Post Office Monthly Income Scheme (POMIS) is an investment option that ensures that the investor would receive guaranteed monthly payment based on the investment amount made. Monthly Income Scheme or MIS is said to be one of the safest options to invest money.
Post Office Monthly Income Scheme (POMIS): Features
The prominent features of every MIS are:
- Under the MIS scheme, the capital invested remains intact with no risk attached of non-return.
- MIS scheme entitles the investor to receive ensured amount of monthly return.
- The return rates are comparatively higher than a savings account and post office time deposits.
The post office monthly income scheme, commonly known as POMIS is a safe and risk free investment scheme. The POMIS is not very popular scheme in cities due to diminishing popularity of post offices.
Moreover, Post Office Public Provident Fund and Post Office NSC offer a slightly higher rate of return plus tax benefit also. Hence, POMIS is a less preferred choice amongst investors.
Major demographic percentage is not properly aware of the large benefits of POMIS. So, today we will discuss about the POMIS and details associated to it.
Who can open the POMIS account?
- Post Office MIS account can be opened by every individual:
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- Who is of 18 years and above
- Is a resident citizen in India
- POMIS can also be opened by minor (individuals who have crossed 10 years of age but have not exceeded 18 years), with a condition that the minor opens a joint MIS account clubbing with a major guardian (individual whose age is more than 18 years) .
How to Open the POMIS account?
1. To open a POMIS account, an individual needs to provide the below documents:
- Copy of the address proof and identity proof (passport/PAN card/ration card/voter identity card)
- Passport size photographs
- AADHAR cards needs to submit to complete the KYC details form.
2. POMIS account can easily be opened by filling a form and depositing cash or cheque into post office.
3. The post official after receiving all documents, forms, KYC details and amount will initiate the process and open your MIS account.
4. Every individual investor can opt to open either an individual account or a joint account.
Note: Joint accounts are accounts opened by 2 or more individuals together by cumulative contribution towards the POMIS scheme. All joint account holders have equal share in each of the joint account opened. One can apply for converting single account into Joint and vice versa.
Also read: Post Office Sukanya Samriddhi Yojana
POMIS: What should be the amount investment?
The minimum investment for each account opening is Rs.1500 only.
But, the maximum cap on investment per individual at any given point of time is Rs.4.5 Lakh. In simple terms, an individual cannot invest more than Rs.4.5 Lakh under POMIS plan.
This limit extends to Rs.9 Lakh in case of joint account investors.
Post Office Monthly Income Scheme: Period of Investment
The POMIS operates for a lock-in period of 5 years. But, the same can be withdrawn before maturity of the scheme by paying penalty.
Post Office Monthly Income Scheme Interest Rate
The interest rate on the Post Office Monthly Income Scheme changes every year and is defined by the government.
The rate of return provided at the beginning of the year remains fixed for a period of 12 months.
The ongoing rate of return for F.Y. 2019-20 is 7.7% only. Do have a look at new interest rates on Post office schemes.
The amount invested will earn a monthly payout interest. The amount of interest can either be en-cashed on monthly basis or allowed to accumulate in the account.
Note: The accumulated interest which is not en-cashed does not earn any interest.
Also, recently an new option is introduced for the betterment of investors wherein the investors can open a recurring post office account and deposit the monthly interest amount earned.
POMIS Withdrawal Option
The amount invested under POMIS can be withdrawn pre-maturely.
But, there is a penalty for withdrawing or en-cashing the amount of investment before its maturity date.
- There cannot be any withdrawal before 1 year from the date of account opening under POMIS plan.
- If the amount is withdrawn in between second and third year, then the investor will get his investment less 2% of penalty deduction.
- If the amount is after the third year, then the investor will get his investment less 1% of penalty deduction.
So, it doesn’t sound wise to withdraw your invested amount before completion of tenure. You can enjoy the full benefits of this Post office savings scheme only if you stay invested for full tenure of 5 years.
POMIS Taxation
Any investment made under the POMIS cannot be claimed as tax exemption under any section of Income Tax Act. In other words, there is no tax benefit and no deductions can be availed for POMIS plan investment.
Moreover, the interest eared under this scheme is subject to tax deducted at source (TDS).
But, the amount received at the time of maturity is tax-free and TDS is only charged on the interest amount earned.
Post Office Monthly Income Scheme or POMIS: Key Points
- An individual investor must nominate any individual as his/her nominee. Thus, in case of unfortunate death of investor and POMIS account holder, the amount is transferred and paid back to the nominee.
- POMIS account can easily be transferred from one post office to other. This transfer will not cost any amount to the account holder.
- The amount realized on maturity of this monthly income plan can be re-invested in the scheme again up to the maximum cap limit.
- If the amount of investment is not withdrawn at the end of 5 years and the account is operational, the amount in the account (apart from interest component) will earn interest at the rate saving account deposit for a period of 2 years.
- An individual can open any number of POMIS accounts with the condition that amount invested does not exceed the maximum capping limit of investment norms (i.e. Rs.4.5 lakh in case of individual account and Rs.9 lakh in case of Joint account holder).
Post Office Monthly Income Scheme or POMIS plan is 100% risk free plan of investment and is highly supported by government provisions. This Post office savings scheme is primarily suited to investors who are looking for risk free investments with a fixed income in return.
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Are you planning to invest in POMIS? Do you think this Post Office Monthly Income Scheme is the best choice for safe investors? Are there any other investment alternatives you can think of? Feel free to share your views about different popular savings schemes.