Features & Benefits of Post Office Monthly Income Scheme
The features of the Post office's monthly income scheme are as follows -
Deposit
You can deposit any amount from Rs. 1000 to Rs. 9 Lakhs in case of a single account holder and Rs. 15 lakhs in case of a joint account holder. However, the amount has to be in multiples of Rs. 1000 only.
Lock-in-period
Once you open the account of the monthly income scheme (MIS) in a post office, a lock-in-period will be applicable for 1 year within which you cannot withdraw any amount out of the account that you have deposited while investing in the scheme.
Maturity
The POMIS scheme maturity tenure is five years. You can withdraw the entire amount after the maturity of the scheme. In case of the death of the account holder, before the completion of the fifth year, then the nominee can close the account and the amount will be refunded to the nominee’s or legal heirs’ account.
Transfer of account
Since Post office monthly income scheme is an all-India scheme, so even if you are shifting from one city to another, you can transfer the POMIS account from the post office of your current city to the one you are shifting to. The invested amount in the account will be intact and so is the interest amount received.
Minor account:
POMIS account can be opened for minors as well who are above the age of 10 years. For minors or people of unsound mind, their guardian can open this account on their behalf.
Joint account
Under post office MIS, the account can be opened jointly for a maximum of three adults. The maximum limit on these joint accounts remains Rs. 15 lakh as per the latest update of the scheme. In a joint account, every account holder must have an equal investment share. So, for instance, you are opening a joint POMIS account with your spouse and you want to deposit Rs. 10 lakhs in it, so, Rs. 5 lakh each will be recorded in the account of the two of you.
Interest
Your post office monthly income scheme earns you regular interest on the amount you have invested in the account. At the end of each month starting from the day of investment, interest shall be payable till maturity of the account. However, if you don’t claim the interest and withdraw it every month, the interest will keep on accumulating but it won’t be reinvested, this means, your investment amount won’t go up and you are not going to get interest on your accumulated interest amount in the POMIS scheme. Often people are mistaken that if they do not withdraw the interest, it will be compounded by the reinvestment process, but that is only a myth. You can physically withdraw the interest via ECS. You need to keep in mind that the interest amount you earn on this scheme is fully taxable in your hand as per the tax slab you fall into. Also, the interest rate changes as per government intervention. You can check the post office monthly income scheme interest rate 2023-24.
Pre-mature withdrawal
You can withdraw the amount from your post office MIS account after one year of the lock-in period and before the completion of five years, which is the maturity tenure. However, certain charges will be levied for pre-mature withdrawal.
Eligibility criteria to open a POMIS account
A POMIS account can be opened by –
Physical gold
You can buy physical gold from any jewellery house.
Digital gold
Many online wallets, and fintech apps, offer digital gold where you can buy the gold as per the current price of physical gold in the market, but you do not have to take the delivery in the physical format. You can buy as per your requirements, usually, the minimum purchase has to be of 1 gm of gold.
Gold Mutual Funds
Just like any other mutual fund, you can invest in a gold mutual fund. You can opt for either lump sum or SIP method which suits your requirements and investment preference. There are different mutual fund apps which offer gold mutual funds as well.
Gold ETF
For investing in Gold ETFs, you need to open a Demat and trading account as these gold ETFs are traded in the stock market. Once you open these accounts, you can directly purchase the gold ETFs and you can trade in the market or stay invested for the long term to gain significant returns.
Sovereign Gold Bonds
One of the debt instruments that allows you to invest in gold is Sovereign Gold Bonds. These bonds are offered by RBI from time to time via public and private banks. The return of these bonds is guaranteed by the government of India and thus, you can get a secure stream of income by investing in these sovereign gold bonds.
Gold Investment vs Mutual Funds
Retail investors always find it intriguing to choose between gold investments and mutual funds as both offer some really good prospects that retail investors want. However, both are different and you can also differentiate between these two depending on your choices of investments and other factors. Here is a short comparison between two of the most popular investment vehicles in the country –
- An individual
- Minor above the age of 10 years but the amount in the account will be accessible when the minor will turn 18 year
- A maximum of three people can come together to open a joint account with POMIS
- Guardian on behalf of people and minors with unsound mind
How to open a POMIS Account?
The process of opening a POMIS account is quite easy. Here are the steps you need to follow –
- You need to visit your nearest post office
- Ask for the post office's monthly income scheme account opening and they will give you the relevant form. You can also download the application form from the India Post website.
- Fill the form duly with all the correct details
- Make and carry photocopies of documents like voter id, AADHAAR card, or any ID proof and address proof and two passport-sized photographs of the applicant.
- Now along with the form, submit all the documents for KYC
- For the deposit, you can use a dated cheque, and that date will be taken as the account opening date.
- If you want to add a nominee, you can add it while opening the account or later as well.
Consequences of early withdrawal
While under this post office monthly income scheme, pre-mature withdrawal is permitted but there are penalties attached to it which you need to consider if you are going for pre-mature withdrawal or closure of the account. While the first year is the lock-in-period,
- So after 1 year from opening the account up to 3 years from the account opening date, if you withdraw any amount or close the account for complete withdrawal, 2% of the principal amount will be deducted.
- If you want to withdraw or close during the 4th and 5th year, then 1% of the principal amount will be deducted.
Comparing Post Office MIS with other Monthly Income Plans
Now let’s see the difference between POMIS and other monthly income plans –
| Basis |
Post Office Monthly Income Scheme |
Monthly Income From Mutual Fund |
Monthly Income Insurance Plans |
| Returns |
The interest rate is fixed for a particular period and you are assured to get that much interest on your deposits. |
Monthly income from mutual funds can be generated with high debt instruments percentage in the mutual fund scheme or portfolio. However, in mutual funds, even though debt mutual funds, the returns are not guaranteed. |
The rate of return from monthly income insurance plans varies as per plans and premiums. |
| Taxes |
There is no TDS deduction on the interest however, it is taxable at the hands of the account holder. |
TDS applies to the income generated from the mutual funds. |
Annuity plans are taxed at the hands of the policyholder |
| Risk |
Risk-free investment, government-backed small savings scheme |
Low to moderate-risk investment, can include government as well as corporate bonds and other bonds and equities |
These plans offer dual benefits in the form of investment and insurance |
| Suitability |
Suitable for people looking for risk-free regular income which is also certain |
Suitable for people looking for a decent return on their investment and regular income |
Suitable for people who are looking for dual benefits |
| Pre-mature Withdraw and Penalties |
After 12 months you can withdraw from the POMIS account but you have to pay penalty charges |
When you redeem mutual funds before a specific period (if any) then the exit load will be applicable |
You have to pay surrender charges which are typically higher than the other two schemes |
| Maximum Deposits/ investments |
For individual accounts, the maximum deposit can be Rs. 9 lakhs while Rs. 15 lakhs can be deposited in a joint account |
There is no cap on mutual fund investment |
The amount is capped as per premium and the plan was chosen. |
Who should invest in POMIS?
Anyone who is looking for risk-free monthly income plans can invest in POMIS. You can get a certain amount every month in your bank account or cash if you withdraw physically from the post office. This can help you with your household expenses or you can invest the interest received into high-return investments as well.
POMIS Interest Rate - Past 5 Years
The post office monthly income scheme 2023-24 interest rate is 7.4% for the period 1st of April, 2023 to 30th of June, 2023 as per recent updates. For a change in the interest rate, you can keep an eye online or you can also enquire at the post office. The interest rate for the past five years are here as follows -
| Period |
Interest Rate |
| 01-04-2023 to 30-06-2023 |
7.40% |
| 01-01-2023 to 31-03-2023 |
7.10% |
| 01-10-2022 to 31-12-2022 |
7.10% |
| 01-04-2020 to 30-09-2022 |
6.60% |
| 01-01-2020 to 31-03-2020 |
7.60% |
| 01-10-2019 to 31-12-2019 |
7.60% |
| 01-07-2019 to 30-09-2019 |
7.60% |
| 01-01-2019 to 31-03-2019 |
7.70% |
| 01-10-2018 to 31-12-2018 |
7.70% |
| 01-01-2018 to 30-09-2018 |
7.30% |
Conclusion
The post office monthly income scheme is the only monthly income savings scheme in India which offers risk-free returns and thus it is one of the favourites of many. It is also a great investment option when you have a lump sum amount in hand, for instance, your retirement benefits or proceeds from the sale of property or any such significant amount. This scheme is for everyone who meets the criteria and offers one of the highest returns compared to other government-backed schemes and also security of the capital invested and returns generation.
