Friday, 8 October 2010

All About Post Office Monthly Income Scheme

The Post office monthly income scheme is the best investment scheme for those who are not ready to bear any risk with their money and also wish to get a good monthly income. This is suitable for retired people and aged people those who are looking for a monthly outcome. An Indian citizen can open a POMIS (Post office Monthly Income Scheme) account in any post office in India. A Lump sum amount can be deposited and can earn monthly interest in cash. This is operated through post offices and supported by government. So this is one of the safest and secure deposit schemes.

Who can operate a MIS account?

Only a resident Indian citizen can open an account under this scheme. An HUF (Hindu Undivided Family) or an NRI (Non Resident Indian) or a foreign national cannot open an account under this scheme. A minor can also open an account under this scheme through a guardian. But if the minor completes his/her 10 years of age can open this account in his or her own name directly. This account can be opened as single account or joint account with more than one person.

Maximum and Minimum limit of investment

The minimum amount can be invested in this account is Rs. 1500. Multiples of thousand can be deposited and the maximum amount can be deposited in a single account is Rs. 450000 and in a joint account it is Rs. 900000. Any number of accounts can be opened by a person but the total amount invested in all accounts should not be overcome the maximum limit.


The rate of interest is 8% per year and can be collected monthly. The facility of direct credit of interest in saving account is limited to those have a savings account is in the same post office. If there is not such savings account in the same post office, you have to collect the interest every month, directly from the post office. If you have closed this account only at the maturity a 5% bonus also will be given. Then the effective income will be 8.9% per year. Even if you are not withdrawn the interest, you won’t get additional interest for the same. If you deposit the interest from Monthly Income Scheme in post office recurring deposit, you can earn approximate 10.5% interest. If you open the MIS and Recurring account in same post office with a standing instruction to deposit the interest in recurring account, this process will work automatically.

Taxation of Investment and Interest

There is no Tax exemption for this investment and the interest earned is fully taxable. There is no tax deducted at source (TDS). But the investment in PO MIS is exempt from wealth tax.

Lock in Period

Maturity period is 6 years. One can prematurely withdraw the deposit after one year but before 3 years at the discount of 2% of the deposit and after 3 years at the discount of 1% of the deposit. (Discount means deduction from the deposit.) A bonus of 5% on principal amount is admissible on maturity in respect of MIS accounts opened on or after 8.12.07

Other Advantages

You can transfer the account to any post office in India. Nomination facility is also available at any time on or after open the account. This is the only investment opportunity in post office where monthly interest is payable.

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