post office monthly income scheme pomis

Similar to any nationalised bank, the Post Office has been a trusted place for depositing and transacting with money. This is trusted by the elderly generation. A number of saving schemes are offered by branches of the Post Office across the country. 

Post Office Monthly Income Scheme (POMIS) is one such scheme where you invest a certain amount and earn a fixed interest every month. As the name suggests, you can invest in this from any post office. In this article, we will cover the following aspects of POMIS. 

Post Office Monthly Income Scheme

Post Office offers POMIS among a host of banking products and services, under the purview of the Finance Ministry. Hence, it is highly reliable. It is a low-risk monthly interest scheme(MIS) and generates a steady income. 

You can invest up to Rs. 9 lakh individually or Rs.15 lakh jointly, and the investment period is 5 years. Capital protection is its primary objective. The interest rate for April-June 2024 is 7.40% per annum, payable monthly.  

For instance, Mr Sharma has invested Rs.9 lakh in the post office monthly investment scheme for 5 years. As mentioned above, the interest rate is 7.40% p.a. His monthly interest will be Rs.5,550 for that period. Post-maturity, he can withdraw his deposit, Rs.9 lakh, along with the accumulated interest either from any post office or get it transferred to his savings account via Electronic Clearance Service (ECS). Alternatively, the account can be renewed.

Features & Benefits of Post Office Monthly Income Scheme

• Capital protection: Your money is safe until maturity as this is a government-backed scheme. 
• Tenure: The lock-in period for Post Office MIS is 5 years. You can withdraw the invested amount when the scheme matures or reinvest it. 
• Low-risk investment: As a fixed-income scheme, the money you invest is not subject to market risks and is quite safe. 
• Affordable deposit amount: You can start with a nominal initial investment of Rs.1,000. As per your affordability, you can invest in multiples of this amount. Keep note that the maximum limit on POMIS is Rs 9 lakhs and for jointly Rs 15 lakhs. 
• Guaranteed returns: You earn income in the form of interest every month. The returns are not inflation-beating but are higher compared to other fixed-income investments like FD. 
• Tax-efficiency: Your investment is not covered under Section 80C; TDS is not applicable either. 
• Payout: You will receive the payout one month after making the first investment, not at the beginning of every month. 
• Multiple Account Ownership: You can open more than one account in your name. But the total deposit amount cannot exceed Rs. 9 lakhs in all of them together. 
• Joint account: You can open a joint account with 2 or 3 people. In this case, an aggregate sum of up to Rs.15 lakhs can be invested in this account.
• Fund movement: The investor can move the funds to a recurring deposit (RD) account, which is a feature the Post Office has added recently. It is initiated to earn more interest and returns.
• Nominee: The investor can nominate a beneficiary (a family member) so that they can claim the benefits and corpus if the investor passes away during the account’s term. 
• Ease of money/interest transaction: You may collect the monthly interest directly from the post office or get it transferred automatically to your savings account. Reinvesting the interest in a SIP is also a lucrative option. 
• Reinvestment: You may reinvest the corpus post maturity in the same scheme for another block of 5 years to continue earning benefits.

Eligibility Criteria to Open a POMIS Account

• Only a resident Indian can open a POMIS account. 
• NRIs cannot enjoy the benefits of this scheme. 
• Any adult can open an POMIS account. 
• You can open an account on the behalf of a minor who is aged 10 years and above. They can avail the fund when they become 18 years old. 
• A minor, after attaining majority, has to apply for conversion of the account in his name.

Who Should Invest in POMIS?

POMIS has the flexibility and reliability that appeal to risk-averse investors, albeit with limited tax benefits. If you think, you belong to that category, now is the time to consider starting one. 

How to Open a POMIS Account

Opening a POMIS account is not as tedious as you think. Instead of imagining long queues and even longer paperwork, please take a look at the step-by-step procedure. 

• Open a post office savings account, if you haven’t already.
• Collect a POMIS application form from your Post Office.
• Submit the duly filled form along with a photocopy of your ID and residential proofs and 2 passport-size photos at the Post Office. Do carry the originals for verification.
• Get the signatures of your witness or nominee(s) on the form.
• Make the initial deposit via cash or cheque. In the case of a post-dated cheque, the date on the cheque will be the account opening date.
• Once the processing is done, the executive at Post Office will provide you with the details of your newly opened account.

Consequences of Early Withdrawal

Comparing Post Office MIS with other Monthly Income Plans

POMIS Interest Rate 2024

The Post Office Monthly Income Scheme (POMIS) provides interest at the rate of 7.4% per annum which is paid monthly for 2024. Below given is the table for past data on the interest rates for POMIS.

Post Office Income Scheme for Senior Citizens

For the individuals above the age of 60 years old, i.e, senior citizens can take advantage of the post office savings scheme and less worry at retirement. Post Office provides Senior Citizens Savings Scheme (SCSS) provides stable  retirement benefit while availing tax benefits under section 80C, the interest paid on SCSS is at 8.2% per annum and the minimum deposit is Rs 1,000. To understand more you can also refer our article on SCSS.