Post office monthly income scheme is one of the best monthly income generating scheme. In this post, I will tell you all information about Post Office Monthly Income Scheme. I will cover most asking question about the Post Office Monthly Income Scheme which is mention below.
- What is Post Office MIS Scheme?
- Key Features of post Office Monthly Income Scheme (POMIS) account.
- Eligibility to apply for Post Office Monthly Income Scheme.
- Analysis the investment process with an example of Post Office Monthly Income Scheme.
- Your Question’s answer
And all about the Post Office Monthly Income Scheme.
- What is Post Office Monthly Income Scheme
Post office monthly income scheme allows you the best way of generating the monthly income from maximum interest rate of your amount. Monthly Income Scheme (MIS) is an investment scheme that promises the investor guaranteed returns at an interest rate of 7.7% per annum. These returns can be availed as fixed monthly income. POMIS is a popular investment scheme wherein an individual invests a particular amount and gets an assured monthly income in the form of interest. Under the Post Office MIS scheme, the interest payable on a monthly basis commencing from the date of deposit is deposited in your post office savings account. There are no income tax benefits available for investing in the Post Office MIS account. This scheme is suitable for those who want a steady flow of income, such as retired persons. POMIS provide mainly the three kinds of benefit to its benefices which is mention below:
- MIS keeps the capital intact.
- POMIS ensures that the customer receives a fixed monthly income.
- POMIS gives better returns than instruments that are debt-based.
- Key Features of Post Office Monthly Income Scheme:
This is the most important things you should read carefully before you applying for the Post Office Monthly Income Scheme.
The maturity period for the Monthly Income Scheme is 5 years. So, the customer should ideally withdraw the amount after this duration. At the end of the term, the customer will receive all the funds that were invested in the scheme. He/she will also receive the benefit of the fixed monthly income for the complete duration. This will happen when you complete this scheme method. But if you withdraw your money before 5 years, the following benefits will be payable:
- Deposit withdrawal within 1 year – The customer receives no benefits.
- Deposit withdrawal between 1 and 3 years – The customer receives the entire deposit after a nominal deduction of 2% as a penalty.
- Deposit withdrawal after 3 years – The customer receives the entire deposit after a nominal deduction of 1% as a penalty.
Other most important features of the Post Office Monthly income scheme (POMIS) include the following:
- The investment is absolutely risk-free.
- The customer can choose to nominate another individual to receive the benefits in the event of his/her unfortunate death.
- The scheme provides the option of a recurring deposit into which the funds can be moved.
- Even minors can invest in POMIS.
- The POMIS account can be transferred from one post office to another, absolutely free of cost.
- For every deposit the customer makes at the post office, a separate account will have to be opened. The advantage here is that one person can open multiple accounts, up to the maximum possible account balance limit of Rs.4.5 lakh. This is the total amount that can be invested by the customer, including his/her share in all joint accounts.
- The maturity amount that is received at the end of the investment term can be reinvested in POMIS.
- There is no Tax Deduction at Source (TDS) for this scheme. However, the interests earned through the investment in the scheme are taxable.
- The amount that is invested in POMIS is not eligible for tax rebates under Section 80C of the Income Tax Act, 1961.
- The account can be opened by a cheque or cash. In case the customer chooses to provide the initial payment through a cheque, the date of realisation of the cheque in the Government account will be the date of opening of the customer’s account.
- A joint account can be opened by two or three adults. All the account holders in the joint account have an equal share. A single account can be converted to a joint account, if needed. The reverse is also possible.
- Eligibility to apply for Post Office Monthly Income Scheme:
The post office monthly income scheme has been specifically designed for investors who are averse to risks (implying a reluctance to invest in equity instruments), but however, are looking for fixed monthly payouts. Investors in this scheme are hence, usually found to be people in retirement or senior citizens.
- The only prerequisite to be able to invest in this scheme is that the customer should be a resident of India. NRIs cannot avail the benefits of this scheme.
- The minimum age limit for entry into the scheme is 10 years.
- The maximum amount that a minor can invest in POMIS is Rs.3,00,000.
- Analysis the investment process with an example of Post Office Monthly Income Scheme:
Suppose, you are here as Mr.X and Mr.X invest Rs.1 lakh in the scheme, with a maturity period of 5 years. At the annual interest rate of 7.7%, he will receive a fixed monthly payout of Rs.641.66. At the end of the investment term, i.e., 5 years, he will get back the amount he deposited. This money can be withdrawn in two modes, i.e., he can either receive it directly from the post office or as a credit in his savings account through ECS. This amount can be withdrawn on a monthly basis; however, if desired by the customer, he can allow it to accumulate over a period of few months and then withdraw the accrued amount. The latter option is not very lucrative, as the accumulated funds do not earn any interests.
A new feature of ‘Post Office Monthly Income scheme’ has now been added to POMIS in order to make it more effective, in terms of returns. The customer can associate the account with a recurring deposit. Hence, the interest earned on the scheme can be invested in the recurring deposit on a monthly frequency. This is a great way to let your money grow, while still staying invested in the scheme.
- Your Question’s answer:
There are many questions asking the people you can check it out below and if you have still question you can comment below or you can directly email me at email@example.com
Q. What happens when the investor does not withdraw the funds after 5 years?
A. If the amount and the interest is not withdrawn after 5 years, then that account will earn a simple interest (as per the post office savings account interest rate) up to 2 years. Following this, the final amount will be kept idle, until withdrawn.
Q. What happens at the death of the depositor?
A. In the event of death, the nominee of the investor must close the account. He/she is not allowed to continue investing in the account. The amount that has been deposited, along with the interest accrued (up to the preceding month) is paid to the nominee.
Q. How is the interest payable?
A. There are three ways in which the interest can be availed:
- The interest will be automatically credited to the savings account with the post office.
- The depositor can request for interest withdrawal every month. He/she will receive the amount either as cash or through a cheque, as required.
- The interest can also be availed through post-dated cheques. The validity of the cheque will be 3 months from the date of issuance. However, this facility can be availed only if the cheque amount is greater than Rs.100. If the depositor has lost the cheque, he/she will have to sign an indemnity bond for duplicate cheques to be issued. It should be noted that the validity period of the cheque and a month of reconciliation time should have elapsed before the duplicate cheque is issued. If the depositor initiates a pre-closure of the account, he/she will have to return the unused cheques with a penalty of Rs.4 per cheque. If the depositor faces death, the nominee will have to return these unused cheques, but will not be required to pay any penalty. If the post-dated cheque option is chosen for availing interest, the account holder receives the final amount (after 5 years) through the cheque only.
Q. What happens when the customer invests more than the prescribed limit?
A. In the event of a breach of limit, the post office will ask the customer to withdraw the additional amount immediately. For the time period between the deposit of the excess amount and the withdrawal, the investor will be paid only the post office savings account interest rate for the excess amount.
Q. Is the amount deposited in POMIS liable to wealth tax?
A. The amount that is invested in the post office monthly income scheme is exempt from wealth tax.
GST of 18% is applicable to life insurance effective from the 1st of July, 2017
The scheme can be prematurely closed after one year. A deduction amounting to 2 percent of the deposit will be applicable to a depositor closing the account between 1 year and three years after opening. And after three years, 1 percent will be deducted. The remainder will be paid to the depositor.
This is the video tutorial you can watch and learn more effictively.
The post office monthly income scheme allows all these benefits which I told you in this post. If you have still question you can ask me in the comment box or you can directly email me at firstname.lastname@example.org. Follow us on social media for a more upcoming update about Post office Monthly income scheme.