## Features of post office monthly income scheme?

### Regular payments

Regular monthly interest payments are made to the investors.

### Low risk

Post office monthly income scheme MIS is a safe investment option. The returns are guaranteed in the form of monthly income payments. Also, it is a 0% risk investment option.

### Lock-in

The scheme comes with a lock-in period of 5 years. Also, the investors can wish to reinvest in the scheme if they want to.

### Single account and joint account

The account can be held individually or jointly by residents of India aged above ten years. A maximum of 3 adults can hold a joint account. Moreover, each joint holder will have an equal share.

### Number of accounts

There is no restriction on the number of accounts one can hold. However, there is an investment limit on cumulative balance. Cumulative maximum balance across all single accounts is INR 4.5 lakhs. For joint accounts, the cumulative balance is INR 9 lakhs.

### Minimum and maximum investment

The minimum investment limit to open a POMIS account is INR 1,500 and thereafter multiples of INR 1,500. The maximum investment limit is INR 4.5 lakhs per individual.

### Minor

A minor (above the age of 10) can open a POMIS account. The maximum amount for a minor is INR 3 lakh. At the age of 18, the minor can convert the account to an adult account.

### Premature withdrawal

Premature withdrawal is allowed after one year of opening the account with a penalty. The penalty is charged based on the time of redemption. A 1% penalty is charged for withdrawal made after three years but before five years. A 2% penalty is charged for withdrawal made before three years but after one year.

### Maturity

Upon maturity, the investor can choose to withdraw or reinvest the amount into the scheme. If the amount has not been withdrawn or reinvested, then the account can continue to earn interest up to 2 years from maturity at the Post Office Savings Account rate.

### Transferable

POMIS account is transferable from one post office to another.

### Auto withdrawal of interest

The investor can choose to withdraw the interest by automatic transfer to the savings account through Post Dated Cheque (PDC) and Electronic Clearing System (ECS).

### Tax

No TDS is deducted on the interest amount. However, interest earned on the post office MIS scheme is taxable, and the investment doesn't qualify for tax savings under section 80C.

## Interest rate for post office monthly income scheme?

Post Office Monthly Income Scheme POMIS is a guaranteed monthly income scheme. It guarantees income in the form of interest on the investment. The rate of interest for a Post Office Monthly Scheme is fixed by the Finance Ministry and the Central Government. The applicable interest rate is announced every quarter. The interest rate depends on the returns yielded by the Government Bonds of the same tenure. The current post office monthly income scheme interest rate is 6.60% (April – June 2020).

The interest payouts occur monthly. Investors can opt for the auto-transfer of withdrawals. In other words, the interest can be auto transferred to the savings account through a Post Dated Cheque (PDC) or Electronic Clearing System (ECS).

Upon maturity, investors can always reinvest the entire corpus into the same scheme. In case of no withdrawal or reinvestment, the account continues to earn interest up to two years at the Post Office Savings Account interest rate.

Additionally, no TDS is deducted for the interest earned. However, the interest earned is taxable in the hands of the investor.

## How to use Scripbox's post office monthly income scheme calculator?

Calculating the interest earned from a post office monthly income scheme is very easy. Using the formula, one can easily calculate the interest income. However, the online Post Office Monthly Income Scheme calculator also uses the same formula to determine the results.

POMIS Monthly Interest = Amount Invested * Annual Interest Rate/12

Let us understand this better with an example. Mr. Kumar invested INR 4 lakhs in the post office MIS scheme in April 2020. The prevailing interest rate for POMIS at the time his investment is 6.60%. Using the above formula, the interest rate is

POMIS Monthly Interest = 4,00,000 * 6.60%/12 = INR 2,20

Therefore the monthly interest that Mr. Kumar would get is INR 2,200. The total interest he will earn over 60 months period is INR 1,32,000.

Using the Scripbox's Post Office Monthly Income Scheme calculator, one can calculate the Monthly Interest in no time. The post office monthly income scheme MIS interest rate calculator requires the user to input the following details:

Investment Amount: It is the total corpus amount invested in the Post Office Monthly Income Scheme.

Interest Rate: The rate of interest at the time of opening the account.

Lock-in Period: It is the duration of the investment

Following are the benefits of using the post office monthly income scheme calculator:

- The post office monthly income scheme calculator is completely online. Investors can use it anytime at their convenience.
- The calculator is free to use.
- Post Office MIS calculator eliminates the scope of human error. The online calculator does the entire calculation and provides the results in seconds.

## How can a post office monthly income scheme calculator help you?

Following are the benefits of post office monthly income scheme calculator:

Determine the monthly interest: The post office monthly income scheme MIS calculator helps in determining the monthly interest one can earn if invested in POMIS.

**Financial planning: **Using the calculator, one can plan their investments. They can use the results from the post office MIS interest rate calculator to compare with other monthly income schemes. Also, by estimating their interest amount, one can plan out their budgets (incomes and expenses) effectively.

**Easy to use:** The calculator is very simple to use. All one has to do is enter their investment amount and the current interest rate. And the calculator gives the monthly interest one can earn from their investment within seconds.

**Accessible and accurate:** The calculator is fast, reliable, and available online. One can access it from anywhere.

**Saves time:** The post office monthly income scheme calculator gives results within seconds and hence saves time of the investor.

## Eligibility for an individual to open a Post Office MIS account

Post Office Monthly Income Scheme was explicitly designed for low-risk tolerance (conservative) investors. In other words, for investors who are not comfortable investing their corpus in market-linked instruments, POMIS is an excellent alternative. POMIS offers guaranteed returns as the Government of India backs it. It is one of the best monthly income plans that are available.

To open a Post Office MIS account, the following eligibility criteria need to be met:

- The account holder has to be a resident of India. NRIs cannot open and benefit from this scheme.
- An individual of or above the age of 10 years. Parents can open an account in their child's name only if the child is of the age of 10 years and above.
- The maximum investment limit that a minor can invest in POMIS is INR 3,00,000.

Also, the minimum amount for account opening is INR 15,000, and the maximum is INR 4.5 lakhs for a single holder account. The maximum investment limit for a joint account is INR 9.5 lakhs.

## How to open a POMIS account?

Opening a POMIS account is not as difficult as one imagines. It is pretty easy and hassle-free. One can open a POMIS account can only at a post office.

Before opening the POMIS account, one needs to have a Post Office Savings Account. If one already has a Post Office Savings Account, they can follow the below procedure to open a POMIS account.

Upon visiting the post office, one needs to collect and fill the application form and submit all the necessary documents.

Following are the things that one requires to open a POMIS account:

- Two Passport size photographs
- Address Proof
- Identify Proof (Aadhar Card, Voter ID, Pan Card, Ration Card, Driving License or Passport, etc.) The original copies of the proofs are necessary for verification.

### Step by Step processes of opening a POMIS account

- Visit the nearest post office.
- Get the application form and fill in all the details.
- Provide the necessary documents, complete the identity, and address proof verifications. The investor has to self-attest the documents.
- Enter the nominee details (if any). However, the nominee details can be added at a later point as well.
- Deposit the cash or cheque (minimum of INR 1,500) and open the account. If the cheque is a post-dated cheque, then the date of the account opening would be the date mentioned on the cheque.

Please note that the interest disbursement on the investment amount is one month from the account opening date.

Additionally, one needs to get signatures of a witness or a nominee(s) on the form.

## Benefits of opening a POMIS account

POMIS investment returns are not market-linked. The government backs it, hence offer guaranteed returns. POMIS is a go-to option for many conservative investors. Following are the two benefits of opening a POMIS account:

**Steady Returns:** Post Office Monthly Income Schemes offer fixed interest income. An investor earns a fixed and steady flow of income every month. The current interest rate is 6.60%. Therefore, for an investment made at this rate would earn a fixed monthly interest income.

**Reinvestment: **POMIS interest income is a good source of additional monthly income. One can collect the interest directly from the post office or transfer to their savings account. The investor can choose to reinvest the monthly income.

Reinvesting as a SIP in either equity mutual funds other asset class mutual funds would help the money grow. This reinvestment into mutual funds is suitable only when the investor understands and is willing to undertake the risk associated. Also, a post office recurring deposit is another option that one can use to invest their monthly interest.

Upon maturity, one may also choose to reinvest the corpus in the same scheme for another five years to get double benefits.

## Comparison between Post Office MIS with other Monthly Income Plans

Parameters/Plans |
Post Office Monthly Income Scheme |
Monthly Income Mutual Fund |
Monthly Income Insurance |

Annual Interest/Growth Rate | 6.60% p.a | The investment made in equity-debt instruments in the ratio of 20:80. These are market-linked. Hence historical returns around 8.3% p.a. | A retirement plan which guarantees monthly income in the form of annuities. |

Fixed Interest/Growth Rate | Guaranteed Fixed Monthly Income at the applicable interest rate. | No Guaranteed Monthly Income. Rather, dependent on the returns earned for that particular period. | Fixed and guaranteed monthly income. Income is generated from the pool of policy premiums paid throughout the tenure. |

Minimum Investment Amount | INR 15,000 | No Limit | No Limit |

Maximum Investment Amount | Single Account: INR 4.5 LakhsJoint Account: INR 9 Lakhs | No Limit | No Limit |

Income Tax Deduction | Investment amount eligible for Section 80 C deductions | The investment amount eligible for Section 80 C deductions | Investment amount is eligible for deduction under Section 80C |

Tax Deducted at Source | TDS not applicable. However, interest earned is taxable. | TDS not applicable | The monthly annuity is taxable. |

Withdrawal Conditions | Investors can withdraw after one year of investment. However, premature withdrawals have a penalty. | 1% exit load on units sold within one year of investment. | The investment tenure is long term. Surrender charges are applicable for withdrawing the amount before the policy term. |

## What are the other types of accounts that can be opened at India Post?

The other types of accounts one can open with the post office or India Post are:

- Post Office Savings Account
- Senior Citizens Savings Scheme
- Kisan Vikas Patra
- Public Provident Fund Account
- Sukanya Samriddhi Yojana
- 5-Year Post Office Recurring Deposit Account
- Post Office Time Deposit Account
- National Savings Certificate

All the above post office schemes (India Post schemes) are investment plans with varying maturity periods and lock-ins. The maturity periods are in the range of 5 years to 18 years. However, all of them guarantee returns.

The tax treatment for each of these investment plans is also different. Scripbox has online calculators for some of the above post office schemes. Namely RD calculator (Recurring Deposit Calculator), PPF calculator (Public Provident Fund), Sukanya Samriddhi Yojana Calculator, and National Savings Certificate Calculator. One can use them to determine the maturity value of their investments in any of the above schemes.

## How does a Post Office monthly income scheme calculator calculate monthly income?

Calculating the interest from post office MIS schemes is not a difficult task. Using the formula, one can easily calculate the interest income.

POMIS Monthly Interest = Amount Invested * Annual Interest Rate/12

Let's take, for example, Ms. Akhila has invested INR 4.5 lakhs at 6.60% interest. The monthly interest for her would be:

4,50,000*(0.066/12) = INR 2,475.

Hence the monthly interest is INR 2,475, and the total interest Ms. Akhila earns in 60 months would be INR 1,48,500.

## Conclusion

The post office monthly income scheme allows an investor to invest a lumpsum amount and earn a monthly income in the form of interest for five years. The interest rate for the quarter April-June 2020 is 6.6%. One can use the post office MIS calculator to calculate the monthly income from this investment.

There are other monthly income schemes in the market, like monthly income mutual funds and monthly income insurance. The investor has to first compare all these schemes and then invest in the one that best suits his/her requirements and risk tolerance.

The primary purpose of investing in a monthly income scheme is to get guaranteed monthly income with limited tax liability and least lock-ins. Invest wisely.

## Frequently Asked Questions

One can withdraw the money invested in POMIS through the post office. The investors can also directly get it credited to their savings account through ECS (Electronic Clearing System). If the amount has not been withdrawn or reinvested, then the account can continue to earn interest up to 2 years from maturity at the Post Office Savings Account rate.

There is no TDS for interest one earns in POMIS. However, investment in the post office monthly income scheme doesn't qualify for tax savings under section 80C of the Income Tax Act.

Yes, senior citizens can invest in POMIS and have a POMIS account and earn a monthly interest higher than the regular post office monthly income scheme interest rates. For senior citizens, the current rate is 7.6%.

In case of relocation from one place to the other, the POMIS account can be easily transferred to the nearest post office of the new location. For this, one needs to have the transfer application form. The transfer form is Form SB 10 (b) and will be available at any post office. One can also download this form online. Investors need to fill the form with basic details like POMIS account number, branch, bank details like bank account number, ifsc code, etc., and signatures of all the account holders. Then the passbook and the form have to be submitted. The Postal Assistant (PA) in the existing branch will give an acknowledgment slip and forward it to the post office in the new location where the investor wants to transfer the account. The same slip should be presented to the PA of the branch where the account has to be transferred. Then the investor will get the new passbook with the old balance.

At the time of withdrawal, the investor can choose to withdraw the investment or reinvest it for one more term.

Premature withdrawal in a post office monthly income scheme MIS is allowed after one year from account opening. However, a there is penalty for the same. The rate of the penalty depends on the time left until maturity.

The lock-in of post office MIS schemes is five years. However, there are premature withdrawals available with a penalty. The rate of penalty depends on the time left until the maturity of the scheme. If the premature withdrawal takes place after one year of account opening, but before three years, then the panalty is 2%. And if the premature withdrawal takes place after three years and before five years (maturity), then a 1% penalty is levied.

When opening the account, the nominee details have to be submitted along with the account holder details. In case of the death of the account holder, upon maturity, the nominee can produce the account holder's death certificate and collect the maturity amount.