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Post Office Monthly Income Scheme

Post Office MIS Scheme

Last Updated 31st Oct 2020

  • Post Office Monthly Income Scheme or POMIS requires single-time investment and generates monthly payouts.
  • Open POMIS account easily by visiting the nearest post office with minimal paperwork.
  • MIS interest rate in the post office is 6.6%.
  • The lock-in period of POMIS is 5 years.
  • The minimum deposit amount is ₹ 15,000 and the maximum amount is ₹ 4.5 lakhs for single accounts and ₹ 9 lakhs for joint accounts.
  • Post Office MIS scheme is risk-free as it has sovereign backing and does not get influenced by market disruption.
  • Earned interest can easily be calculated using a Post Office Monthly Income Scheme calculator.

What Is Post Office Monthly Income Scheme?

Post Office Monthly Income Scheme is among the highest-earning investment instruments offered by the Finance Ministry of the country. It allows investors to invest money at a fixed interest rate, for a fixed tenure and generates monthly payout. Similar to all other Post Office schemes, the government backs the post Office MIS scheme. The sovereign guarantee ensures returns and makes the scheme risk free. Even in the current availability of wide-ranged investment options, Post Office Monthly Income Scheme holds prevalence due to its assured returns and low risk.

Features and Benefits of Post Office Monthly Income Scheme

To understand the Post Office Monthly Income Scheme further, one needs to study the following salient features and benefits.

Regular assured income

The MIS post office scheme generates guaranteed returns each month and thus aids in maintaining a regular income. Any market turbulence never influences the post savings as it is backed by sovereign assurance.

Transferable

The investments under the Post Office Monthly Income Scheme are easily transferable. If you are shifting from your current residency to another place, you can transfer the total corpus to your convenient post office. Additionally, Single accounts can be transferred to joint accounts and vice versa.

Joint account facility

The MIS post office offers the facility of joint accounts. A maximum of three members can hold a joint account. All account holders will enjoy equal ownership of the account. An investor can open multiple MIS accounts under a single post office as well. however, the total investment of all accounts together should not exceed the maximum limit.

Minor accounts

One can open a POMIS account for a minor individual. The individual must be above 10 years to be eligible for the MIS scheme. The account will be converse to the individuals when they reach the age of 18.

Auto-withdrawal

The Post Office MIS scheme permits auto-withdrawal of the monthly payout to the savings account. The transfer must be done via PDC or ECS. The monthly payout can be transferred to the CBS savings account if the MIS scheme has been opened at a CBS post office.

Flexible nominee facility

Account-holders can select the nominee while opening the account. Moreover, the nomination can be updated or changed even after opening the account.

Easy transaction

Investors can collect the money from the respective post office or can transfer the amount to your savings account.

Reinvestment

At the maturity of your current MIS scheme, you can reinvest the total corpus in the same scheme for another 5 years.

Tax benefits

The interest earned on the Post Office MIS scheme is not subject to any Tax Deducted at Source or TDS. Tax benefits under section 80C of the Indian Income Tax Amendment Act of 1996 are not applicable to this scheme.

Premature withdrawal

Premature withdrawal is allowed with the following conditions.

  • Withdrawal before one year: No benefits
  • Withdrawal between 1st to 3rd year: Complete investment amount returned after deducting 2% penalty.
  • Withdrawal between 3rd to 5th year: Complete corpus returned after deducting 1% penalty.

Minimum and maximum deposit amount

The minimum amount required for opening a POMIS account is ₹ 1,500. The deposit limit varies based on the account holders and account types. Below is the list for maximum deposit limit.

  • Single account: ₹ 4.50 Lakh
  • Joint account: ₹ 9 Lakh
  • Minor account: ₹ 3 Lakh

Apart from the abovementioned, keep the following features in mind.

  • MIS interest rate in the post office is 6.6%
  • The MIS scheme comes with a lock-in period of 5 years.
  • Accounts can be opened with both cash and cheque. In case you are using cheque, keep the date of realization the same as the date of opening the account.

POMIS Account Opening Procedure

Opening a POMIS account is hassle-free and can be completed in these simple steps.

  • Open a savings account at the post office of your convenience (if you have no existing account).
  • Collect the application form for the Post Office Monthly Income Scheme.
  • Fill up the form and submit it together with the photocopies of all required documents and photocopies of the applicants.
  • Make the initial deposit with cash or cheque.

While opening a POMIS account, one must remember the following points.

  • Keep the original documents ready as they will be needed during verification.
  • Collect signatures of nominees and witnesses.
  • All documents must be self-attested.

How does POMIS Calculation work?

The POMIS calculation works easily using this simple formula. here is an illustration of how the POMIS calculation works using the formula.

Formula: Invested amount*interest rate/12 = POMIS monthly payout

Suppose you have invested an amount of ₹ 2 Lakh at the interest rate of 6.6% for 5 years. Multiply the invested amount with the interest rate and divide the sum by 12.

Hence, ₹ 2,00,000 (Invested amount) * 6.6% (Interest rate) / 12 = ₹ 1,100 (monthly payout). If you have any difficulty in calculating the monthly payout of POMIS, you can use the Post Office Monthly Income Scheme calculator.

Eligibility Criteria of Post Office Monthly Income Scheme(MIS)

Before opening a Post Office MIS scheme, one must go through the eligibility criteria, which are given below.

  • Only residents of India are eligible for the scheme.
  • Individuals ageing 18 or above can open and operate a Post Office MIS scheme.
  • Minors ageing 10 or above can have a POMIS account. However, their parents/guardians will have to open the account on behalf of the minor applicant. The account will be transferred when the account holder reaches the age of 18.

Who should invest in POMIS?

The decision of making an investment via any instrument depends on the financial objectives of the investors. The individuals with the following investment goals should opt for POMIS.

  • Individuals who want a regular income.
  • Individuals with a low appetite for risk.
  • Individuals who are looking for a single-time investment.
  • Individuals who are willing to invest for the long-term.

Documentation Required for Post Office Monthly Income Scheme (MIS)

Opening a POMIS account requires very little documentation. Make sure you have the following documents while you apply for the scheme.

  • Identity proof (self-attested photocopies and originals for verification).
  • Address proof (self-attested photocopies and originals for verification).
  • Passport size photograph.

How the Post Office Monthly Income Scheme Works?

Once an investor has opened a POMIS account and made the investment, the principal amount remains invested and generates interest. Account-holders can collect the monthly payout from the post office or receive the amount via their savings account. The principal amount is paid to the investors at maturity.

FAQs

What is MIS account in a post office?

MIS account in the post office is an investment instrument that requires investors to invest a lump sum and generates interest on a monthly basis. The investors receive the principal amount at maturity. This is considered a risk-free investment option due to the sovereign backing it has.

How can I withdraw money from my POMIS account after the tenure?

After the tenure, you can withdraw money from your POMIS account from the post office or the payout will be generated through ECS. If you have a CBS savings account, the money can be transferred to the CBS post office.

Is post office monthly income scheme taxable?

TDS or Tax deducted at source is not applicable on the interest earned under the monthly income scheme. The scheme do not offer any tax benefits, the interest earned is taxable in the hands of the investor.

Where can I get the withdrawal form of POMIS?

You can access the POMIS withdrawal form in these two following ways.

  • Directly from the post office.
  • By visiting the official website of Indian Post Office.

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

The interest rates of MIS in the post office over the years are mentioned below.

  • April 2017 – June 2017: 7.6%
  • July 2017 – December 2017: 7.5%
  • January 2018 - June 2018: 7.3%
  • April 2020 – June 2020: 6.6%
  • July 2020 - Sept 2020: 6.6%

Is Premature Withdrawal of the POMIS allowed?

Yes, premature withdrawal is allowed under POMIS in these conditions.

  • Premature withdrawal before completing 1 year – No benefit is given.
  • Premature withdrawal between the 1st and 3rd month – Invested sum returned with 2% penalty.
  • Premature withdrawal between the 3rd and 5th month – Invested sum returned with 1% penalty.

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