What is the Post Office Monthly Income Scheme?
The Post Office Monthly Income Scheme is a scheme offered by the post office which allows an investor to make a one-time investment which earns interest over the months, which is paid as a regular income to you. You can use this investment to ensure that you and your family have a regular source of income. A key point to note is that the interest calculated on your initial investment is paid to you monthly and remains fixed throughout the term of investment. At the end of 5 years, your initial investment is paid to you.
Can NRIs Invest in POMIS?
No, NRIs are not eligible to invest in POMIS. However, POMIS can act as a great investment instrument for people living abroad with families in India who wish for their family to receive a fixed monthly income which is also automated. Since NRIs are ineligible to apply to the scheme, you can ask your family to enrol under the scheme and provide them with a lump sum amount that they can invest and receive their monthly income thereafter.
What Happens If You Become an NRI After Opening a POMIS Account?
As per the rules governing India’s National Saving Schemes, as soon as your status of residency changes from Indian to an NRI, your account is discontinued, which can no longer earn interest as per the POMIS interest rates. You can follow the following course of action in such a situation:
Ensure you notify your post office branch about the change of residency
Since your account can no longer earn interest at the same rate, it is recommended to withdraw your money and close the account.
Thereafter, you can either redirect the money into a new PMOIS account created under a resident family member's name or you can direct these funds towards investment plans for NRIs.
Key Features of Post Office Monthly Income Scheme
The key features of the Post Office Monthly Income Scheme (POMIS) are listed in the table below:
| Features |
Details |
| Launched By |
Department of Posts, Government of India (GoI) |
| PO-MIS Interest Rates for NRI/OCI/PIO |
Quarterly interest rates (decided by the Ministry of Finance, GoI): 7.4% p.a. for the April – June quarter |
| Unclaimed monthly interest does not accrue additional interest |
| Account Type |
Single Account |
| Joint Account |
| Minor Account |
| Minimum Investment Limit |
Rs. 1,000 (thereof, in multiples of Rs. 1,000) |
| Maximum Investment Limit |
For Single Account: Rs. 9 lakhs |
| For Joint Account: Rs. 15 lakhs (equal share for both individuals) |
| For Minor Account: Rs. 3 lakhs |
| Maturity Period |
Minimum 5 years |
| Monthly Income Payouts |
Your payouts will be made on a monthly basis, but not at the beginning of each month. |
| You will continue to earn interest on your investment until it matures. |
| Auto-Credit Facility |
You can receive interest through auto-credit to your savings account at the same post office or via Electronic Clearance Services (ECS). |
| You can also invest the earned interest in a Recurring Deposit (RD) account to earn more returns. |
| Nomination Facility |
Available |
| Taxation |
Interest earned from POMIS is taxed as per your income tax slab. |
| No tax deductions on your investment made in POMIS under Section 80C of the Income Tax Act, 1961 |
| No TDS will be deducted from the interest income or on the maturity of the POMIS. |
Eligibility Criteria to Invest in Post Office Monthly Income Scheme
To start investing in the Post Office Monthly Income Scheme (PO-MIS), an applicant must fulfil the following eligibility criteria:
- Citizenship and residency: The applicant must be a citizen and resident of India. The scheme is not available for NRIs.
- Minors(self-operated): Minors above the age of 10 can open and operate a POMIS account.
- Minors/Person with unsound mind: A guardian can open an account for minors or people with unsound mind.
How to Open a Post Office Monthly Income Scheme Account?
To open a PO-MIS account, an applicant can follow these steps:
Step 1: You need a Post Office savings account to enrol in this scheme. If you do not have one, open an account before enrolling in the scheme.
Step 2: Collect Form 1 from the post office. You can also download the application form directly from the official website of India Post.
Step 3: Fill the form and ensure you enter all the details correctly to avoid any delay in the enrollment. Attach copies of all the required documents with the form.
Step 4: Submit the form with your documents. Ensure you carry the original documents for verification purposes.
Step 5: Make your initial deposit to open the account.
Documents Required to Open a PO-MIS Account
Ensure you carry the following documents to open a PO-MIS account
Premature Withdrawals under Post Office Monthly Income Scheme.
The rules on premature withdrawals from the Post Office Monthly Income Scheme (PO-MIS) account are as follows:
| Conditions of Period of Withdrawals from POMIS Account |
Conditions |
| Before 1 Year of POMIS account |
No withdrawals are allowed during the first 12 months of opening your POMIS account. |
| Withdrawal between 1-3 years of opening a POMIS account |
A 2% penalty is levied on the principal amount before the withdrawal. |
| Withdrawal between 3 – 5 years of POMIS account |
A 1% penalty is levied on the principal amount before the withdrawal. |
Advantages of Post Office Monthly Income Scheme (PO-MIS)
Post Office Monthly Income Scheme offers the following advantages to the investors:
- Protection of Investment: PO-MIS, as a government-backed investment instrument, ensures that your initial investment remains safe during the term of investment. At the end of the investment period, you are paid your entire initial investment.
- Assured Returns: Your returns are generally guaranteed when you make your initial deposit. A fixed interest rate is used to calculate your monthly income, and thus your returns are assured.
- Multiple Account Ownership: A PO-MIS allows multiple people to own and operate a single account.
- Low-Risk Investment: There is no risk involved when investing in a PO-MIS account. Your initial investment, along with your returns are assured to you throughout the term of your investment.
- Affordable Deposit Amount: An investor can start investing in PO-MIS with a minimum deposit of Rs. 1,000.
- Flexible Tenure: The fixed tenure of 5 years can be extended in blocks of 5 years after the term is over.
- Easy to Open and Operate: A PO-MIS account can be opened at any post office in India.
- Tax Efficiency: The interest earned on PO-MIS is taxable, but there is no TDS deducted.
Interest Rates Offered Under the PO-MIS Scheme in the Last 5 Years
The historical interest rates offered under the PO-MIS scheme are as follows:
| Period |
PO-MID Interest Rate (in % p.a.) |
| 01 April 2020 – 30 September 2020 |
6.60% |
| 01 October 2020 – 31 March 2023 |
7.10% |
| 01 April 2023 – September 2026 |
7.40% |
Similar Investment Option for NRIs
The following table lists some investment options similar to PO-MIS for NRIs
| Investment Option |
Rate of return |
Taxation |
| Non-Residential External(NRE) Fixed Deposit |
6.5-7.35% |
Tax-free in India. No TDS is deducted |
| Non-Residential (NRO)Fixed Deposit |
6.5-7.35% |
Fully taxable. Interest is added to the taxable income. |
| Foreign Currency Non-Resident (FCNR) Deposit |
Up to 4.5% |
Tax-free in India |
| National Pension System |
Market-linked returns |
Contributions are eligible for deductions under Section 80C |
| Debt Mutual Funds |
Market-linked returns |
Gains are taxed as per your income tax slab rate. |
Conclusion
The Post Office Monthly Income Scheme is a great investment option for people who wish to have a regular income on a lump sum investment while also ensuring that their initial investment remains completely secure. You can further read about the best investment plans and create an investment portfolio best suited for you.
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