Post Office Monthly Income Scheme (POMIS) is a government-backed small savings monthly income scheme. In POMIS, you deposit a lump sum amount in the post office for which you get a regular monthly income. The income you receive comes from the interest generated through the investments. The scheme is only meant for Indian Residents. NRI’s cannot invest in this particular scheme. Most importantly, the investment is highly secure as it comes under the purview of the Finance Ministry.
POMIS Eligibility And Details
A POMIS account can be opened by any Indian Resident aged provided that he/she is aged 10 and above. The account can be opened even for minors as well.
The maximum investment limit in POMIS is 4.5 Lakhs for a single account. Whereas, the investment limit for a joint account is 9 Lakhs.
There is no limit on the number of accounts that a person can open. But the maximum investment limit is 4.5 Lakhs including the joint accounts.
Also, the maximum investment limit in the case of a minor account is 3 Lakhs.
For example, suppose there’s a person who has a POMIS joint account with an investment amount of 6 Lakhs. If he opens another individual account, the maximum investment limit would be 1.5 Lakhs. It’s so because the POST office assumes that 2 individuals have invested an equal amount in their joint account.
Additionally, the minimum investment amount should be in the multiples of Rs. 1,500.
Post Office MIS Interest Rates 2019
The interest rate on MIS in post office changes on a quarterly basis. The current interest rate is 7.6%. The rate of interest refers to a simple interest rate which is provided in the form of regular monthly income.
For example, Mr. Suresh has deposited an amount of 3 Lakhs in the Post Office Monthly Income Scheme (POMIS). He is entitled to receive an income of Rs. 1900 each month.
Post Office Mothly Income Scheme Calculator 2019- POMIS Calculator
You can download the Post Office Monthly Income Scheme calculator (POMIS Calculator 2019) by clicking on the link given below.
Is POMIS Taxable – Is MIS In Post Office Taxable?
Yes, POMIS in Post Office is taxable. The interest that you earn is added to your income and taxed accordingly.
You don’t get to enjoy any tax benefits if you invest in the Post office Monthly Income Scheme. Nevertheless, there is no TDS deduction in this scheme.
The tenure of POMIS is 5 years i.e. the minimum investment time period is 5 years. Although you can close the account after 1 year, the penalty would be levied on your deposit as follows:
Withdrawal After 1 Year and Before 3 Years – If you close the account after 1 year but before 3 years, 2% amount would be deducted from the investments. The rest would be paid back.
Withdrawal After 3 Years – If you close the account after 3 years, 1% amount would be deducted from the investments. The rest would be paid back.
Let me take an example – Mr. Suresh deposited an amount of 3 Lakhs in POMIS scheme. After a period of 1 year, he wants to close the account due to some emergency in the family. The post office would deduct 6,000 from the account and return the remaining 2.94 Lakhs back to him.
Monthly Income Payout
The facility of monthly income payout is not given at the beginning of the month. The completion of 1 month is counted from the date of investment. So, if you deposit the amount on 6th August, the actual payout would begin from 6th September.
The interest income can be credited directly into the savings account if you have one in the same post office. It can also be credited through ECS or post-dated cheques.
Upon maturity of the scheme, the principal amount is paid back.
The minor needs to apply for the conversion of the account in his/her name after becoming major.
The nomination is allowed in POMIS scheme. The nominee will get the entire principal amount back in case the person faces any unfortunate event.
You can reinvest the amount in POMIS after maturity. The interest rates prevailing at that point of time would be applicable.
POMIS scheme seems to be ideal for Senior Citizens who require a regular source of monthly income with capital protection.
Also Read: Best Investment Options For Senior Citizens
POMIS VS SCSS
If we compare POMIS with Senior Citizens Savings Scheme (SCSS):
- The maximum limit in SCSS is 15 Lakhs for a single account whereas it’s 4.5 Lakhs in POMIS.
- The rate of interest in SCSS is 1% more than POMIS at this point in time. POMIS’s interest rate is 7.6% while SCSS’s interest rate is 8.6%
- You can claim tax deduction under Section 80C in SCSS while the same is not available in case of POMIS.
So, if you are a senior citizen looking for a regular monthly income, SCSS would be a better option. If you’ve exhausted your limits in SCSS and PMVVY, you can definitely go for the Post Office Monthly Income Scheme.
This was all about the POMIS scheme. If you have any queries in your mind, please feel free to ask. We would be more than glad to resolve your queries!