What is POMIS?
POMIS stands for Post Office Monthly Income Scheme. This scheme was launched in India in 1987. The Government of India introduced this scheme to provide regular income to Indian resident citizens every month. This scheme is one of the best choices for the investors who are not willing to take the risk and want to receive regular monthly income with less capital of 4.50 lakhs. The Capital invested in this scheme is completely safe and guaranteed by the government.
Who can open?
Only Indian residents are eligible for MIS with a maximum investment of 4.50 lakhs.
A resident can open any number of accounts subject to a maximum investment limit by adding the investments in all his/her accounts.
A joint account can also be opened and all the joint account holders share an equal share of the invested amount. In the Joint Account, the Maximum Investment Limit is 9 lakhs.
Parents or legal guardians can also open on behalf of a minor.
NRI’s & HUF’s are not eligible for this scheme.
If the depositor’s status changed to NRI during the currency of the account, the account shall be discontinued.
Where can it be opened?
One can open a MIS account in any post office.
While opening the account, a passbook will be given with investors and nominee details.
The depositor has to indicate a nominee for the MIS account. In an unfortunate event of death of the depositor, the nominee will receive the payments.
In case of Joint account, Joint holders is eligible to make changes in the nomination after the death of the one joint holder.
How long has to Invest :
The Investor has to remain invested in this account for 5 years
The Scheme does not have any auto Extension. Again you can review your financial status and can re-invest if necessary.
How Risk-Free it is :
Since it is sponsored by the Government of India, It provides Capital protection and regular income to the investor. This is more suitable for the people who don’t want to take any risk in their Financial planning.
The Current Interest rate is 7.6%. The Interest is paid to the depositor every month. The interest rates have been reviewed by the finance ministry every quarter.
The below graph shows the historic rates of Interest for this scheme
The FD works on simple interest and not in compound interest. The interest payout on 1st working day of the month.
Interest credited into the account will not earn any additional interest.
Income Tax Benefits:
One cannot have any Tax deduction under Section 80C of the Income Tax Act,1961.
The Interest received is Taxable.
No TDS applies to the interest earned. However, the depositor has to declare it while filing Income Tax under “Income from Other Sources”.
Investment payments / Deposits:
The payment mode shall be in cash if the deposit is below one lakh rupees.
More than one lakh rupees, It should be in the form of Cheque or Demand Draft(DD).
The minimum deposit is Rs.1000 or in multiples of 1000 and Maximum investment can be 4.5 lakhs. However, the deposit should be a lump sum single time investment.
The scheme allows premature closure at any time due to the death of a depositor without any penalty charges.
Also, the scheme does not allow during the first year of completion.
However, after one year but before the completion of 3rd year, allows premature closure with a penalty charge of 2% of the deposit.
Similarly, after 3 years of completion, premature closure shall be availed with a penalty charge of 1% of the deposit.
The Scheme does not have partial withdrawal.
The portability of the account from one deposit office to another is available.
No Loan Facility is available.
Example / Illustration
So for the peoples who want an alternate option to park their money safely without any risk, this is the best option to lock in their 4.5 lakhs or 9 lakhs jointly and get monthly returns with the Capital protection.
I will explain “How to maximize the return in MIS” by combining this in RD in a separate post later.
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