The Post Office Monthly Income Scheme (POMIS) is a Government of India backed small savings scheme that allows the investor (s) to set aside (save) a specific amount every month. Subsequently, interest is added to this investment at the applicable rate and paid out to the depositor(s) on a monthly basis.
Following individuals are eligible to avail the scheme-
- A resident of India. NRIs are not eligible to invest in this scheme
- Individual of or above the age of 10 years
Who should invest?
- Post Office Monthly Income Scheme is suitable for investors who are seeking fixed monthly income but are unwilling to take any risks in their investments. Thereby, it is more favourable for retired individuals or senior citizens who have landed into the no-more-paycheck zone
- It is suitable for the investors seeking a one-time investment to serve the purpose of getting regular income to maintain the lifestyle
- Investors willing to make long-term investments
Maximum Investment Amount in Post Office MIS
Though there is no limit on the number of accounts held by individuals, there are limits on the maximum amount that can be cumulatively invested across all POMIS accounts.
- In case of sole operated account, maximum investment allowed in POMIS is Rs.4.5 lakhs
- In case of joint holders (up to 3 joint holders), maximum of Rs.9 lakhs can be invested in POMIS
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 Q2 FY19-20 (July – September 2019) is 7.6%. The following are the historical Post Office MIS Interest Rates* :
|Period||Interest Rate on Post Office MIS (annual)|
|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.
Read More About Post Office Investment: Saving Schemes & Interest Rates
Key Features of Post Office Monthly Income Scheme
- Effective 1st December 2011, the maturity period of the scheme is 5 years (60 months) from account opening date
- POMIS accounts can be held individually or jointly (max. three adult holders)
- Minimum Rs. 1500 required for account opening. Higher amounts in multiples of Rs.1500
- Maximum amount that a minor can invest is Rs.3 lakh
- On the use of cheque for account opening, date of cheque realization will be account opening date
- In case of joint account, each account holder will hold equal share
- Nominee facility available and can be updated later after opening an account
- POMIS accounts can be freely transferred from one Post Office to another
- No limit on the number of POMIS accounts held singly/jointly. Subject to max. cumulative balance criteria
- Cumulative maximum balance across all sole operated POMIS accounts is Rs. 4.5 lakhs. For jointly held accounts, the maximum POMIS balance limit is Rs. 9 lakhs
- 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
- No bonus available on accounts opened on or after 1st December 2011. Accounts opened earlier were eligible for a 5% bonus on deposit amount
- Post Office Monthly Income Scheme does not offer any tax rebate on the investments or maturity amount
- 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
- Identity Proof: Copy of government issued ID such as Passport / Voter ID card / Driving License/Aadhaar, etc.
- Address Proof: Government issued ID or recent utility bills.
- Photographs: Passport size photograph.
How to open a POMIS account?
To open an account under Post Office Monthly Income Scheme, follow the steps given below-
- First, you must have a Post Office savings account. Open the same account if you do not have one
- Get an application form from your Post Office or Click here to download POMIS Account application form
- Fill and submit the form along with the copies of all the required documents at the post office. Note: You must carry the original documents for verification
- Mention the Name, DOB and Mobile no. of the nominees (if any)
- All the documents should be self-attested
- Proceed to make initial deposits (Minimum Rs.1500/-) via cash or cheque
How does it work- POMIS Calculation
- After opening the account, the investors need to make the suitable investments. For single account, Rs.1500 is the minimum amount of investment and Rs.4,50,000 is maximum amount of investment
- For a joint account, Rs.1500 is the minimum amount of investment and Rs.9,00,000 is the maximum amount of investment
For an example:-
You make an investment òf Rs.1,00,000 with a maturity period of 5 years. The annual interest rate being 8.5% gives a fixed monthly income of Rs.708. And, at the end of the scheme tenure, you will get your deposited money back.
Post office MIS Vs Bank FD Vs NSC
|Post Office MIS||Bank Fixed Deposit||National Savings Certificate|
|Fixed rate of interest at 8.5%||Rate of interest is fixed at 7% to 9%||Fixed rate of interest at 8%|
|Guaranteed Returns||Assured returns||Assured returns|
|No TDS applicable||TDS is applicable||`No TDS applicable|
|There is an investment limit||There is no investment limit||No maximum investment limit|
|No to low risk||No risk at all||Low risk profile|
|Premature withdrawals are possible with penalty||Premature withdrawals are possible but penalty will be applied||Premature withdrawal available in special cases only|
|No tax rebate||Deposits are eligible for tax exemption under Section 80C||Deposits qualify for tax rebate under 80C|
|Maturity period of 5 years||Maturity varies from 7 days to 10 years||Two fixed maturity periods- 5 years and 10 years|
|Lock in period of 1 year||Lock in period is 5 years||Lock in period is 5 years|
How is it different from other Monthly Income Schemes?
There are different investment options which offer monthly incomes such as Mutual Funds Monthly Income Plan and Insurance Monthly Income Plan. Here is a tabular representation of the differences which you will find in these plans-
|POMIS||Mutual Funds Monthly Income Plan||Insurance Monthly Income Plan|
|Fixed Monthly income scheme with 8.5% interest||A debt-oriented mutual fund with investments made into debt & equity in a 20:80 ratio||A retirement plan in which the investor receives annuities in form of monthly income|
|Guaranteed monthly income||No guarantee of monthly income as the returns are associated with the market performance of the fund||Fixed and guaranteed monthly income|
|TDS is not applicable and interest earned is taxable||TDS is not applicable||Monthly annuity is taxable|
|Suitable for risk-averse investors wanting to earn monthly income and not seeking equity investments||Suitable for investors with moderate risk tolerance, seeking investments into debt & equity||Suitable for investors willing to enjoy dual benefits of insurance as well as investments|
|Maximum limit of investment is Rs.4.5 lakh for single account and Rs.9 lakh on joint account||No limit on investment amount||Investment amount is not limited|
|Fixed returns at 8.5%||No fixed returns||Focuses on securing the capital rather than accumulating returns|
Premature Withdrawal of the Scheme
Premature withdrawal /closure of POMIS account before maturity period (5 years) is allowed subject to following terms and conditions:
- In case of premature withdrawal between 1 to 3 years of account opening, a 2% discount on deposit is applicable
- In case of premature withdrawal between 3 to 5 years of account opening, 1% discount on deposit is applicable
Frequently Asked Questions
Q.1: How can I withdraw money from my POMIS account after the tenure?
Ans. You can withdraw the deposited amount from the account either from the post office or you can also get it credited in your savings account through ECS. You can follow the usual way and withdraw the amount monthly. However, the investor is allowed to let some amount accumulate and withdraw it all together after a few months.
Q.2: Can I transfer POMIS account?
Ans: Yes, your account can be transferred from one post office to another for absolutely free.
Q.3: Can I reinvest my accumulated amount in POMIS?
Ans: This is one of the best features of this scheme. It allows the investors to reinvest their accumulated money at the end of the tenure.
Q.4: Is there any Tax deduction at source?
Ans: No, there is no TDS (Tax Deduction at Source). But, the interests earned are taxable.
Q.5: Is there any nomination facility available in POMIS?
Ans: Yes, the scheme allows you to select and appoint a nominee against the account who will get the accumulated amount in case of unfortunate demise.
Q.6: Does the scheme offer tax rebate?
Ans: No, POMIS does not offer any tax benefits under Section 80C of the Income Tax Act, 1961.
Q.7: Can a senior citizen also invest in POMIS?
Ans: Yes, infact POMIS is most suitable for senior citizens and retired persons.
Q.8: From where can I get the withdrawal form of POMIS?
Ans: You can get the withdrawal form directly from the post office or download it from the India Post website.