Post Office Monthly Income Scheme (POMIS)

1. MIS keeps the capital intact.
2. It ensures that the customer receives a fixed monthly income.
3. It yields better returns than instruments that are debt-based.

Budget 2023-24: For a single account, the maximum deposit limit for the monthly savings scheme is increased from Rs.4.5 lakh to Rs.9 lakh. On the other hand, in case of joint account, maximum deposit limit is enhanced from Rs.9 lakh to Rs.15 lakh.

The Post Office is one of the trusted places to invest money. In fact, most of the elderly people prefer depositing money in the Post Office. Throughout the nation, Post Office offices provide a variety of savings plans.

PAN and Aadhaar Mandatory for POMIS

Here are the details regarding necessity of PAN and Aadhar for POMIS:

1. To open a new POMIS account, Aadhaar number and PAN has been made mandatory by the Ministry of Finance. proof of application of enrollment for Aadhaar card or enrollment ID must be provided by the account holder and the Aadhar number should be provided within six months of opening the account, in case they are not assigned an Aadhaar yet

1. Aadhar should be provided within a period of six months with effect from 1 April 2023, in case you are an existing accountholder and have not submitted the Aadhar number

1.  PAN should be submitted within two months of account opening under following circumstances:

o If account balance exceeds Rs.50,000

o In any financial year, the aggregate credit in the account is more than Rs.1 lakh

o In a month, the aggregate of all withdrawals and transfers from the account is more than Rs.10,000

Post Office Monthly Income Scheme Current Rate of Interest

The rate of interest offered on the Post Office Monthly Scheme is fixed by the Central government and finance ministry. The current rate of interest offered is 7.40%. This rate of interest is effective from 1 April 2023 onwards.

Key Features of Post Office Monthly Income Scheme

Key Features of Post Office Monthly Income Scheme

1. Lock-in period: On opening a Post Office Monthly Income Scheme, there will be a lock-in period of 5 years during which you cannot withdraw any money.

1. Maximum limit: If you open an MIS scheme individually, then the maximum amount you can invest is Rs.4.5 lakh. If the account is opened jointly, the investment limit will be Rs.9 lakh

1. Scheme is transferable: In case you move from one city to another, you can transfer your scheme to the post office in the city in which you are going to reside.Joint account: A total of three people can open a joint account where the maximum investment limit is Rs.9 lakh.
2. Minor account: You can open an MIS account in the name of a minor aged over 10 years. The minor can withdraw the amount from the account once they turn 18 years.
3. Every Indian is allowed to invest in this scheme: If you are a citizen of India, then you can invest in MIS.
4. Auto-withdrawal: You can choose the auto-withdrawal option where the monthly interest amount will be transferred to your bank account.
5. Penalty: If you choose to withdraw the investment amount before the lock-in period, you can do so by paying a penalty.
6. Investment amount: You can make a deposit of a minimum of Rs.1,000.
7. Tax benefits: There are no tax benefits that you can avail yourself of from investing in this scheme.
8. Nomination facility: Accountholders can add members as nominees after opening an account who can later claim the benefits after the demise of the account holder.

1. Maturity period: The maturity period is five years from the date of account opening on 1 December 2011.

1. POMIS bonus: The scheme does not offer any bonus to the account opened after 1 December 2011 (early bonus was offered at 5.00%).

1. Reinvestment: The corpus can be reinvestment post maturity into the same scheme for another five years.

1. Interest transaction: Transacting the interest amount is simple and easy as it can be either withdrawn by visiting the post office physically or can be received in your savings account.
2. Fund movement: This scheme allows the investors to move their funds to other investment schemes offered by the post office, such as recurring deposits.

1. Guaranteed returns: The return is higher than other fixed-income investments like fixed deposits. Though they are not inflation-beating, they provide interest as income every month.

1. Low-risk investment: The deposit amount is not market related and hence investment into this scheme is safe.

Benefits of POMIS

Some of the benefits of the Post Office Monthly Income Scheme are:

1. The date of account opening is date of cheque realization

1. Joint accountholders hold equal share

1. No upper limit for the number of POMIS account held singly or jointly and is subject to maximum cumulative balance criteria

1. Minor of 10 years of age can open the account by any adult and fund can be managed by the minor on attaining 18 years of age

1. The Post office credits proceeds is received on a monthly basis by ECS/CBS in the investor’s post office savings account

1. Interest up to 2.00% can be earned even after maturity of the account, if the fund is not withdrawn

Eligibility for POMIS

The following is the list of eligibility of POMIS:

1. Must be Indian resident

1. Adults can only open this account

1.  Account can be opened on behalf of minor of age 10 years or above

1. The fund can be availed by the minor once they attain 18 years of age

1. After attaining the age, the minor need to apply for change of name in the account

1. The account type allowed is single and joint (two to three holders) with maximum investment limit of Rs.9 lakh and Rs.15 lakh, respectively.

Documents Required to Open POMIS

The following is the list of documents required to open Post Office Monthly Income Scheme:

1. Passport sixed photographs

1. Government issued ID or recent utility bills as proof of address

1. Voter ID card, passport, driving license, Aadhaar, etc., as identity proof

How Post Office Monthly Income Scheme Works

The process of investing in POMIS can be done easily and requires minimal documentation. The investor will be required to submit a copy of his/her identity proof, an address proof, and some passport size photographs. The ID proof can be the passport, ration card, PAN card, or voter identity card.

At the beginning, the customer is required to open an account, either on an individual basis or as a joint account. The table below shows the minimum and maximum funds that can be invested in the post office monthly income scheme:

Let us analyse the investment process in MIS through an example:

Suppose Mr. X invests Rs.1 lakh in the scheme, with a maturity period of 5 years. At the annual interest rate of 6.6%, he will receive a fixed monthly payout of Rs.550. At the end of the investment term, i.e., 5 years, he will get back the amount he deposited. In this case, Mr. X will receive an amount of Rs.33,000 at the end of the deposit tenure. This money can be withdrawn in two modes, i.e., he can either receive it directly from the post office or as a credit in his savings account through ECS. This amount can be withdrawn on a monthly basis; however, if desired by the customer, he can allow it to accumulate over a period of few months and then withdraw the accrued amount. The latter option is not very lucrative, as the accumulated funds do not earn any interests.

A new feature has now been added to POMIS in order to make if more effective, in terms of returns. The customer can associate the account with a recurring deposit. Hence, the interest earned on the scheme can be invested in the recurring deposit on a monthly frequency. This is a great way to let your money grow, while still staying invested in the scheme.

How to Open a POMIS Account: Step-by-Step Guide

It is very convenient and easy to open a POMIS account because you don’t have to stand in long queues to complete the procedure. Moreover, there is less paperwork involved in this process. Let us have a look at the steps given below to open a POMIS account:

1. Firstly, you need to open a post office savings account.
2. Next, visit your nearest post office and collect a POMIS application from the counter.
3. Fill in all the required details on the POMIS application form. 
4. Submit the duly filled application by enclosing the scanned copies of your identity proofs, residential proofs, as well as two passport size photographs at the post office. 
5. Ensure to carry your original documents for verification.
6. Get the signature of your nominee done on the application form.
7. You have to make the initial deposit through cash or cheque.
8. Finally, the post office executive will issue you the details of your POMIS account.

POMIS Early Withdrawal Penalty

If you choose to withdraw the investment corpus before the end of the lock-in period, then a penalty is levied. The penalty you will incur is:

1.  Before the completion of one year: No benefits

1.  Between 1 year and 3 years: Penalty of 2% after the entire amount is refunded.
2.  Between 4 years and 5 years: Penalty of 1% after the entire amount is refunded.

POMIS vs Other Income Plans

Here is the list of difference between POMIS with other income plans:

1. POMIS vs NSC (National Savings Certificate) vs Bank FD (Fixed Deposit)

1. Difference between POMIS, Mutual Fund Monthly Income Plan, and Insurance Monthly income plan: