Post Office Monthly Income Scheme: Account Opening and Benefits

The government introduced a range of National Savings Schemes aimed at offering secure investment options with guaranteed returns. These schemes are relatively free from risk and can play a vital role in building wealth for individuals residing in rural areas and senior citizens. This article will explain one of these national savings schemes, the Post Office Monthly Income Scheme (POMIS).

Key Features of the Post Office Monthly Income Scheme 

The Post Office MIS (POMIS) offers the following key features:

1. Qualification: POMIS accounts can be opened by adults individually or jointly with up to three other adults. Guardians can also open accounts for minors below 10 years.
2. Account Holders: POMIS permits both single and joint account holders, with a maximum of three adults.
3. Deposit Limits: The minimum deposit is ₹1,000, with subsequent deposits in multiples of ₹1,000. Maximum deposit limits vary:

• Minor Account: Up to ₹3 lakh
• Single Account: Up to ₹9 lakh
• Joint Account: Up to ₹15 lakh

4. Maturity Period: POMIS has a fixed 5-year tenure, with the option to reinvest the maturity amount.
5. Early Closure: Early account closure is possible, but a one-year lock-in period applies. Penalties for early closure are as follows:

• 1 — 3 years: 2% of the principal
• 3 —  5 years: 1% of the principal

6. Nomination: Nominee details can be updated after the account is opened, but beneficiaries can only claim funds upon the account holder’s demise.
7. Transfer Option: POMIS account holders can transfer their accounts between Post Offices.
8. Bonus Scheme: Accounts opened before December 1, 2011, used to receive a 5% bonus, but this is no longer applicable.
9. Taxation: POMIS is taxable and not eligible for benefits under Section 80C of the Income Tax Act. It is also not subject to TDS.

How does POMIS Work? 

Before proceeding, you must decide whether you want an individual or joint account and then deposit the appropriate amount accordingly. If you invest ₹4,50,000 in a 5-year Post Office MIS term at an annual interest rate of 6.6%, you can expect a consistent monthly payout of ₹2,475, as calculated using the readily available online Post Office Monthly Income Scheme calculator. You will receive your deposited principal amount back at the end of the investment period.

You have two options for withdrawing your funds: directly from the Post Office or by transferring them to your savings account via the ECS (Electronic Clearing Service). Monthly withdrawals are permitted, although you can choose to accumulate the money over several months before withdrawing it. However, this isn’t advisable because keeping your funds idle will not earn any interest.

Eligibility Criteria for POMIS 

The Post Office Monthly Income Scheme (MIS) is designed primarily for individuals who prioritise safety in their investments. Firstly, it enjoys government backing, making it an almost risk-free investment option. Secondly, it offers a fixed monthly income, making it particularly appealing to those seeking a steady income source. It proves especially suitable for senior citizens and retired professionals who rely on regular income to support their lifestyles. The eligibility requirements are as follows:

• Investors must be Indian residents; Non-Resident Indians (NRIs) are not allowed to participate in POMIS.
• Individuals aged 10 years and above can invest in their own name.
• You have the option to open an account either individually or jointly with up to three other individuals.

How to Open a POMIS Account? 

To initiate the process of opening a POMIS account, it’s essential to already possess a savings account with a Post Office. Once you have met this prerequisite, you can proceed by following these steps:

1. Obtain a POMIS application form from your nearest Post Office.
2. Complete the form and provide the necessary documents, including proof of identity, proof of address, and passport-sized photographs. Ensure that both the originals and photocopies of these documents are available for verification.
3. Obtain the signature of your chosen nominee for the account.

Benefits of the Post Office Monthly Income Scheme 

The Post Office Monthly Income Scheme (MIS) offers a range of advantages, which include:

1. Enhanced Safety: This investment option is exceptionally secure because it’s supported by the government.
2. Steady Income: As a fixed-income scheme, it shields your invested funds from market fluctuations, providing a high level of safety.
3. Low Entry Point: You can begin investing with as little as ₹1,000, making it accessible to a wide range of individuals.
4. Guaranteed Returns: It provides an assurance of consistent and fixed returns every month.
5. Flexible Withdrawals: You have the flexibility to either receive your monthly interest directly from the post office or have it automatically deposited into your savings account. Additionally, reinvesting interest through SIP (Systematic Investment Plan) is a lucrative option.

Documentation Required 

To open a POMIS account, you will need to provide the following documents:

1. Identification Proof: A photocopy of an official government-issued identification document, such as a Passport, PAN card, Voter ID card, Aadhaar card, etc.
2. Address Proof: A photocopy of a government-issued identification card or recent utility bills, like electricity or gas bills, that serves as proof of your address.
3. Photographs: Need to include 2–4 passport-sized photographs of the applicant.

Summing Up

In conclusion, the Post Office Monthly Income Scheme (POMIS) offers a secure and convenient investment option for risk-averse individuals, providing fixed monthly income with government backing and minimal investment requirements. It serves as a reliable source of steady returns, especially appealing to retirees and those seeking stability in their financial portfolios.

FAQs