Post Office Monthly Income Scheme (POMIS) is a monthly income savings scheme available in post offices around the nation. Like other post offices schemes like Public Provident Fund (PPF), Post office Recurring Deposit (RD), National Savings Certificate (NSC), this scheme also comes with tax benefits.
At present, the interest rate of the post office monthly income scheme was 6.6%. The monthly Income Scheme (MIS) comes with the guaranteed returns and assures income every month. It is a risk-free investment option than other equity-based investments and other fixed-income investments. Senior Citizens looking to save their income can avail MIS as their pension tool.
1) What is Post Office Monthly Income Savings Scheme (MIS)?
Apart from delivering our posts, the post office plays an important role in our economy. The post office has the ability to reach low-income and mid-income families than the nationalized and private sector banks. They are bringing low-income people into the investment scheme. For that Post office has introduced schemes like PPF, NSC, SSYS, SCSS, and MIS.
These schemes mostly come with the fixed interest. All these schemes are government-backed schemes. Financially weaker families find it easy and feel safer to invest in this scheme. By the Monthly Income Scheme, you can make a minimum deposit of Rs.1500. The maximum deposit is up to Rs.4.5 lakhs. For the MIS scheme, you can avail of tax benefits also.
2) Why Post office Monthly Income Scheme (MIS)?
The primary motto of the Post office Monthly Income Savings scheme is to provide guaranteed returns and a steady income to mid and low-income families. This scheme will invite those low-income families into the savings habit. This will be used as financial security for their future expenses. MIS scheme has a short lock-in period.
MIS scheme is completely a risk-free investment option. The tenure of the MIS scheme is about 5 years. This scheme works the same as other post office savings schemes like PPF, NSC, SCSS. But varies in the point of
- Tenure period
- Interest rate
- Premature withdrawal
- TDS at the income earned
- The facility of a joint account
- Monthly income withdrawal
If you have a post office savings account then you can transfer your generated interest every month to your account.
3) What are the eligibility criteria to open the MIS scheme account?
To open a POMIS account you need to meet certain eligibility criteria. They are
- An individual must be an Indian citizen
- An individual can open a joint account with family members
- The joint can be between two members as well as three members
- A person above the age of 10 can open an MIS account and able to operate the account himself
- No NRI are allowed to open an MIS account
If you pass these certain criteria then you can open an MIS account from the post office.
4) How to open an MIS account?
Opening a post office monthly income savings scheme is one of the easiest processes. If you need to open an MIS account then you should have a post office savings account. If you won’t have a savings account then you should need to open a savings account.
After the opening of a savings account follow the below-mentioned procedures to open an MIS account.
- Visit the nearby post office from where you need to open an account
- Get the post office monthly income savings scheme application form from the post office
- Fill in the form completely without any correction
- Attach the required documents
- Then submit the application form to your MIS account provider for the KYC verification process
- Signatures of Benfeciaries and witnesses must be included.
- You can choose a nominee for your MIS account
- Then you can make your initial deposit (capital investment)
- You can make this either through cash, cheque, or demand draft
- The minimum amount to make initial deposits is Rs.1500
If it is cash then your MIS account will be opened immediately. Whether it is a cheque, the account will be opened only after the realization of the cheque. Note that you can’t open an MIS account online. But you can download your MIS application form online
4.1) Documents required to open a monthly income savings account
While filling the application form you are asked to some documents for KYC verification. The documents are
- Your recent passport size photographs
- Identity proof such as Aadhaar card, PAN card, Driving Licence, Voter identity card, and Passport
- Documents for Address proof can be the same as for identity proof, Government-issued id’s, and recent utility bills
After attaching these documents with the MIS account application form submit them to the MIS account provider for KYC verification.
5) What are the features and benefits of the Post office Monthly Income Savings scheme (MIS)?
POMIS scheme remains a risk-free safe investment scheme due to the following features and benefits.
5.1) Lock-in Period
The post office monthly income savings account comes with the lock-in period of 5 years ie) 60 months from the date of account opening. You are allowed to withdraw your amount from your MIS account after the completion of your tenure.
Until the maturity period, your MIS account will earn interest on your capital sum. The withdrawal amount can be reinvested in the POMIS account. So that the choice of withdrawing the total amount or reinvesting it back into the account depends upon you.
5.2) Minimum and maximum limit
The MIS account comes with flexibility which makes deposits easier for low and mid-income people. The minimum amount to be deposited in the MIS account is Rs.1500. This reduces the burden of mid and low-income people for earning money for their savings.
The maximum amount to be deposited in the MIS account is Rs.4.5 lakhs. Your deposits can be in multiples of Rs.1000. The maximum amount to be deposited for the minor in the MIS account should be Rs.3 lakh. While the minimum amount remains the same for a major account as well as a minor account.
If you are opening a joint account then this maximum limit should vary. In the case of a joint account of two, each individual can invest up to Rs.4.5 lakhs. This means the sum of their deposit should not exceed Rs.9 lakhs.
5.3) Transferable account
In case of your business transfer or if you are transferring to another city for other reasons, you can transfer your account from one post office branch to another without spending even a single penny.
When you transfer your POMIS account, all your earned interest and investment corpus will be transferred from the originated post office to the designated post office branch. For transferring an account just visit the post office or either download the transfer application form. Submit it to the account provider. He/She will carry out the remaining process.
5.4) Joint account
You can take MIS joint account as per your wish. Some other postal schemes like Sukanya Samriddhi Yojana Scheme (SSYS) are limited to only girls while the Senior Citizen’s Savings Scheme (SCSS) is limited only for senior citizens above the age of 80. Here the joint account can be only opened between the account holder and their spouse.
But in the case of the MIS scheme, either two members can open a joint account or three members jointly can open an account. The returns of the MIS account will be divided equally based on the members. All the members have equal rights over the account.
5.5) Minor account
In other schemes, an individual above the age of 18 can open a savings account on behalf of a minor. Some account like senior citizen savings schemes does allow only senior peoples. Hence in the post office monthly income scheme account, a minor above the age of 10 can open and operate the account by themselves.
After attaining the age of 18 they can able to withdraw the amount from the MIS account.
5.6) Auto withdrawal
As the scheme name implies you can earn a monthly income through the post office monthly income savings scheme. Follow the steps below for monthly withdrawal
- Go to the post office
- Choose the option of transferring your earned interest directly to the post office savings account. This can be done through PDCS or ECS
- If you have opened your post office monthly income scheme account at the CBS post office then you can opt for direct transfer of interest to any of the CBS-centric savings account.
Here reinvesting your earned interest in a Systematic Investment Plan (SIP) is also a better option for earning more interest.
5.7) Premature Withdrawal
Though this scheme doesn’t offer premature withdrawal, you can make a premature withdrawal by paying the suitable and assigned penalty. There are three stages to withdraw from an MIS account. They are
- Before the completion of one year
- Between the 1st and 3rd year
- Between the 3rd and 5th year
The penalty will be different for the different stages. If you withdraw before the completion of 1st year no benefits of interest will be given. You will earn zero benefits. If you withdraw between the 1st and the 3rd year then 2% of your total will be deducted as a penalty.
If you withdraw between the 3rd and 5th year of the tenure then 1% will be deducted as a penalty. Note that if the investor misses withdrawing after the tenure then the simple interest will get accumulated for 2 years even after the completion of tenure.
5.8) Tax benefits
The monthly interest earned through the MIS account won’t incur any tax. However, the returns are com0letely taxable. But it doesn’t have TDS for their earnings. This scheme won’t attract any tax benefits under Tax act 80C.
The primary benefits of the post office monthly income scheme include
5.9) Steady income
This option won’t present in any other schemes. In all other schemes, earned interest will be credited to the account annually. But in this scheme, you can directly receive your earned interest on your savings account. Your interest income won’t get affected by market fluctuations.
For example, let us assume if you are depositing a sum of Rs.40,000 then you could earn an interest of Rs.220 per month. Then your total interest earned in the tenure period is about Rs.13,200.
While reinvesting the earned interest always looks for hybrid funds. Hybrid funds consist of both equity funds and fixed deposit terms. This willpower your risks on equity funds and higher your returns.
Hereby concluding that if you are looking for the monthly income which must be steady and risk-free, then Post Office Monthly Income Scheme will be a better option. If you are a senior citizen this scheme works well with the post-retirement period. Whether you are looking for tax-free investment then PPF and NSC would be a better replacement.
If the investor failed to withdraw the amount will be continued in the account. It will earn a simple interest as per the post office savings account.
No Tax Deduction at Source (TDS) won’t applicable for MIS savings account. While the returns are taxable