Click Here for old Websitenext_arrow
close_icon
Home / Glossary / Saving Schemes / Post Office Monthly Income Scheme

Introduction

The Post Office Monthly Income Scheme (POMIS) is a popular savings instrument in India, known for providing a reliable and steady source of monthly income. The Indian postal department manages this scheme, making it a secure investment option backed by the government. In this comprehensive guide, we will delve into the features, benefits, eligibility criteria, and process of investing in the Post Office Monthly Income Scheme.

What is the Post Office Monthly Income Scheme (POMIS)?

The Post Office Monthly Income Scheme (POMIS) is a fixed-income investment plan that offers investors a regular monthly income. It is an ideal option for retirees and individuals seeking a steady income stream. The scheme provides a fixed interest payout every month, ensuring financial stability for investors.

Key Features of POMIS

1. Interest Rate

The current interest rate for POMIS is 6.6% per annum, payable monthly. This rate is subject to periodic review and changes by the government.

2. Tenure

The investment tenure for POMIS is 5 years from the date of opening the account. After the completion of 5 years, the investor can either withdraw the entire amount or reinvest in the scheme.

3. Minimum and Maximum Investment

  • Minimum Deposit: Rs. 1,500.
  • Maximum Deposit:
    • Single Account: Rs. 4.5 lakh.
    • Joint Account: Rs. 9 lakh.

4. Nomination Facility

Investors can nominate a beneficiary at the time of opening the account or anytime thereafter. This ensures that the nominee receives the invested amount if the investor passes away.

5. Premature Withdrawal

You can withdraw funds prematurely after one year of opening the account, though this is subject to certain conditions and penalties.

  • If withdrawn between 1 to 3 years: A penalty of 2% on the deposit.
  • If withdrawn after 3 years: A penalty of 1% on the deposit.

6. Transferable

You can transfer the POMIS account from one post office to another, making it convenient for individuals who frequently relocate.

Benefits of POMIS

1. Regular Monthly Income: The primary benefit of POMIS is the assured monthly income, which is particularly beneficial for retirees and individuals seeking a steady cash flow.

2. Low Risk: Being a government-backed scheme, POMIS carries minimal risk, making it a safe investment option.

3. Tax Benefits: Although the interest earned is taxable, the initial investment amount qualifies for tax deduction under Section 80C of the Income Tax Act, 1961.

4. Ease of Operation: POMIS accounts can be easily opened and managed through any post office in India, providing convenience and accessibility to investors.

Eligibility Criteria

1. Indian Residency

Only Indian residents are eligible to invest in POMIS. Non-Resident Indians (NRIs) are not permitted to open an account under this scheme.

2. Age Requirement

There is no specific age requirement to invest in POMIS. However, minors aged 10 years and above can open an account with a guardian.

Also Read: Post Office Tax Saving Scheme

How to Open a Post Office Monthly Income Scheme (POMIS) Account?

The Post Office Monthly Income Scheme (POMIS) is a popular investment option that offers a fixed monthly income. Here’s a detailed guide on how to open a POMIS account:

1. Step: Eligibility Check

  • Individual Accounts: Any Indian resident can open a POMIS account. It is not available to NRIs.
  • Joint Accounts: Up to three adults can open a joint account.
  • Minor Accounts: A minor aged 10 and above can open an account in their name. A guardian can open an account on behalf of a minor.

2. Step: Required Documents

  • Identity Proof: Aadhaar card, PAN card, Voter ID, Passport, or Driving License.
  • Address Proof: Aadhaar card, Utility Bill, Passport, or Voter ID.
  • Photographs: Passport-sized photographs.
  • Other Documents: If opening for a minor, the minor’s birth certificate or school ID.

3. Step: Visit the Nearest Post Office

Go to the nearest post office with the necessary documents and the initial deposit amount.

4. Step: Fill Out the Application Form

Obtain the POMIS account opening form from the post office or download it from the India Post website.

Fill in the form with your details, including name, address, PAN (if required), nominee details, and the initial deposit amount.

5. Step: Make the Initial Deposit

  • Minimum Deposit: ₹1,000.
  • Maximum Deposit: ₹4.5 lakhs for a single account and ₹9 lakhs for a joint account.

The deposit can be made in cash, cheque, or demand draft.

6. Step: Submit the Form and Documents

Submit the filled application form, required documents, and the initial deposit to the post office official.

7. Step: Verification and Account Creation

The post office will verify the documents and process the account opening. Upon successful verification, the account will be created.

8. Step: Receive Passbook

A passbook will be issued, containing details of the POMIS account, including the account number, deposit amount, interest rate, and maturity date.

How to Operate a Post Office Monthly Income Scheme (POMIS) Account?

1. Monthly Interest Payment

  • Interest Rate: The current interest rate for POMIS is 7.4% per annum (as of August 2023).
  • Monthly Payout: Interest is paid monthly. The first interest payment is made one month after the date of opening the account.
  • Payment Mode: Interest can be credited to a post office savings account or an electronic transfer to a bank account. Ensure you link the POMIS account with your savings account for seamless transfers.

2. Withdrawal of Interest

The monthly interest can be withdrawn from the linked savings account at the post office or bank. It’s advisable to withdraw or transfer the interest regularly to avoid loss of interest.

3. Nomination Facility

You can nominate a beneficiary at the time of opening the account or any time during the tenure. The nominee will receive the investment amount in the event of the account holder’s death.

4. Premature Withdrawal

Premature withdrawal of the principal amount is allowed after one year from the date of account opening. However:

  • After 1 Year and Before 3 Years: A deduction of 2% of the principal amount.
  • After 3 Years: A deduction of 1% of the principal amount.

5. Maturity and Reinvestment

  • Tenure: The POMIS has a tenure of 5 years.
  • Maturity Amount: Upon maturity, the principal amount can be withdrawn, or reinvested in another POMIS or different post office savings scheme.
  • Reinvestment: If you wish to reinvest, you will need to fill out a new application form and provide the necessary documents.

6. Account Transfer

POMIS accounts can be transferred from one post office to another. This is helpful if you relocate and want to manage your account from a new location.

7. Joint Accounts

For joint accounts, the maximum investment limit is ₹9 lakhs. The monthly interest is credited to the joint account holders in the order of their names in the account.

8. Tax Considerations

The interest earned on POMIS is fully taxable. It does not provide any tax deduction under Section 80C of the Income Tax Act. However, since TDS is not deducted at source, you must declare the interest income when you file your income tax returns.

9. Passbook Maintenance

Keep your passbook updated by visiting the post office periodically. The passbook contains all the transactions related to the account, including monthly interest payments and withdrawals.

Key Points to Remember:

  • Regular Monitoring: Keep track of the monthly interest credited to your linked savings account.
  • Premature Closure: Be aware of the penalties associated with premature closure of the account.
  • Maturity Process: Plan for the maturity of the scheme and decide whether to withdraw the funds or reinvest them.
  • Maintain Updated Information: Keep your contact information, nominee details, and bank account information up to date to avoid any issues with interest payments and communication from the post office.

Importance of POMIS

POMIS plays a crucial role in providing financial security and stability, especially for retirees and conservative investors. The scheme’s assured monthly income and low-risk nature make it an attractive option for individuals looking to safeguard their investments while earning regular returns.

Also Read: Post Office Saving Schemes

Comparison with Other Saving Schemes

1. Senior Citizen Savings Scheme (SCSS)

  • Interest Rate: Higher than POMIS (currently 7.4% per annum).
  • Eligibility: Only for individuals aged 60 and above.
  • Investment Limit: Higher maximum limit (up to Rs. 15 lakh).

2. Public Provident Fund (PPF)

  • Interest Rate: Variable but generally higher (currently 7.1% per annum).
  • Tenure: Longer investment period (15 years).
  • Tax Benefits: Interest earned is tax-free.

3. Recurring Deposit (RD)

  • Interest Rate: Similar to POMIS but varies with tenure.
  • Tenure: Flexible tenure options.
  • Monthly Deposits: Requires regular monthly deposits.

Conclusion

The Post Office Monthly Income Scheme is a robust and secure investment option for those seeking a reliable monthly income. Its government backing, fixed returns, and accessibility make it an ideal choice for conservative investors and retirees. With the Post Office MIS, investors can achieve their financial goals and ensure a steady income stream if invested carefully.

You can start working on your financial goals by opening a Demat Account with Jainam. Open Now!

Frequently Asked Questions

What is the current interest rate for POMIS?

The current interest rate for POMIS is 6.6% per annum, payable monthly.

Can NRIs invest in POMIS?

No, only Indian residents are eligible to invest in POMIS.

Is the interest earned on POMIS taxable?

Yes, the interest earned on POMIS is taxable.

Can I open a joint account in POMIS?

Yes, a joint account can be opened in POMIS with a maximum investment limit of Rs. 9 lakh.

Can minors open a POMIS account?

Yes, minors aged 10 years and above can open a POMIS account with a guardian.

How can I transfer my POMIS account to another post office?

The transfer of the Post Office Monthly Income Scheme Account (POMIS) can be done by submitting a transfer application form to the current post office.

What happens upon maturity of the POMIS account?

Upon maturity, you can either withdraw the entire amount or reinvest in POMIS or other post office schemes.

Explore our feature-rich web trading platform

Get the link to download the App

trading_platform