Post Office Monthly Income Scheme (POMIS) – A detailed guide

(Last Updated On: April 2, 2017)

Post Office Monthly Income Scheme (POMIS) is an investment option that ensures that the investor would receive guaranteed monthly payment based on the investment amount made. MIS is said to be one of the safest options to invest funds.

The prominent features of every MIS are:

  • Under the MIS scheme the capital invested remains intact with no risk attached for non-return.
  • Under MIS scheme the investor is to receive ensured amount of monthly return.
  • The return rates are comparatively higher than other investment schemes.

The post office monthly income scheme, commonly known as POMIS is safe and risk free investment scheme.  The POMIS is not very popular scheme in cities due to diminishing popularity of post offices.

Major demographic percentage is not properly aware of the large benefit of POMIS.

So today we will discuss about the POMIS and its features.

 Who can open the POMIS account?

  • Post Office MIS account can be opened by every individual:
    • Who is of 18 years and above
    • Is a resident citizen in India
  • POMIS can also be opened by minor (individuals who have crossed 10 years of age but have not exceeded 18 years), with a condition that the minor opens a joint MIS account clubbing with a major guardian (individual whose age is more than 18 years) .

How to Open the POMIS account?

To open a POMIS account, an individual needs to provide the below documents:

  • Copy of the address proof and identity proof (passport/PAN card/ration card/voter identity card)
  • Passport size photographs
  • AADHAR cards needs to submit to complete the KYC details form.

POMIS account can easily be opened by filling a form and depositing cash or cheque into post office.

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The post official after receiving all documents, forms, KYC details and amount will initiate the process and open a MIS account.

Every individual investor can opt to open either an individual account or a **joint account.

**Joint accounts are accounts opened by 2 or more individuals together by cumulative contribution towards the POMIS scheme.

Note: All joint account holders have equal share in each of the joint account opened.

         One can apply for converting single account into Joint and vice versa.

What should be the amount investment?

The minimum investment for each account opening is Rs.1500.

But the maximum cap on investment per individual at any given point of time is Rs.4.5 Lakh. In simple terms an individual cannot invest more than Rs.4.5 Lakh under POMIS plan.

The limit extends to Rs.9 Lakh in case of joint account investors.

Period of Investment

The POMIS operates for a lock-in period of 5 years. But the same can be withdrawn before maturity of the scheme by paying penalty.

Rate of Return

Rate of return on the POMIS plan changes every year and are defined by government on annum basis.

The rate of return provided at the beginning of the year remains fixed for a period of 12 months.

The ongoing rate of return is 7.80% for FY 2016-17 (earlier the rate of return was 8.40%).

The amount invested will earn a monthly payout interest. The amount of interest can either be en-cashed on monthly basis or allowed to accumulate in the account.

Note: The accumulated interest which is not en-cashed does not earn any interest.

Also recently an new option is introduced for the betterment of investors wherein the investors can open a recurring post office account and deposit the monthly interest amount earned.

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POMIS withdrawal Option

The amount invested under POMIS can be withdrawn pre-maturely. But there is a penalty for withdrawing or en-cashing the amount of investment before its maturity date.

There are 3 points to be noted before withdrawing any amount from POMIS scheme:

  • There cannot be any withdrawal before 1 year from the date of account opening under POMIS plan.
  • If the amount is withdrawn in between second and third year, then the investor will get his investment less 2% of penalty deduction.
  • If the amount is after the third year, then the investor will get his investment less 1% of penalty deduction.

POMIS taxation

Any investment made under the POMIS cannot be claimed as tax exemption under any section of Income Tax Act. In simple terms, no tax benefit or deductions can be availed for POMIS plan investment.

Also the interest eared under this scheme is chargeable to Tax Deducted at source (TDS)

Other prominent Features of POMIS:

  • The individual investor must nominate any individual as his or her nominee. Thus in case of unfortunate death of investor and POMIS account holder, the amount is transferred and paid back to the nominee.
  • The POMIS account can easily be transferred from one post office to other. This transfer will not cost any amount to the account holder.
  • The amount realized on maturity of POMIS plan can be re-invested in the scheme again up to the maximum cap limit. But the amount received at the time of maturity is tax-free and TDS is only charged on the interest amount earned.
  • If the amount of investment is not withdrawn at the end of 5 years and the account is operational, the amount in the account (apart from interest component) will earned interest at the rate saving account deposit for a period of 2 years.
  • An individual can open any number of POMIS accounts with the condition that amount invested does not exceed the maximum capping limit of investment norms (i.e. Rs.4.5 Lakh in case of individual account and Rs.9 Lakh in case of Joint account holder)
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The POMIS plan is 100% risk free plan of investment and is highly supported by government provisions. This plan can be opted for investors who are not looking for higher risk investment but are expecting fixed risk free returns.

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