Post Office Monthly Income Scheme – Opt For Regular Income
Mr. Sandeep retired last month, and has received a sum of money which he is looking to invest in a non risky product such that he receives regular income going forward. He already has investments in fixed deposits with banks and is looking for something different. Post Office Monthly Income Scheme (PO MIS) will come handy for Mr. Sandeep as it will serve twin objectives- regular income and safety. PO MIS is guaranteed by the government and hence the risk element is very low.
What is a PO MIS?
PO MIS is an investment product offered by the Post Office, with a six year lock in period, wherein investors will receive interest income every month at a fixed rate of interest and a bonus at the end of the tenure. This product is best for those looking for a steady state of income. It is like a fixed deposit providing monthly income in the form of interest.
The interest rate currently provided on this product is 8% p.a. with a bonus of 5% on the principal amount at the end of the tenure i.e. six years. On account of the bonus, the effective return on the product increases to ~8.9%.
The interest earned on PO MIS is taxable. There is not tax deducted at source and the investment is exempt from wealth tax.
You need to approach any head post office/ sub-post office, fill the prescribed form and then submit it with cash, demand draft or local cheque. The post office will open the account for you, issue you a scheme certificate and then give you a passbook to record the transactions against the MIS. The passbook will contain details such as name, address, the amount deposited and the monthly interest payable along with the date on which the deposit will be due for final payment. Interest can be received either by presenting the pass book to the post office every month or by availing of the direct credit facility to the savings account in which case, the pass book has to be presented to the post office at least once every six months for completion of entries. There is not restriction on transfer of account to any other post office.
Eligibility: Only individuals can invest in this product. A minor having attained 10 years of age can open an account in his/her own name directly. A Non Resident Indian (NRI) or Hindu Undivided Family (HUF) cannot have an investment in PO MIS
Tenure: Investment in this product will be locked in for duration of six years.
Interest payment: Interest is paid on a monthly basis one month from the date of making the investment. In case monthly interest is not claimed, additional interest is not paid for the interest not claimed.
Investment Limit: The maximum investment is Rs. 4.5 lakh in case of single account and Rs.9 lakh in case of a joint account. The minimum amount that can be invested is Rs. 1,500
Number of accounts: Any number of accounts can be opened so long as the total amount does not exceed the maximum permissible amount of Rs. 4.5 lakh in case of single holding and Rs. 9 lakh in case of joint holding.
Pre-mature closure: This can be done only one year after the investment has been made. The conditions are as under
- Closure prior to 3 years of opening the account will lead to a deduction of 2% on the principal amount i.e. the deposit, and the remainder will be paid.
- Closure post 3 years of opening the account will lead to a deduction of 1% on the principal amount, and the remainder will be paid.
E.g. Mr. Mani had an investment in a PO MIS of Rs. 1 lakhs. He decided to pre-maturely close the account at the end of 1.5 years. He would have received monthly interest for the 1.5 years the money was with the post office which totals up to Rs.12,000. He will lose out on the bonus on account of pre-mature closure and will receive Rs. Rs. 98,000 on account of the penalty of 2% instead of Rs. 1 lakh. Hence his total earnings for the 1.5 years will fall to Rs. 10,000 which in effect is a return of 6.67%.
In case of death of a depositor before maturity, the account may be closed and the deposited amount refunded to the nominee/heir along with interest up to the month preceding the month in which refund is made.
The rate of interest currently offered by banks for a similar tenure is almost a percentage point lower than that offered by PO MIS in most cases at this point. Besides, banks do not pay off the interest monthly. This makes PO MIS more attractive.
21 Responses to “Post Office Monthly Income Scheme – Opt For Regular Income”
ajay said on June 1st, 2010 at 7:13 pm
m i s
praveen kumar yadav said on June 28th, 2010 at 9:16 pm
if the monthly interest in converted into recurrinng deposit what will b the rate of interest
shwetabh said on June 29th, 2010 at 11:36 am
That becomes a compound interest.
Venkat Raghavan said on June 29th, 2010 at 8:58 pm
My son who has made an investment in MIS and the principal is maturing shortly.He has gone abroad for a training and needs to apply for closure and reinvestment. Can I scan the relevant forms and send it for his signature and authorization and he can download the forms sign it and re-mail the signed forms for submission to me. Will the post office accept such forms? Please clarify Raghavan
Shwetabh said on July 6th, 2010 at 3:37 pm
It will be better if use courier service and get the originally signed documents.
Karups said on July 6th, 2010 at 3:38 pm
POMIS is possibly one of the best product for your monthly income after retirement.
Haritha said on July 8th, 2010 at 11:01 am
I want to pay monthly some amount on my kids name. so, please suggest me the good scheme.
shwetabh said on July 8th, 2010 at 12:01 pm
You can invest in SIP, over a longer period they are very safe and give you good returns. These are goog avenues for higher education or marriage corpus building.
Vipin Kumar Jain said on July 27th, 2010 at 2:36 pm
I want to invest in MIS but i want intrest end of Lock in time.
any posibilty please sugest me. what i will do.
Gowda said on August 24th, 2010 at 11:10 am
it is correct information.
Thank you Sir,
A.V.Ramanujam said on September 21st, 2010 at 10:49 am
I wanted to avail this opportunity in investing POMIS, I have a little doubt whether the monthly interest given by the post office may be credited to the natinalised bank savings bank account if so I want to join please guide me.ding in chennai whereas my native place is Kadapa town of AP.
bhavesh solanki said on November 29th, 2010 at 11:56 am
i have an account of MIS scheme of post since 4-5 months but for my emergency requirement of money i would like to close my account, so can i close my account & if yes than what is the procedure? early response required. thanks a lot.
chetan said on February 10th, 2011 at 3:53 pm
can we avail loan aginst monthly income schem
Deepak Kadam said on March 9th, 2011 at 11:51 am
I want to open an MIS account in post office but will the monthly interest be credited to my nationalised saving account.
As also i have heard that it takes long time to credit the interest to other nationalised bank as our post office is not that techno savy.
Please mail me the detailed comments.
KL Gala said on March 22nd, 2011 at 6:42 pm
PO MIS account opened in joint account. One account holder expired before maturity of account. The second account holder contnued the account till maturity. Can the second account holder get the bonus on maturity. Can interest be paid till maturity.
Charu said on April 15th, 2011 at 12:07 pm
The interest of your post office MIS will automatically get transferred to any saving a/c. however, it is not possible to transfer it to other nationalized bank. Once, interest is credited in your post office MIS account, you can transfer it wherever you want. There are no speed issues in this.
Here, I would like to add to your benefit that to earn interest on your interest, you can open a Recurring Deposit (RD) a/c in post office.
Roshni Bhatia said on February 6th, 2012 at 1:03 am
Now, Interest @8.2% p.a. , Maturity period: 5 years and No bonus w e f 1-12-2011
s.s abdul rasheeth said on April 11th, 2012 at 2:47 pm
I want Full Details
R.Ramaswamy said on April 23rd, 2012 at 10:44 am
I have a Post Office MIS account for Rs.6,00,000/-. the account was opened in 2006 and is maturing this month. How much bonus will I get? Whereas my Passbook mentions 10% bonus, the website mentions 5%. which one is correct?
ram prasad guiya said on May 9th, 2012 at 10:37 am
my fathr has invested 600,000 in mis since2006 and renewal date was on the month of jan 2012 but due to some reason could not renewnal on dated but done on he month of may . now clear me what about the monthly income of jan 2012 to april 2012 . he will get in what rate of interest.
lakshmi said on July 7th, 2012 at 7:11 pm
what is the minimum amount of MIS for deposit and what are the benefits we can get