11 Mins

What is POMIS?

Post Office Monthly Income Scheme (POMIS) is a monthly savings scheme regulated by the Department of Post (DOP). The Central Government of India governs this savings scheme. It intends to provide a monthly income for small and medium individual investors like other post office small savings scheme. This savings scheme is a better option for investors seeking an additional regular income and a lower-risk investment option. Since the interest rate and income are fixed, predetermined, and guaranteed we can say that the POMIS saving scheme is a lower risk investment option. 

The provisions of General Rules apply to the Post Office Monthly Income Scheme in relation to the matters for which no provision is available in this Scheme. 

Features of a Post Office Monthly Income Scheme

  1. POMIS investment scheme offers a monthly interest on the deposit amount. You can either withdraw at your own convenience or opt for an automatic withdrawal and credit to your savings account. 
  2. You can make a deposit to the POMIS account in multiples of Rs 1,000 only. Hence, in a way, the minimum deposit amount is Rs 1,000.
  3. You can make a maximum deposit of Rs 4.5 lakh in a single account holder account and Rs 9 lakhs in a joint account.
  4. An individual can invest a maximum of Rs 4.5 lakhs either in a single account or through a joint account
  5. The interest rate on the POMIS investment scheme from 1st April 2020 is 6​.6​ % per annum payable monthly.
  6. The lock-in period is 5 years from the date of opening of the account.
  7. You can withdraw after the expiry of 1 year. However, every premature withdrawal attracts a fee. If you withdraw before 3 years then a 2% fee is applicable. Moreover, the fee is just 1% if you withdraw after 3 years. 
  8. The provisions of the General Rules shall, so far as may be, apply in relation to the matters for which no provision has been made in this Scheme.
  9. No TDS is applicable on the interest income. However, neither the interest income nor the deposit amount qualifies for any income tax deduction. 

Eligibility for Post Office Monthly Income Scheme

To open an account under the POMIS scheme you need to submit an application in Form-1. Only the following individuals can apply for an account under the POMIS scheme:

  1. A single adult
  2. Joint account with a maximum of up to 2 individuals
  3. A minor who has attained the age of ten years
  4. A guardian on behalf of a minor or a person of unsound mind
  5. An individual can open one or more than one single account or a joint account. However, the depositor must maintain the maximum amount of deposit for all the accounts.
  6. The share of each account holder will be one and a half if there are 2 depositors. If there are more than 2 depositors then the share will be ⅓ for each depositor in the joint account.

Deposits and Withdrawals under POMIS Scheme

  1. The minimum amount to open an account under POMIS is Rs 1,000 or any sum in multiple of one thousand rupees. 
  2. There shall be only one deposit in an account.
  3. A maximum deposit of up to Rs 4.5 lakhs is applicable for POMIS. For a joint account, the same limit is Rs 9 lakh. 
  4. A minor’s account and an account on behalf of a minor or person of unsound mind also have a maximum deposit limit of Rs 4.5 lakhs.
  5. If an individual holds more than 1 account either jointly or individually then the limits remain the same. Deposits in all the accounts taken together for an individual shall not exceed Rs 4.5 lakhs in a single account and Rs 9 lakhs in a joint account
  6. If you deposit any amount above the maximum limit then the post office account officer will refund you the excess deposit amount. 

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 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, you can add the nominee details 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 the signatures of a witness or a nominee(s) on the form.

Documents Required To Open a PO savings account

You need to submit the following documents to open a new account and complete the KYC as well:

  1. Identity Proof- Aadhaar Card, PAN, Voter ID, passport, driving license. Job card issued by NREGA signed by the State Government officer 5. Letter issued by the National Population Register containing details of name and address;
  2. Photo Identity Card issued by recognized University/ Education Board/ / College/ School, Identity card from Central/State Government or PSU.
  3. Address Proof- bank or post office passbook, passport, ration card, utility bills like electricity, telephone, etc.

Interest on Deposit under POMIS Scheme

  1. The deposit under the POMIS scheme offers a rate of interest of 6.60%
  2. The monthly Interest will be payable on the completion of a month from the date of deposit.
  3. If you do not claim or withdraw the monthly interest then such interest will not earn any additional interest.  
  4. Interest can be drawn through auto credit into savings accounts standing at the same post office, or ECS. In the case of MIS accounts at CBS Post offices, monthly interest can be credited into savings accounts standing at any CBS Post Offices.
  5. The interest income is taxable in the hand of the taxpayer under the head ‘Income from Other Sources’
  6. The interest income earned will be rounded off to the nearest rupee.
  7. The excess deposit amount shall carry interest at the rate applicable from time to time to the Post Office Savings Account. This shall be payable to such depositor on such amount. Such interest will be paid from the date of deposit of the excess amount till the end of the month preceding the month in which the deposit has been refunded.
  8. If the due date of payment of monthly interest i.e. last day of the month is a holiday or Sunday then the payment will be made on the immediately preceding business day.

Premature Withdrawal on POMIS Scheme

  1. To make a premature withdrawal you need to submit an application in Form-2 to the Post Office of India. You can either visit any nearest branch or apply online by logging into your account.
  2. Premature withdrawal or closure of account is available only after the expiry of 1 year from the date of opening of such account. 
  3. If you close before the expiry of 3 years from the date of opening the account then a fee of 2% on the deposit amount will be applicable. You will receive the remaining balance in the account.
  4. If you close after the expiry of 3 years from the date of opening the account then a fee of 1% on the deposit amount will be applicable. You will receive the remaining balance in the account.

Closure of POMIS Deposit Account on Maturity

  1. You can easily close the account at any time after the expiry of 5 years from the date of opening the account. 
  2. You need to submit an application in Form-3 along with the passbook to the Post Office of India. 
  3. On the closure of the account, you will receive the initial deposit amount along with the interest income. The interest income will be the amount accrued for the deposit period. 
  4. In the case of the death of the account holder, the nominee or legal heir will receive the amount of deposit and interest. The interest income will be up to the month preceding the month in which the refund is made. 

Types of Form for Post Office Savings Account

FormPurpose
Form-1Application for opening an account
Form-2Application for premature closure of account
Form-3Application for closure of the account

Benefits of opening a POMIS Account

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

  1. Steady Returns: Post Office Monthly Income Scheme POMIS offers fixed interest income. An investor earns a fixed and steady flow of income every month. The current interest rate is 6.60%. Therefore, an investment made at this rate would earn a fixed monthly interest income.
  2. 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.
  3. Reinvesting as a SIP in either equity mutual funds or 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.

Frequently Asked Questions

How can I withdraw money from my POMIS account after the tenure?

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.

Is there any Tax deduction at the source?

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

How can I transfer my Post Office Monthly Income Scheme account?

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. You need to present the same slip 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.

Can I get a loan from Post Office Monthly Income Scheme?

No, you cannot take a loan against your Post Office Monthly Income Scheme investments. Moreover, you cannot pledge or transfer the POMIS as security. 

Can I open a post office MIS account anywhere?

Yes, you can open a post office MIS account anywhere and at any branch of the India Post Office. Moreover, you can also transfer your post office account from one branch to another by filling an application form. 

Can I claim a tax deduction for investment under POMIS?

No, there is no tax deduction or exemption available for an investment made under the POMIS. The POMIS does not qualify for a tax deduction under section 80C of the Income Tax Act, 1961. However, no TDS will be deducted from the interest income or on the maturity of the POMIS.