In line with the demographic fact of a majority of middle-income group people in India, India Post, governed by the Ministry of Communication & Technology, offers some attractive Savings Schemes. These schemes are aimed at encouraging the habit of Saving, while also assisting the common man in earning good returns on the amount put towards such investment.

Post Office Monthly Income Scheme

One of the highly sought-after Savings Schemes is the Post Office Monthly Income Scheme, also known as the POMIS. As the name suggests, this scheme requires you to invest a certain amount of money, after which you are entitled to earn a fixed interest on the same. You can conveniently avail the scheme through any post-office.

The POMIS is a highly-reliable, low-risk monthly income scheme, which ensures a steady income for the investor. Here are some of the basic details pertaining to this scheme:

Investment Amount – A minimum investment of Rs. 1,500 and a maximum of Rs. 4.5 Lakh for an individual investor is allowed under this scheme. The maximum investment is Rs. 9 Lakh for joint investors. If the account is opened in the name of a minor (aged 10 or above), the maximum investment limit is Rs. 3 Lakh.

Investment Period – 5 years

Interest Rate – 7.7% per annum, payable monthly (as of 31^st March 2019)

Here, if an investor puts in Rs. 4.5 Lakh in the scheme, for 5 years, then considering the annual Post Office Interest Rate of 7.7%, he will receive Rs. 2,888/- every month, until maturity. Once the span of 5 years is complete, the investor can either withdraw the money through any Post-Office or place a request for transfer of the amount to his Savings Account through ECS. The beneficiary can also choose to reinvest the money in the scheme.

Features of Post Office Monthly Income Scheme

Here are the underlying features of POMIS that you must be aware of-

Capital Protection

This is one of the most imperative aspects of POMIS. Since the Ministry of Finance governs the Savings Scheme, you can be rest assured that your invested money is safe, and will be available for withdrawal once the scheme matures. If needed, you can also withdraw the funds before the maturity date, albeit you may lose out on the benefits.

Lock-In Tenure

The tenure for this scheme is 5 years, after which you are free to withdraw the invested sum or re-invest the same. 

Low-Risk Investment

Since the scheme guarantees a fixed income throughout the tenure as well as makes the initial investment available after maturity, this scheme can be easily classified as a low-risk investment scheme. Besides, the amount invested herein is not subjected to market risks. 

Guaranteed Returns

The scheme entitles you to a fixed income every month. Although the earning is not inflation-bearing, it is still higher in comparison to other such investments such as a bank Fixed Deposit.

Tax Efficiency

While the income from the POMIS is subject to taxation, it does not attract TDS, thereby helping you have an upper hand.

Eligibility

In order to avail the benefits of this incredible government-backed investment scheme –

You must be a resident Indian

You must be an adult, aged 18 or above

If the account is to be open in a child’s name, it can be done by the parents, provided the child is 10 years of above in age

Here, it is crucial to note that the POMIS is not available for NRIs.

Payout

Once you have made the investment, you will start receiving the monthly payout, exactly one month from making the investment, and NOT on the 1^st of every month.

Multiple Account Ownership

If need be, you are allowed to open multiple accounts in your name, provided that the total amount invested in them altogether, never exceeds Rs. 4.5 Lakh.

Joint Account

If need be, you can conveniently open a joint account with 2 or maximum of 3 people. In this case, the maximum investment allowed is Rs. 9 Lakh in total for 2 people, and Rs. 13.5 Lakh for 3 people. Regardless of the contributions of each member, the account belongs to each account holder in equal measure. 

Fund Movement

If you wish to, you can move the funds to the Post Office Recurring Deposit.

Nominee

You are entitled to nominee a family member, who can claim the benefits as well as the corpus, in the unfortunate event of your passing away. 

Accessibility

You can conveniently collect your monthly interest from the Post Office, or opt for electronic transfer of the same to your savings account.

Transfer

If you are shifting from one city to another, you can place your request for the transfer of your account to the new city, without paying any charges!

Early Withdrawal

As mentioned earlier, a POMIS is a medium terms investment, wherein your lock-in period is a minimum of 5 years. If, however, you must withdraw the amount earlier than that, you may lose out on the benefits or may even have to pay the penalty. Here are the 3 scenarios pertaining to the early withdrawal from POMIS.

If the amount is withdrawn before the completion of 1 year of investment, you are not entitled to any benefits.

If you withdraw the amount between 1^st and 3^rd year of the investment, you will be required to pay a 2%, before you receive the corpus amount.

If you withdraw the amount between 3^rdand 5^thyear of the investment, you will be required to pay a 1%, before you receive the corpus amount.

This is all you need to know about the highly reliable and flexible Post Office Monthly Income Scheme. While there are no major tax benefits related to this scheme, it still proves to be ideal for risk-averse investors, who wish to earn a little income on the side.

Also Read: Your Handy Guide to Post Office Fixed Deposit Schemes

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