The Post Office Monthly Income Scheme (POMIS) is one of the most popular risk-free postal savings programs where an investor can invest with a minimum deposit of ??1000. Investors from middle and low income groups may also consider this Post Office MIS as a tax saving option, as they are eligible for income tax exemption under Article 80C of the Income Tax Act on their investment in this system. It has a 5 year lock-up period and the interest rate of the Post Office Monthly Income Scheme will remain unchanged throughout the investment period. This means that the return of the Post’s Monthly Income Program is guaranteed and that an investor would get a return on their money in accordance with the interest rate of the Post’s Monthly Income Program at the time of investment.
Here we list the important details an investor should know when investing in the Post’s Monthly Income Program:
1]Interest rate: This small postal savings plan being a blocked product, its interest rate will remain fixed according to the rate of return at the time of investment. For example, the interest rate for the Post Office Monthly Income Scheme is currently 6.60 percent per annum. So, if an investor invests in this post office program, he will get an annual return of 6.60% on his money at the time of maturity.
Interest is payable at the end of one month from the opening date and so on until maturity and an investor must claim it. According to the India Post website, “If the interest payable each month is not claimed by the account holder, such interest will not earn any additional interest.” Interest on the Post Office Monthly Income Scheme is taxable in the hands of the depositor.
2]Deposits: According to the India Post website, Post Office MIS account can be opened with a minimum of ??1000 and in multiples of ??100. A maximum of ??4.50 lakh can be deposited in a single account and 9 lakh in a joint account. In a common account, all joint owners have an equal share in the investment.
3]Blocking period: Like any tax-saving fiat currency, this postal savings program also has a 5-year blocking period. One can apply for an income tax exemption on his investment in this scheme under Section 80C of the Income Tax Act 1961.
4]Guaranteed return plan: this postal system is a guaranteed no-risk return plan. If an investor invests in this post monthly income program today, he will get a 6.60% return on his investment at the time of maturity.
5]Maturity: The account can be closed at the expiration of a period of 5 years from the date of opening on presentation of the application file with passbook to the post office concerned. If the account holder dies before the due date, the account can be closed and the amount will be refunded to the legal representative / heirs. Interest will be paid until the previous month, in which the repayment is made.
6]Early closure of the account: No deposit will be withdrawn before the expiration of one year from the date of deposit. If the account is closed after 1 year and before 3 years from the date of opening the account, a deduction equal to 2 percent of the principal will be deducted and the remaining amount will be paid. If the account is closed after 3 years and before 5 years from the date of opening the account, a deduction equal to 1 percent of the principal will be deducted and the remaining amount will be paid.
7]Eligibility: Only an Indian resident can open a Post Office Monthly Income Scheme account. By submitting the necessary documents to the nearest post office, any adult can open this Post Office MIS account. A minor over 10 years old can open this account in his name.
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