Post Office Monthly Income Scheme (POMIS)
The Post Office Monthly Income Scheme (POMIS) serves as the beacon of financial prosperity in India, providing a simple yet exceptionally safe investment outlet. This government-sponsored plan, yielding a fixed annual interest rate of 7.4%, ensures a regular monthly income and helps you control your expense schedule effectively. The ability to begin with as little as Rs 100 to such a high value of 15 lakhs makes it available to many joint-account investors. With a lock-in period of at least five years, this scheme offers guaranteed returns but also has penalties for early withdrawals. This article explores the Post Office MIS's crucial aspects, including eligibility criteria, investment limits, and procedures to open an account. Also, interest rates change compared to other post office savings schemes. Let us explore the intricacies of this reliable and safe financial instrument that has gained traction among individuals wishing to receive consistent monthly payments.
Important Points to Remember about the Post Office Monthly Income Scheme
Here are some essential things to know about the scheme that the post office offers:
- Who Can Join?
Any person who is a citizen of India can join, barring non-resident Indians (NRIs). - How Much Can You Invest?
You can start with any amount in multiples of Rs. 100. - For Kids Too!
Those above ten can possess a child's account from which they can draw out funds after 18. - Locked In for 5 Years
However, once you open your account, your money is tied up for at least 5 years. - Investment Limits
Individuals can deposit up to Rs. 9 lakhs, with a minimum amount of Rs. 1,500. The maximum is Rs. 15 lakh for a joint account. - Move It Anywhere in India
If you shift your residence within India, you can quickly move your account to a different post office. Your account travels with you. - Joint Opening
Up to three people can open an account together, and each person will have equal rights over the account. The most you can invest jointly is Rs. 15 lakh. - Get Your Money Automatically
You can set up your plan to automatically send your monthly interest through checks or electronic transfers. - Caution
There's a penalty if you withdraw your money in less than five years. - No Tax Breaks
You will not be paying tax on the interest, but you won’t get any benefits in terms of Section 80C.
Investment Limit for Post Office Monthly Income Scheme
| Accounts | Maximum Limit |
| Single Account | Rs 9,00,000 |
| Joint Account | Rs 15,00,000 |
| Minor Account | As stated at the time of account opening |
What's Good About the Post Office Monthly Income Scheme (POMIS)?
- Excellent Returns: You get a solid 7.4% yearly interest rate—one of the best rates among government schemes. Plus, it's safe because the Indian government has your back.
- Steady Cash Flow: Imagine a reliable paycheck every month. You get a fixed amount of money periodically, making it easier to budget for expenses.
- The choice to Reinvest: If you feel adventurous, you could reinvest your interest in mutual funds or stocks. Just remember, these choices are much riskier.
Who Can Join?
- A party ranging from 1 to three adults
- A guardian for a minor or a disabled person
- It is possible to have an individual account for children over ten.
- For the Non-Resident Indians (NRIs)
What Papers Do You Need?
- Something that proves who you are (ID cards from the government, like a Passport or Aadhaar)
- Something that proves where you live (another government ID or recent utility bills)
- A couple of passport-size photos
Interest Rates Update
The interest rate used to be higher at 8.40%, but it took a dip, and now it's 7.4%. You get this every year, paid out monthly. This rate is what you will receive from October to December 2023.
Post Office Monthly Income Scheme Interest Rate History
| Period | Post Office MIS Interest Rate (Annual) |
| 1 October 2023 to 31 December 2023 | 7.40% |
| 1 July to 31 September 2023 | 7.40% |
| 1 April 2023 to 30 June 2023 | 7.40% |
| 1 January 2023 to 31 March 2023 | 7.10% |
| 1 October 2022 to 31 December 2022 | 6.70% |
| 1 July 2022 to 30 September 2022 | 6.60% |
| 1 April 2022 to 30 June 2022 | 6.60% |
| 1 April 2021 to 31 December 2021 | 6.60% |
| 1 April 2018 to 30 June 2018 | 7.3% |
| 1 January 2018 to 31 March 2018 | 7.3% |
| 1 October 2017 to 31 December 2017 | 7.5% |
| 1 July 2017 to 30 September 2017 | 7.5% |
| 1 April 2017 to 30 June 2017 | 7.6% |
However, what if you need to pull out money beforehand?
Life occurs, and sometimes you may require cash before those 5 years is over. Here's the deal:
- No touching the money in the first year. It's off-limits.
- If you close the account between 1 and 3 years, a 2% penalty on the principal amount kicks in, and the rest comes to you.
- Close it between 4 and 5 years, and a 1% penalty hits, with the rest finding its way to your account.
Opening Your Post Office Monthly Income Scheme (MIS) Account:
- If you do not have a post office savings account, take care of that first.
- Call your nearest post office and ask for the POMIS application form.
- Fill it out, hand in a copy of your ID and address proofs, and throw in two passport-sized photos. Keep the originals handy for a quick check.
- Remember to get your witness or nominee to sign the form.
- Give in your initial deposit using cash or a check. If it is a placed order, the date becomes your account’s birthday.
- Turn in all your papers, leave some money, and the Post Office staff will handle it.
- After processing your new Post Office Monthly Income Scheme account, they will give you a briefing.
In a few steps, you’re already there on that regular income.
Post Office Monthly Income Scheme or Monthly Income Plans?
The confusion often occurs between the Monthly Income Scheme and the Monthly Income Plan. However, the Monthly Income Plan itself is used to refer to situations in both insurance and monthly income mutual funds.
Here are the essential differences between the three:
| POMIS | Monthly Income Mutual Fund | Monthly Income Plan (Insurance) |
| Ensures a fixed monthly income at a 7.4% annual rate. | Invests in a 20:80 ratio of equity-debt instruments. | Provides annuities to the insured as monthly income. |
| Monthly income is guaranteed. | Monthly income is variable, depending on returns for the period. | Monthly income is fixed and guaranteed, derived from premiums paid over the policy tenure. |
| TDS is not applicable. However, interest earned is taxable. | TDS is not applicable. | A monthly paid annuity is taxable. |
| It is ideal for risk-averse individuals, especially the elderly and retirees. | Suited for investors seeking a middle ground between safe debt funds and risky equity funds. | Perfect for those desiring the dual advantages of insurance and investment. |
| After 1 year, withdrawal is possible with 1-2% penalty charges. | 1% exit load for cashing units within the first year. | Surrender charges apply for withdrawing before the policy term ends. |
| POMIS limits are 9 lakhs for a single account and 15 lakhs for a joint. | There is no limit on the investment amount. | There is no limit on the investment amount. |
| Returns are fixed. | Returns are not fixed. It can shoot up to 14% or tumble down even negatively. | Monthly income plans aim to ensure and secure the capital rather than get the returns. |
Post Office Monthly Income Scheme vs Other Post Office Savings Schemes
| Savings Scheme | Rate of Interest | TDS |
| Post Office Monthly Income Scheme | 7.40% | No TDS is deducted |
| Post Office Recurring Deposit | 6.20% | No TDS is deducted |
| Post Office Time Deposit | 5.50% | No TDS is deducted |
| Post Office Time Deposit (5 years) | 6.70% | TDS is deducted |
| National Savings Certificate | 6.80% | TDS is deducted |
| Senior Citizen Saving Scheme | 8.20% | TDS is deducted |
| Public Provident Fund | 7.10% | TDS is deducted |
Conclusion
This concludes that the Post Office Monthly Income Scheme (MIS) is a risk-free, attractive investment alternative for many people in India. It offers a monthly income stream with an annual fixed interest rate of 7.4%, providing easier budgeting for the holders’ accounts. The minimum investment in this scheme can be Rs. 1000. Individuals can invest a maximum of Rs. 1,50,000 in ELSS mutual funds to avail themselves of tax benefits under Section 80C 9 lakhs in one account and Rs. 15,00,000 in a joint account. The scheme is locked in for five years and has penalties for early withdrawals. A post office account can be easily activated by providing the essential documents and an initial deposit. Since interest rates change every three months, it is crucial to follow all the changes. Although the plan is not tax-deductible, it attracts many consumers because of its reassuring nature. Unlike other post office savings schemes, the Post Office MIS is unique because it has a competitive interest rate with no TDS deduction. In all, it serves those who want a low-risk investment through which they can receive guaranteed monthly payments.