Photo courtesy Johnny Briggs on Unsplash.
The post office has many saving plans that provide risk-free returns. There are almost 1.5 lakh post office branches in India and they are spread in every nook and corner of the country. Most of the saving schemes in the Post office are long-term investments with an attractive rate of return, better than the bank fixed deposit rates. The post office monthly income scheme is one of them.
How to open a POMIS account?
- To open a POMIS account you will have to visit the nearest post office. There is no facility for online opening. The account can be opened in a post office monthly income scheme and an investor has to submit a copy of identity proof and address proof (Pan Card, Aadhar card, passport, ration card, voter identity card) and passport size photographs. A duly completed POMIS application form has to be completed and submitted along with the required documents. A person can opt for either a single account or a joint account. The money for initial deposit in branch post office is through cheque only.
Some of the salient features of the Post Office Monthly Income Scheme (POMIS) are-
- Minimum investment amount-
An individual can invest a minimum of Rs. 1000 and in multiples of Rs 100. The minimum balance requirement is Rs 1000.
- Maximum limit for single and joint account-
A person who wishes to invest in a monthly income scheme can invest a maximum of Rs 4.5 lakh in a single account and Rs. 9 lakh in a joint account.
- Who can open an account?
The account can be opened by a single person, a joint account with up to 3 adults, a guardian on behalf of a minor, a guardian on behalf of a person with an unsound mind, and a person above 10 years of age in his own name. All the joint account holders shall have an equal share in investment in a joint account.
- Payment of interest-
The interest is payable monthly from the date of opening of the account till maturity. If the interest due is not claimed by the individual every month no additional interest will be paid.
- Auto withdrawal of Interest-
Interest can be withdrawn every month by visiting the post office or auto credit into a savings account or through ECS.
- Annual interest rate-
The annual interest rate for a post office monthly income scheme is 6.6%.
- Premature closure of account and penalty-
No deposit is allowed to be withdrawn before the completion of 1 year from the date of deposit. An account can be closed after 1 year and if it is closed before 3 years from the date of opening of the account a deduction of 2% is made from the principal amount and the balance is paid to the account holder. If the account is closed after the 3rd year and before the 5th year from the date of account opening a deduction of 1% is made from the principal amount and the balance is paid to the account holder.
- Tax rebate-
The post office monthly income scheme does not offer any tax rebate under section 80C. There is no TDS on the post office monthly income scheme, but the interest income is taxable.
The POMIS account can be transferred from one post office to the other.
- Closure of account–
The account can be closed after 5 years by submitting the required application form with the passbook.
The maturity amount received at the end of the term can be invested again in POMIS. This can be done by filling the POMIS form and submitting it 2-3 days before the expiry date for the formalities to be completed again.
The post office monthly income scheme offers you a steady return which is better than the bank fixed deposit return. For a person who does not want to take risks in the stock markets, the POMIS could turn to be a good investment choice.