A monthly Income Scheme (MIS) is an investment option where an investor can earn guaranteed returns at an interest rate of 6.60 % per annum. An investor can earn these returns as fixed monthly income.
Post Office Monthly Income Scheme (POMIS) is an investment scheme of the Post office depository service where investors can earn up to 6.60% annual interest every month. POMIS Account can be opened singly or jointly. A guardian or a minor above the age of 10 years can open POMIS account. As the name suggests, the interest earned in this scheme is disbursed monthly.
Experienced investors consider Post Office MIS Scheme as one of the safest investment plans to invest surplus funds because it promises a fixed monthly income and offers better returns than debt investments. Like any other post office schemes, POMIS is recognized by the Ministry of Finance and thus is more credible.
Key Features of Post Office Monthly Income Scheme (POMIS)
Being a government-backed investment, the returns for Post Office Monthly Income Scheme are guaranteed, and it comes with assured loyalty additions. Furthermore, it offers multiple benefits at limited premium pay.
The Post Office Monthly Income Scheme or POMIS is one of the most popular short-term savings schemes.
1. Interest Rate
The interest in the post office MIS scheme is payable on completion of a month from the opening date and so on till maturity. If the account holder does not claim the monthly interest, such interest shall not earn any additional interest.
You can close your POMIS account five years after the opening date by submitting the prescribed application form with the passbook at your Post Office. However, if the account holder dies before maturity, the account may be closed, and the nominee or legal heirs will get the refunded amount. The Post Office will only pay interest until the month preceding the refund.
3. Minimum Deposit Amount
The minimum amount for opening a post office MIS account is INR 1000. In addition to this, the amount should be a multiple of 100. The low and limited premium pay makes it an affordable savings plan.
4. Maximum Deposit Amount
The maximum amount that single account holders can deposit in the post office MIS account is INR 4.5 lakhs. For joint accounts, this amount goes up to INR 9 lakhs.
5. Lock-in Period
You cannot withdraw the whole amount from your Post Office Monthly Income Scheme account before the maturity period of five years is over.
6. Premature Withdrawal
The following table shows how much of a return you are eligible to get if you withdraw early.
|Time of Withdrawal||Outcome|
|Before one year||Zero benefits|
|Between the first and third year||The whole deposit after a 2% penalty|
|Between the third and fifth year||The whole deposit after a 1% penalty|
7. No Tax Benefits
Unlike some other investment and savings plans, the post office monthly income scheme does not offer any tax benefits. However, most people do not count this as a demerit because of its various other merits. Explore tax-saving plans by Canara HSBC Life Insurance.
8. Joint Account Facility
You can open your Post Office Monthly Income Scheme account as a joint account with up to 3 people.
9. Accounts of Minors
You can open an account for a minor on their behalf as their legal guardian. A child over the age of ten can also apply for one in their name.
10. Flexible Nomination Facility
You are free to choose your nominee, who shall receive the refund of your monthly Income Scheme investment should something happen to you within its tenure.
11. Hassle-free Transactions
The Post Office efficiently handles everything involved in the process from the initial deposit to the monthly return payments. You can set up the interest payments for auto-withdrawal to receive monthly interest payments in a completely hassle-free process. You can also transfer one POMIS amount to another POMIS account.
12. Guaranteed Regular Income
The post office monthly income scheme is a low-risk and government-supported investment. So, you receive guaranteed income regularly. The returns are significant for a short-term investment while being without risk.
You can also invest in other saving and investment plans like the Guaranteed Income4Life Plan by Canara HSBC Life Insurance which offer guaranteed regular income for the long-term.
Here are 5 reasons to invest in Guaranteed Income4life Plan.
You can decide to reinvest the guaranteed returns from the post office MIS scheme towards investments with higher risks that, in turn, have the possibility of higher yields.
You are free to transfer your account from one post office to another according to your convenience. If you are moving to another location, you can move your Post Office Monthly Income Scheme account with you as it is; the account itself will remain unchanged.
Benefits of Post Office Monthly Income Scheme (POMIS)
The post office monthly income scheme offers several benefits, especially for investors seeking to convert their wealth into a regular income. Here are the benefits of the POMIS scheme:
1. Hassle-free Transactions
POMIS account allows for automatic withdrawal of interest directly to your savings bank or post office account. So, once you deposit the money, you don’t have to visit the post office for at least 5 years to receive the interest.
2. Guaranteed Income
The interest rate of the post office monthly income scheme remains fixed once you start. Plus, the scheme is supported by the government of India and carries a sovereign guarantee.
3. Option to Reinvest Interest
If you don’t need to use the interest money from POMIS, you can invest it in other investment options. For example, debt funds for market-linked returns, or a tax-saving equity fund for tax benefits.
4. Hold Jointly with Spouse
You can only deposit up to Rs 4.5 lakhs in the individually held POMIS account. Hold it jointly with the spouse of parents to increase the limit to Rs 9 lakhs.
How does Post Office Monthly Income Scheme (POMIS) Work?
You can start your post office monthly income scheme with nominal efforts. How the account will progress after that is given below:
1. Visit the nearest post office branch and submit the application form along with PAN and address proof. Also, submit these documents for the co-applicant in case of joint account holding.
2. You will also need to provide nominee detail who will receive the account balance in case of your premature death
3. You can deposit the money in your POMIS account through check or demand draft
- You can deposit an amount between Rs 1000 and Rs 4.5 lakhs
- The amount has to be in multiples of 1000
- If you have more than one POMIS account, you can only deposit a total of Rs 4.5 lakhs
- Joint holders have equal shares in the account
4. You can also submit an ECS request if you can receive the interest payments in your savings bank or post-office account.
5. The deposit will start paying the interest after the completion of one month and will continue the same until maturity
6. Interest Payment Rules in POMIS:
- Ongoing interest offered by the POMIS scheme is 6.6% p.a. (w.e.f. April 1, 2020) payable monthly
- If you are withdrawing money in cash from the post office, make sure to do it every month. The unclaimed interest does not earn any interest in the scheme.
- The interest is rounded off to the nearest rupee for payment
- If the due date for interest payment falls on a holiday then the payment will be made on the immediately preceding working day.
- If you happen to deposit in excess of the individual limit, the additional money will earn the post office saving account interest until withdrawn.
Maximum Investment Limit for Post Office MIS Scheme
Upper and lower limits of investment in the post office monthly income scheme are given below:
|Single Account||Rs 1000||Rs 4.5 lakhs|
|Joint Account||Rs 1000||Rs 9 lakhs (equal share)|
|Minor Account||Rs 1000||Rs 3 lakhs|
Eligibility Criteria to Invest in Post Office Monthly Income Scheme
The scheme is open for the following categories of people. You can apply if you are:
a) A single adult
b) Up to 3 adults: holding a Joint Account (Joint A or Joint B)
c) A guardian registering on behalf of a minor or a person of unsound mind
d) A legal minor above ten years registering in his/her name
e) All account holders should be Resident Indian
f) A Minor account holder must be aged 10 years or above
g) Minor account holders can access the money directly by converting the account once they reach 18 years of age
How to Open Post Office MIS Account?
Step One: If you do not have a Post Office savings account, open one with the Post Office of your choice.
Step Two: Collect or download the application form for the Post Office Monthly Income Scheme.
Step Three: Fill out the form, attach the other documents and submit it to the Post Office. Attach the duplicates and carry the originals at the time of submission for verification. All documents must be self-attested.
Step Four: Select a witness and nominee and have them sign your application form.
Step Five: Make the initial deposit via cash or cheque. In case of payment by cheque, the date of cheque realization will be the account opening date.
You can nominate or change nomination in the POMIS account after opening as well.
Documents Required to Open POMIS Account
The procedure for opening an account does not include too much hassle. You require the following essential documents.
a) Identity proof (self-attested photocopies and the original).
b) Address proof (self-attested photocopies and the original).
c) Passport size photograph.
d) The duly filled form.
Early Withdrawal Penalty in Post Office Monthly Income Scheme
Early withdrawals and premature closure of the POMIS account attract penalties. Following are the rates of penalties applicable to POMIS premature closure:
|Time of Withdrawal||Penalty|
|Before one year||Withdrawal not allowed|
|Between the second and third year||The whole deposit after a 2% deduction from the principal amount|
|Between the fourth and fifth year||The whole deposit after a 1% deduction from the principal amount|
You can close the account prematurely using the prescribed form and submitting it along with your passbook.
How to Calculate Post Office MIS Interest?
Interest on your POMIS deposit is calculated with the following formula:
POMIS Interest = Deposit Amount x Applicable Interest Rate / 12
For example, if you have deposited Rs 3 lakhs in your POMIS Account the monthly interest will be:
300000 x 6.6% / 12 = Rs 1650
The prevailing rate of interest on POMIS is 6.6% p.a.
Post Office Monthly Income Scheme vs Other Post Office Saving Schemes
|Savings Scheme||Interest Rate|
|Post Office Monthly Income Scheme||6.6%|
|Post Office Recurring Deposit||5.7%|
|Post Office Time Deposit (1,2,3 Years)||5.5%|
|Post Office Time Deposit (5 Years)||6.7%|
|National Savings Certificate||6.8%|
|Senior Citizen Saving Scheme||7.4%|
|Public Provident Fund||7.1%|
Difference between POMIS and other Monthly Income Plans
POMIS is one of the monthly income deposits you can choose from. Other similar schemes are monthly income plans from mutual funds, and bank fixed deposits with monthly interest pay-out.
Here’s how the three investment options differ from each other:
|Post Office MIS scheme||MIP Mutual funds||Fixed deposit|
|Rate of Return||Fixed-rate of interest payable throughout the tenure||The variable rate depends on market performance||Fixed-rate of interest payable throughout the tenure|
|Safety of Return||Guaranteed returns||Returns depend on fund performance||Assured returns|
|Investment Limit||Max 4.5 lakhs per depositor||No limit||No limit|
|TDS||Not applicable||Not applicable||Applicable|
|Investment Risk||Nil||Moderate risk||Nil|
|Premature withdrawal||Allowed after 1 year with a penalty||The minimum lock-in period of 3 years for SIP||Premature withdrawal allowed with penalty|
|Who can invest?||Resident Indians||Both residents and NRIs||Both residents and NRIs|
POMIS Revised Interest Rate
Interest rates in India have been declining ever since the liberalization of the economy. It is a sign of the maturing economy. However, at the same time rate of return on safe deposits has also declined. POMIS scheme, before April 2016, has paid interest of 8.4% p.a., which has now come down to 6.6% p.a.
So, where you could receive Rs 3150 p.m. from POMIS if started a deposit of Rs 4.5 lakhs on 1st April 2015, now you will receive only Rs 2475 p.m.
Post Office MIS Scheme FAQs
Yes, you can change a single POMIS account to a joint account and a joint to a single account.
The minimum deposit amount in POMIS is Rs 1000. You need to maintain a balance in multiples of 1000. As all the interest is paid out monthly only your deposit money remains in the balance.
Yes, POMIS has the nomination facility. You can nominate while opening the account or afterwards. You can also change the nomination anytime during the investment period.
Bonus payments are no longer a part of the POMIS scheme since FY10 or the year 2011.
POMIS scheme requires you to maintain the deposit for at least one year before a premature withdrawal can be allowed.
The nominee can furnish the death certificate along with his/her identification documents. In the absence of a nominee, a legal heir can submit relevant documents to claim the amount.
Yes, you can transfer your POMIS account from one post office to another.
Yes, you can reinvest your accumulated funds in POMIS. Just make sure that your total POMIS deposit should not exceed Rs 4.5 lakhs.
Yes, senior citizens can also invest in the post office MIS scheme.
The funds will earn interest as per the saving account rate at the time until withdrawn.