Post Office Monthly Income Scheme: Features, Benefits, Interest Rates, Eligibility, & More
Updated: Nov 27
The Post Office is a reliable place to deposit and carry out financial transactions, much like any nationalised bank, specifically for the elderly population. Post offices throughout the nation provide a range of savings plans. The Post Office Monthly Income Scheme (POMIS) is a beneficial scheme where you invest a specific sum to earn a predetermined interest rate on a monthly basis. You can make investments in this from any post office, as the name implies. The most recent update states that the monthly savings scheme's maximum deposit limit has raised from Rs. 4.5 lakh to Rs. 9 lakh for a single account, while the limit is Rs. 9 lakh to Rs. 15 lakh for a joint account. In this article, we will explain the POMIS concepts in detail.
Table of content
What is the Post Office Monthly Income Scheme?
Under the authority of the Finance Ministry, the Post Office offers POMIS along with plenty of other banking services and products. It is, hence, very reliable. POMIS offers ongoing revenue and is a low-risk monthly interest plan, making it ideal for savvy investors. You can invest up to Rs. 9 lakh alone or Rs. 15 lakh together in a joint account over five years. The primary objective is capital protection. From April to June 2024, the interest rate is 7.40 percent annually, with monthly payments due.
For example, X invested Rs. 9 lakh over five years in the post office monthly investment scheme. The interest rate is 7.40% p.a., previously stated. For that time, his interest will be Rs. 5,550 per month. When he reaches maturity, he can get his Rs. 9 lakh investment and accrued interest from any post office or transfer it to his savings account through the Electronic Clearance Service (ECS). Another option is to renew the account.
Features of Post Office Monthly Income Scheme
Capital protection: Because this is a government-backed program, your money is secure until it matures.
Tenure: Post Office MIS has a five-year lock-in duration. At the scheme's maturity, you can reinvest or withdraw your investment.
Low-risk investment: Because it's a fixed-income plan, your money is safe and immune to market fluctuations.
Reasonably priced deposit amount: A small initial investment of Rs. 1,000 is sufficient to get you started. You can invest more than this amount, depending on your financial situation. Note that the POMIS maximum is Rs 9 lakhs, and the joint maximum is Rs 15 lakhs.
Guaranteed returns: Each month, interest is paid on this scheme. The returns are greater than those of other assets with fixed income, such as FD, but they do not beat inflation.
Tax efficiency: Section 80C does not apply to your investment, and TDS is not applicable as well.
Payout: Rather than at the start of each month, the payout will be sent to you one month after the initial deposit.
Ownership of multiple accounts: You can open multiple accounts under your name. However, the total deposit amount for all of them combined cannot be more than Rs. 9 lakhs.
Joint account: Two or three people can open a joint account. In this case, a maximum of Rs. 15 lakhs can be invested overall in this account.
Fund transfer: A new feature introduced by the Post Office allows the investor to transfer the monies to a recurring deposit (RD) account. The goal is to increase interest and returns.
Nominee: In the event that the investor dies within the term of the account, the beneficiary (a family member) may be designated by the investor to receive the corpus and benefits.
Reinvestment: To keep receiving profits at maturity, you can put the funds back into the same program for an additional five years.
Benefits of the Post Office Monthly Income Scheme
Purchasing POMIS offers two main advantages. Many investors with little tolerance for risk select it since it is a government-guaranteed investment plan that has no connection with the market. The advantages are:
Steady Returns: Whatever the changes in the market, you will receive a consistent monthly income from your investment capital. The post office sets an interest rate of 7.40 percent per annum.
Reinvestment: You can choose to put the interest you've earned into securities that offer large profits, such as shares or equity funds, but these investing options also carry a lot more risk.
Eligibility for a POMIS Account
A POMIS account can only be opened by an Indian resident.
The benefits of this arrangement are not available to NRIs.
A POMIS account can be opened by any adult.
A minor who is ten years of age or older may have an account opened on their behalf. When kids turn 18, they will be able to access the fund.
Once a minor reaches the majority, he must seek to have the account converted to his name.
Account Type | Maximum Permissible Deposit |
Single Account | Rs. 9 lakhs |
Joint Account (2 or 3 adult members) | Rs. 15 lakhs |
Who Should Invest in Post Office Monthly Income Scheme
For investors who want a consistent monthly income but don't want to take on any risk, the Post Office Monthly Income Scheme is a good option. Therefore, it is favourable for senior citizens or retirees who are in the "no-more-paycheck" zone.
Investors looking for a one-time investment that will provide them with a consistent income to support their lifestyle should consider it appropriate.
Those who are willing to commit to long-term investments
Documentation Required
The following documents are required to invest in the Post Office Monthly Income Scheme:
Identity Proof: A copy of a government-issued document, such as an Aadhaar, driver's licence, voter ID card, or passport
Proof of address: Recent utility bills or a government-issued ID
Photos: Passport-size photographs
PAN and Aadhaar Mandatory Requirements
According to a recent statement from the Ministry of Finance, your UID number and PAN have to be submitted to open a POMIS account. If you do not have an Aadhaar yet, you must show proof of enrolment for an Aadhaar card or enrolment ID to open an account. You need to give the accounts office your Aadhaar identification number within six months of the account opening date. If you currently have a POMIS account and have not yet uploaded your Aadhaar number yet, you can do it within the time period of six months beginning on April 1, 2023. Additionally, you must submit your PAN within two months of the date of any of the following events, whichever occurs first: -
The amount in the account at any given moment reaches Rs. 50,000
The sum of all the credits in the account surpasses Rs. 1 lakh in any given fiscal year.
In any given month, the total withdrawals and transfers to the account exceed Rs. 10,000.
If you fail to submit your Aadhaar number and PAN to the accounts office within the designated six months and two months, respectively, your newly formed account will remain dormant.
Steps to Open a POMIS Account
You might be surprised to learn how easy it is to open a POMIS account. Here is the detailed process rather than envisioning lengthy lines and even more paperwork.
Step 1: If you haven't already, open a savings account at the post office.
Step 2: Fill out an application for POMIS at your local post office.
Step 3: Deliver the completed paperwork to the Post Office with two passport-sized pictures, a photocopy of your ID, and proof of residency. For verification, bring the originals.
Step 4: Obtain the form's signatures from your nominee or witnesses.
Step 5: Make the first transaction by cheque or cash. The date on the cheque will be the account opening date if the cheque is post-dated.
Step 6: The Post Office executive will give you the specifics of your recently opened account after the processing is complete.
Interest Rate on POMIS in 2024
In 2024, interest will be paid monthly at 7.4% annually through the Post Office Monthly Income Scheme (POMIS). The table with historical POMIS interest rate data is provided below.
Time Interval | Interest Rate (Per Annum) |
1st Apr 2024 - 30th Dec 2024 | 7.40% |
1st Jan 2024 - 31st March 2024 | 7.40% |
1st Oct 2023 - 31st Dec 2023 | 7.40% |
1st Apr 2023 - 30th June 2023 | 7.40% |
1st Jan 2023 - 31st March 2023 | 7.10% |
1st Oct 2022 - 31st Dec 2022 | 7.10% |
1st April 2020 – 30th Sept 2020 | 6.60% |
1st Jan 2020 – 31st March 2020 | 7.60% |
1st Oct 2019 – 31st Dec 2019 | 7.60% |
1st July 2019 – 30th Sept 2019 | 7.60% |
1st Jan 2019 – 31st March 2019 | 7.70% |
1st Oct 2018 – 31st Dec 2018 | 7.70% |
1st Jan 2018 – 30th Sept 2018 | 7.30% |
Senior Citizens Post Office Income Scheme
The post office savings scheme is accessible to people over 60, or senior citizens, who can use it to reduce their retirement concerns. To receive tax benefits under section 80C, the Post Office offers the Senior Citizens Savings Scheme (SCSS), providing a steady retirement income with an annual interest rate of 8.2% and a minimum deposit of Rs 1,000. You can also read our SCSS article to learn more.
POMIS Calculation
Investors must make the right investments after opening an account. The smallest investment amount for a single account is Rs. 1,000, whereas the maximum is Rs. 9,00,000.
The lowest investment amount for a joint account is Rs. 1,000, and the maximum is Rs. 15 lakh.
As an illustration:
You invest Rs. 1,000,000 with a five-year maturity period. A regular monthly income of Rs. 550 is provided by an annual interest rate of 6.60%. Furthermore, you will receive your money back at the end of the scheme's duration.
POMIS & Other Monthly Income Plans: A Comprehensive Comparison
POMIS | Monthly Income Insurance | Monthly Income Mutual Fund |
Assured income of 7.40% per annum | Monthly annuities, with rates varying according to period and premiums | Invested in 20:80 equity-debt ratio, so there is no guaranteed income |
No TDS | Annuity is taxed | TDS applicable |
Fixed return rate | NA | Floating rate according to the market movement |
Low-risk, appropriate for the risk-averse | Double benefits of insurance and investment | Relevant for people with a high-risk appetite |
Withdrawal allowed only after 12 months with a penalty | Higher surrender charges being a long-term investment | Exit load applicable for premature withdrawal |
Limit of Rs. 9 lakhs per account and Rs. 15 lakhs for a joint account | No investment limit | No investment limit |
Early Withdrawal Penalty
The following rules stand as penalties for MIS premature closure:
There are no bonuses before a year is up.
The full deposit is returned with a 2% penalty between the first and third years.
The amount is reimbursed with a 1% penalty between the third and fifth years.
Conclusion
A government-backed investment plan that is perfect for people who don't want to take on a lot of risk is the Post Office Monthly Income Scheme. The POMIS Scheme is available to retirees and smart investors looking for a steady income stream. The scheme's USP is its capital protection feature, which makes it a well-liked option for anyone seeking steady returns. Furthermore, adding life insurance to POMIS can ensure comprehensive financial protection and peace of mind for you and your loved ones.
FAQ
Q1. How is the individual account holder’s share calculated when they have a joint account?
An equal proportion of each joint account will belong to each joint account holder.
Q2. What if I don’t want to withdraw the deposit amount on account maturity?
The money stays in the account and earns simple interest in accordance with the Post Office Savings Account for two years after the account maturity if you do not withdraw the deposit amount at that time.
Q3. What is the minimum amount required to open an MIS account?
It costs not less than Rs. 1,000 to open a MIS account.
Q4. What is the POMIS investment limit in 2023?
Under POMIS, an individual account can have a maximum deposit of 9 lakhs, while a joint account can have a maximum deposit of 15 lakhs.
Q5. Is this scheme suitable for senior citizens?
Yes. Seniors can deposit their life savings into the account and earn interest so they can pay for their monthly bills, making this a beneficial arrangement.
Q6. What happens to my account if I have to relocate due to work?
In the event that you shift, it is simple and free to move your POMIS account to the Post Office in your new neighborhood.
Q7. Can the nominee withdraw the amount before maturity in the case of the death of the investor?
Yes, even if the five-year lock-in period is not yet up, nominees may file for a death claim payment as soon as the POMIS investor passes away. They can submit a death claim application to receive a reimbursement of their investment and interest accrued until their passing.
Q8. Is there a provision to get the interest credit of the MIS account to the RD account?
No. The MIS fails to include such a clause. Additionally, standing Instructions to credit the RD account from the SB account might be given in a stipulated application form.
Q9. Does the Post office provide the facility of Net Banking / Mobile Banking?
Indeed. Post Office Savings clients of Core Banking Solutions post offices have the option of intra-operable net banking and mobile banking.
Q10. Is deduction on interest from POMIS allowed under the Income Tax Act?
Interest on Post Office Savings Accounts may be claimed under Section 80TTA up to a maximum of Rs. 10,000.
Q11. Can I transfer the POMIS account?
In action, it is possible to move your account for free between post offices.
Q12. Can I reinvest my accumulated amount in POMIS?
One of the said scheme's best features is this. At the close of the term, it permits the investors to reinvest the money they have accumulated.
Q13. Is there any Tax deduction at source?
TDS (Tax Deduction at Source) has no basis. However, the interest received is subject to taxes.
Q14. Is there any nomination facility available in POMIS?
Yes, the plan enables you to choose a nominee against the account who would receive the accrued funds in the event of your untimely death.
Q15. Does the scheme offer a tax rebate?
In line with Section 80C of the Income Tax Act of 1961, POMIS does not provide any tax advantages.
Q16. What happens when the investor does not withdraw the funds from POMIS after 5 years?
In keeping with the interest rate on the post office savings account, the investor will continue to earn simple interest for up to two years after the five-year maturity if he does not remove the entire amount.
Q17. Is Premature Withdrawal of the POMIS allowed?
Yes, after a year, the early withdrawal option is permitted. However, there is a 2% deduction on the deposit if you withdraw before three years, and a 1% deduction on the deposit if you withdraw after three years.
Q18. What is the monthly interest for Rs. 10 lakh in the post office?
The monthly interest rate applicable on Rs. 10 lakh in POMIS is 7.1% for three years, and 7.5% for five years deposit tenures respectively.
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