effective 1st December 2011, the maturity period of the scheme is 5 years (60 months) from the account opening date

3. Number of Account Holders – POMIS accounts can be held individually or jointly (maximum three adult holders

4. Nomination Facility – Nominee facility available and can be updated later after opening an account by a beneficiary (i.e. a family member) and can only claim the benefits after the demise of the account holder.

5. Transfer Facility – POMIS accounts can be freely transferred from one Post Office to another.

6. Taxability – This scheme doesn’t come under the  Section 80C of the Income Tax and it is subject to taxation. Moreover, it has no TDS either

7.  Post Office Monthly Income Scheme Bonus – No bonus available on accounts opened on or after 1st December 2011. Accounts opened earlier were eligible for a 5% bonus on deposit amount

Other Benefits of Post Office Monthly Income Scheme

  • A minor aged 10 years or above can avail the Post Office Monthly Income Scheme Account. On turning 18 years, he or she will be asked to convert his/her minor account to an adult account

  • The Post office credits proceeds directly to the investor’s post office savings account on a monthly basis by ECS/CBS

  • Post Office Monthly Income Scheme accounts can continue to earn interest for up to 2 years after account maturity if proceeds are not withdrawn by the investor. The applicable rate will be the same as that of a standard Post Office savings account

  • On the use of cheque for account opening, date of cheque realization will be account opening date

  • No limit on the number of POMIS accounts held singly/jointly. Subject to max. cumulative balance criteria

  • In case of joint account, each account holder will hold equal share

Comparing Post Office MIS with other Monthly Income Plans

POMIS Monthly Income Mutual Fund Monthly Income Insurance
Assured income at 6.6% annual rate Invested in 20:80 equity-debt ratio and hence no guaranteed income Monthly annuities (rates vary based on premiums & period)
No TDS TDS applied Annuity is taxed
Fixed return rate Floating rate as per the market movement NA
Low-risk, suitable for the risk-averse Suitable for people with high risk appetite Double benefits of investment & insurance
Withdrawal permitted after 12 months with penalty Exit load applicable if withdrawn before time Higher surrender charges as this is a long-term investment
Limit of Rs. 4.5 lakhs per account and Rs. 9 lakhs for a shared account No investment limit No investment limit