With rising inflation, saving money is more important than ever. There are various saving schemes out there, but the ones backed by the government are the safest. Post Office Monthly Income Scheme (POMIS) is one such government-backed investment vehicle that we’re going to discuss in detail.
What is Post Office Monthly Income Scheme (POMIS)?
Available at all post offices across India, POMIS is a small savings scheme that promises individual monthly income. It is usually meant for those people who have a low-risk appetite. In POMIS, the account holder invests a certain sum of money for a specific period of time. In return, he/she receives monthly income, along with some interest.
For the quarter that ended on 30th June 2020, the interest rate generated by the POMIS was 6.6% per annum, payable monthly. That makes it one of the highest-earning saving schemes offered by the post office. The other great thing about the POMIS is that your money is absolutely safe since the scheme is backed by the government itself.
How to apply for Post Office Monthly Income Scheme?
Initially, it wasn’t easy to get anything done at post offices. It has changed, though, with everything more streamlined and efficient. The process to apply for POMIS is also easy, requiring minimum time and paperwork. Follow these steps if you’re interested in POMIS:
- Open a post office savings account. Ignore if you already have one.
- Grab an application form from your nearest post office. You can also get it online.
- Carefully fill in the required details, such as your name, date of birth (DOB), and mobile number of the nominees. Once you’ve done that, submit the form, along with self-attested copies of all the required documents to the post office.
- Remember to carry the original documents during the verification process.
- Make the initial deposit. The minimum amount is fixed at ₹1500. You can pay via cash or cheque only.
Current Interest Rate on Post Office Monthly Income Scheme (POMIS)
The Central Government and the Ministry of Finance shall fix and relocate the Rate of Interest each quarter in accordance with the income earned by government bonds of the same term. POMIS’s interest rate for financial year 2020-21 is 6.60 percent. The previous years Post Office MIS Interest Rates are as follows:
|Period||Interest Rate on Post Office MIS|
|01-04-2020 – 30-09-2020||5.80%|
|01-07-2019 – 31-03-2020||7.20%|
|01-10-2018 – 30-06-2019||7.30%|
|01-01-2018 – 30-09-2018||6.90%|
|01-07-2017 – 31-12-2017||7.10%|
|01-04-2017 – 30-06-2017||7.20%|
|01-10-2016 – 31-03-2017||7.30%|
|01-04-2016 – 30-09-2016||7.40%|
|01-04-2014 – 31-03-2016||8.40%|
|01-04-2013 – 31-03-2014||8.30%|
Key Documents required for POMIS:
- Passport size photographs
- Proof of Identity
- Aadhaar Card (UID)
- PAN Card
- Driving License
- Voter ID
- Other recognized ID issued by the government
- Proof of Address
- Aadhaar Card (UID)
- Voter ID
- Ration Card
- Driving License
- Lease Agreement
- Telephone/Electricity/Water Bill
- Other recognized document issued by the government
Key Benefits of POMIS:
- Nomination facility
POMIS allows you to pick a nominee, who will benefit from the proceedings of the scheme in case of your (account holder) untimely death and you can also update the nominee in the future.
- Freedom to pick your investment amount
You can invest in a POMIS with whatever amount you want. It should, however, not be less than ₹1500 or more than ₹4.5 lakhs for a single account.
- Multiple account holders
The POMIS also allows multiple people to hold an account together. There can be up to three account holders, which is unheard of in other financial tools.
- Low-risk scheme
There are no risks associated with a POMIS. The money that you invest is completely safe and won’t be eroded. The scheme is backed by the government of India, which in itself is enough reason to invest in the scheme.
- Minors can invest too
What makes the POMIS even more attractive is that you can invest on behalf of minors as well. The minor should, however, be over the age of 10.
The eligibility criteria listed below must be passed before the opening of the post office MIS scheme.
- It can only be opened by a resident Indian. This scheme does not apply to non-resident Indians.
- A POMIS account can be available to minors under 10 years old or older. However, on behalf of a minor applicant, their parents/guardians are required to open the account. When the account holder hits the age of 18, the account will be transferred.
Who should consider investing in POMIS?
The decision to invest in any scheme is based on the investors’ financial objectives. POMIS is recommended for those with the following financial goals:
- Individuals looking for a consistent source of income.
- Individuals with a low-risk appetite.
- Individuals looking to make a one-time investment.
- Individuals who are able to make long-term investments.
Early Cancellation of POMIS:
Under the following terms and conditions, premature withdrawal and closure of POMIS before maturity period (5 years) shall be allowed:
- If you withdraw your money within 1 year after opening your account, you will get no benefit.
- If you withdraw your money between 1 to 3 years after opening your account, after a 2% penalty your whole deposit is refunded.
- If you withdraw your money between 3 to 5 years after opening your account, after a 1% penalty your whole deposit is refunded.
Post Office Monthly Income Scheme Vs Other Saving Schemes:
|Savings Scheme||Duration||Rate of Interest||TDS|
|Post Office Monthly Income Scheme||5 years||6.60%||No TDS is deducted|
|Post Office Recurring Deposit||5 years||5.80%||No TDS is deducted|
|Post Office Time Deposit (1,2,3 years)||1-3 years||5.50%||No TDS is deducted|
|Post Office Time Deposit (5 years)||5 years||5.50%||TDS is deducted|
|National Savings Certificate||5 years||6.80%||TDS is deducted|
|Senior Citizen Savings Scheme||5 years||7.40%||TDS is deducted|
|Public Provident Fund||15 years||7.10%||TDS is deducted|
Frequently Asked Questions (FAQs):
Q. How do I withdraw my money out of my POMIS account at the end of the term?
Ans: At end of the term, you can withdraw money from the post office from your POMIS account or the payment is made through ECS. The money can be transferred to the CBS post office if you have a CBS savings account.
Q: Is it possible to transfer my POMIS account?
Ans: Yes, you can transfer your account completely free of charge from one post office to another.
Q: Can I reinvest the money I’ve accumulated in POMIS?
Ans: Yes, you can. This is one of the scheme’s best functions. It helps investors to reinvest the money they have accumulated at the end of the term.
Q: Is there a TDS (Tax deduction at source)?
Ans: No, there isn’t any TDS (Tax Deduction at Source). However, the interest you receive is taxable.
Q: Does the POMIS scheme provide a tax rebate?
Ans: No, under Section 80C of the Income Tax Act of 1961, POMIS does not have any tax benefits.
Q. How could I obtain a POMIS withdrawal form?
Ans: You can get to the POMIS withdrawal form in one of two ways.
- Straight from the post office.
- By going to the Indian Post Office’s official website.
Q: Can a senior citizen invest in the POMIS scheme as well?
Ans: Yes, in reality, POMIS is best suited to senior citizens and retirees.
Q: What if an individual does not withdraw the funds after 5 years?
Ans: If an individual does not withdraw the money after 5 years, he will continue to receive basic interest for up to 2 years (as per the post office savings account interest rate).