The Post Office Monthly Income Scheme (POMIS), which is offered by India Post, is a lesser-known but extremely beneficial investment avenue. Post Office Monthly Income Scheme accounts are a popular choice among investors since they can deposit a certain sum of money into this scheme for a period of 5 years and receive a guaranteed interest which is payable monthly. While a POMIS account can be opened by any Indian resident, it is ideal for senior citizens and retired employees since this mode of investment poses no risk and still guarantees a fixed monthly income.
Features and Benefits of the Post Office Monthly Income Scheme
- The maturity period for this scheme is 5 years. While you can always keep your money in the account even after the deposit attaining its maturity, you will have to remember that you will continue to earn an interest for only 2 years after the maturity date. Post this, no interest will be paid to you.
- Customers have the option of withdrawing their funds before the completion of the 5-year period. However, if the withdrawal is done between the 1st and the 3rd year or the after 3 years, he/she will receive the deposit amount after certain nominal deductions.
- Customers can choose to deposit money in their POMIS account by way of cash, cheque, or demand draft.
- A single account can be opened by any adult Indian citizen, residing in India. Single accounts can also be opened for children over the age of 10 years, provided they have a guardian.
- Joint account facility is also available, wherein two or three adults can open an account together. In this case, all account holders will have an equal share.
- The amount that can be invested into a POMIS single account is restricted to Rs.4.5 lakh, and the maximum amount that can be invested into a joint account is Rs.9 lakh.
- The minimum amount that can be invested is Rs.1,500, under both single accounts and joint accounts.
- The interest received through the Post Office Monthly Income Scheme is fully taxable. No tax rebates are offered on the interest paid. However, TDS or Tax Deduction at Source is not applicable for this scheme.
- Nomination facility is offered at the time of opening the account and even post opening an account. Thus, in case of the account holder’s death, his/her nominee will receive the benefits.
- Customers have the option of transferring their POMIS account from one post office to the other, without having to pay anything.
- One can choose to convert their single account into a joint account, if need be. Likewise, a joint account can also be converted into a single account.
- Non-resident Indians (NRIs) and Hindu Undivided Families (HUFs) cannot open a Post Office Monthly Income Scheme account.
How the Post Office Monthly Income Scheme Works
Opening a Post Office Monthly Income Scheme account requires minimal paper-work and documentation, and can be done in a hassle-free manner. The documents that need to submitted are:
- Valid identity proof
- Address proof,
- Recent passport-size photographs
At the time of opening the account, you will be given the option of opening an individual account or a joint account. After opening your account, you can proceed to investing your preferred sum of money, provided it is within the minimum and maximum limits, as shown below.
Eligibility Criteria for Post Office Monthly Income Scheme
Investing in a Post Office Monthly Income Scheme is highly advisable if you are risk-averse, but are still interested in an investment option that will give you fixed monthly incomes. Thus, while any individual can choose to invest in a POMIS account, it is an ideal investment option for senior citizens and individuals who have just retired and are looking to supplement their monthly income or receive a fixed sum of money on a monthly basis.
- The main prerequisite for investing in the Monthly Income Scheme is that one should be a resident of India. You can’t invest in this scheme if you are an NRI or are a part of a HUF.
- The minimum age limit is restricted to 10 years for minors. There is no maximum age limit.
- The maximum amount of money that can be invested into an account opened for a minor is Rs.3 lakh.
FAQs about the Post Office Monthly Income Scheme:
I did not nominate a beneficiary at the time of opening my account. Can I still avail the nomination facility?
Yes, you can nominate a beneficiary any time during the POMIS account tenure. In order to make the nomination, you will have to collect the prescribed form from the postmaster.
What are the deduction rates applicable if one wishes to prematurely withdraw his/her funds from the POMIS?
If you are in need of emergency liquidity and you need to withdraw your funds before the maturity date, the following deductions will be applicable:
- Premature encashment of funds after 1 year but before 3 years: 2% deduction applicable
- Premature encashment of funds after 3 years: 1% deduction applicable
Will I continue to earn an interest if I don’t withdraw my funds after maturity?
Your deposit will continue to earn an interest for a period of 2 years after the date of maturity. Post that, it will not earn you any additional interest. Thus, it is recommended that you withdraw your funds post maturity and re-invest it.
How will the interest be paid to me?
The interest amount can be paid to you through any of the three methods mentioned below:
- The interest amount can be automatically credited to your post office savings account.
- You can only choose to withdraw the interest amount on a monthly basis, via cash or cheque.
- You can also avail your interest through post-dated cheques.
Are any bonuses payable upon attaining the date of maturity?
Currently, no bonus is payable upon attaining the date of maturity. Previously, accounts that were opened between 8.12.2007 and 30.11.2011, earned a 5% interest on the principal amount, upon attaining maturity.