The Post Office Monthly Income Scheme is a very good monthly income investment option in India to get guaranteed returns each month. One can deposit a maximum of 4.5 Lakh in single account and Rs 9 lakhs in joint account for two people. The interest acquired is taxable as per the income slab of the person.
The account matures in 5 years from the date of opening and interest is mostly charged at 8.4% per Annum. The interest is payable monthly from the next month of account opening. If one has a PO savings account, then the cash can be directly deposited in that account each month.
This is considerably different from a Recurring Deposit scheme. In a recurring deposit scheme, the interest rates are lower than post office MIS and also, the modus operandi is different. You have to invest a fixed amount every month in the RD scheme for the pre-fixed tenor. The interest that is earned will be added to the amount invested and there will be compounding that takes place.
RDs are a good way to earn high short-term returns. When it comes to comparing between post office MIS and Recurring Deposits, make sure you take professional advice and do your homework before taking a final decision.
How to open a Post Office Monthly Income Scheme Account:
Current Interest Rates on Post Office Monthly Income Scheme:
Period | Interest Rate on Post Office MIS (annual) |
---|---|
1st April 2020 – 30th June 2020 | 6.60% |
1st April 2018 – 30th June 2018 | 7.3% |
1st January 2018 – 31st March 2018 | 7.3% |
1st October 2017 – 31st December 2017 | 7.5% |
1st July 2017 – 30th September 2017 | 7.5% |
1st April 2017 – 30th June 2017 | 7.6% |
Key Features of Post Office Monthly Income Scheme
The maximum limit for the amount of deposit in Post Office MIS plan is as follows:
Type of Account | Maximum Limit |
---|---|
Single Account | Rs. 4.5 Lakh |
Joint Account | Rs. 9 Lakh |
2.Maturity Period – Effective 1st December 2011, the maturity period of the scheme is 5 years (60 months) from the account opening date
Other Benefits of Post Office Monthly Income Scheme
- A minor aged 10 years or above can avail the Post Office Monthly Income Scheme Account. On turning 18 years, he or she will be asked to convert his/her minor account to an adult account
- The Post office credits proceeds directly to the investor’s post office savings account on a monthly basis by ECS/CBS
- Post Office Monthly Income Scheme accounts can continue to earn interest for up to 2 years after account maturity if proceeds are not withdrawn by the investor. The applicable rate will be the same as that of a standard Post Office savings account
- On the use of cheque for account opening, date of cheque realization will be account opening date
- No limit on the number of POMIS accounts held singly/jointly. Subject to max. cumulative balance criteria
- In case of joint account, each account holder will hold equal share
Comparing Post Office MIS with other Monthly Income Plans
POMIS | Monthly Income Mutual Fund | Monthly Income Insurance |
---|---|---|
Assured income at 6.6% annual rate | Invested in 20:80 equity-debt ratio and hence no guaranteed income | Monthly annuities (rates vary based on premiums & period) |
No TDS | TDS applied | Annuity is taxed |
Fixed return rate | Floating rate as per the market movement | NA |
Low-risk, suitable for the risk-averse | Suitable for people with high risk appetite | Double benefits of investment & insurance |
Withdrawal permitted after 12 months with penalty | Exit load applicable if withdrawn before time | Higher surrender charges as this is a long-term investment |
Limit of Rs. 4.5 lakhs per account and Rs. 9 lakhs for a shared account | No investment limit | No investment limit |