Post Office Monthly Income Scheme (POMIS)

Post office depository service has a wide assortment of schemes that offer fixed returns on investment. These schemes are all stringed with the benefit of the sovereign guarantee, i.e. this investment avenue is government-backed. Therefore, these schemes are safer investment options compared to equity shares and many fixed-income options. 

Post Office Monthly Income Scheme, amongst others such as Post Office Savings Account, Post Office Recurring Deposit, Post Office Time Deposit, is one of the highest-earning schemes with an interest rate of 7.4%. The interest in this scheme, as the name suggests, is disbursed monthly. This scheme, like other post office schemes, is recognized and validated by The Ministry of Finance.

Features of POMIS 

• Lock-in period: When you open a Monthly Income Scheme account with a post office, you cannot withdraw the amount deposited in such account prior to 5 years. 
• Maximum limit: You can make a maximum investment of Rs. 9 Lakhs in the scheme. Even if you hold the scheme in multiple post offices, the aggregate of all your deposits cannot exceed Rs. 9 Lakhs. In the case of joint accounts as well, the share of your investment should be within the specified limit. The maximum limit for minor accounts is Rs. 3 Lakh. The minimum amount which can be invested is Rs. 1,500 for any individual.
• Transferrable: In case, you are changing your residential status to a different city anywhere in India, you can transfer your POMIS account to a convenient post office. Your Post Office Monthly Income Scheme investment corpus and interest disbursal will be carried forward to such a post office.
• Joint account: A maximum of 3 individuals can open a joint account for this scheme. In the case of joint accounts, each investor possesses equal rights over the account. The maximum limit in the case of joint accounts is Rs. 15 Lakhs, and the singular limit is Rs. 9 Lakhs.
• Minor account: You can open a POMIS minor account in the name of your child. The Post Office Monthly Income Scheme age limit for minors is above 10 years. He/she can withdraw the amount after maturing for 18 years.
• Eligible residential status: Every Indian citizen is eligible to open a POMIS account; however, NRI individuals cannot.
• Auto-withdrawal: You can opt to withdraw the monthly interest amount on your investment through automatic transfer to your savings account through PDCs or ECS. If the POMIS account is with a CBS Post Office, then the interest amount can be directed towards any other CBS centric savings account.
• Penalty: In case you wish to withdraw your investment corpus before the lapse of the lock-in period, a penalty is charged on the withdrawal amount depending on the time of such redemption.
• Investment amount: Any amount in the multiple of Rs. 100 is admissible as an investment.
• Tax benefits: The interest amount does not incur any Tax Deducted at Source (TDS); however, it also does not attract any tax benefits under Section 80C. 

The following table demonstrates the maximum investment limit for the Post Office Monthly Income Scheme.

Documentation Required

• 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 photographs

Current Interest Rates on Post Office Monthly Income Scheme

The Post Office Monthly Income Scheme's rate of interest is fixed by the Finance Ministry and the Central Government of India. The interest rates are often revised every quarter depending on the returns generated by government bonds of similar tenure.

The following table includes the current and previous interest rates-

POMIS Account Opening Procedure

Opening a Post Office Monthly Income Scheme Account (MIS) is easy and hassle-free. However, to invest in the scheme, you need to have a Post Office Savings Account. After opening a savings account with the Post Office – if you did not already have one – you can adhere to the following procedure – 

1. Procure a POMIS Form from your nearest post office. 
2. Submit the form along with the following documents – photocopy of ID proof, photocopy of address proof, 2 passport-sized photographs. 
3. Submit the originals for the documents mentioned above for verification purposes. 
4. Collate signatures of witnesses or beneficiaries. 

You can invest the capital amount through a dated cheque. The date mentioned on the cheque will be considered as the account opening date. The interest earned on the investment will be disbursed one month from the opening date. 

The beneficiary can also be nominated after opening the Post Office Monthly Income Scheme in India account. 

Eligibility of MIS Scheme in Post Office

• A POMIS account can only be opened by a resident Indian.
• This system does not apply to non-resident Indians.
• Anyone above the age of 18 can open an account.
• You can open an account on behalf of a minor who is 10 years old or older. When kids reach the age of 18, they will be able to access the fund.
• After reaching the age of majority, a minor must apply for conversion of the account in his name.

Early Withdrawal Penalty

1) Before the completion of one year = Zero benefits

2) From 1 year to 3 years = The entire deposit is refunded with a 2% penalty.

3) From the 4th year to the 5th year = The entire corpus is refunded with a 1% penalty.

Benefits of Post Office Monthly Income Scheme (MIS)

There are two major benefits to investing in POMIS. As it is not a market-linked investment scheme and is guaranteed by the government, it is a go-to option for many investors with a low-risk appetite. These benefits are – 

1. Steady returns: You would earn a steady flow of income every month on your investment corpus irrespective of market fluctuations. An interest rate of 7.70% p.a. is fixed by the post office.
   
   
2. Reinvestment: You can decide to invest the interest earned into high-profit yielding securities such as equity shares, equity fund; however, these investment options also entail much higher risk. 

Hybrid funds, comprising both equity funds and fixed income instruments, are a viable option to engage in the stock market, develop a diverse investment portfolio, earn comparatively higher returns and take lower risk compared to equity shares and funds.

Post Office Monthly Income Scheme Vs other Saving Schemes of the Post Office