Post Office Monthly Income Scheme: Interest Rate, Features and Benefits

Have you ever wondered about the days when communicating with your loved ones wasn’t that easy? In the earlier times, it was not as simple as just typing messages and sending it via WhatsApp in a single click; it was rather a lengthy task.

Your elders must have told you about their old days of visiting post offices, having postcards, and dropping letters in the letterbox, right?

But, as time passed, this integral part of communication somehow started disappearing, and as mentioned above, other technological innovations like phone calls, SMS, WhatsApp, etc. took their place. This is the reason why post offices around us have also somehow reduced in numbers. 

However, the post offices have just reduced in number; they have not completely disappeared. The reason being the wide variety of schemes such as Post Office Savings Account, Post Office Recurring Deposit, Post Office Time Deposit, offered by the post offices which are beneficial at the depositor’s end. 

As they have government backing, Post offices are highly reliable with utmost safety and security. Such schemes are usually opted for by retirees and elderly people. These schemes offer a fixed return on investment and are all strung with the advantage of the sovereign guarantee. 

One such scheme is the post office monthly income scheme. Read on to know more about the Post Office Monthly Income Scheme. 

What is the Post Office Monthly Income Scheme?

The Post Office Monthly Income Scheme (POMIS) is a small savings scheme that is backed up by the ministry of finance of the government of India. This scheme allows the investor or the depositor to save or set aside a specific amount on a monthly basis. 

Thereafter, interest is calculated and added to this investment at a favourable rate and paid out to the depositor or the investor on a monthly basis. With an interest rate of 7.6%, the post office monthly income scheme is one of the highest-earning schemes. 

Features of the Post Office Monthly Income Scheme

 A list of some of the features of the POMIS is given below:

1. Maximum limit: A maximum investment of Rs. 4.5 Lakh could be made by you in the POMIS scheme. Even if you hold this scheme in more than one post office, even then, the total of all your deposits cannot exceed this limit of Rs. 4.5 Lakhs.

Even in case of a joint account, the amount of your investment should be within the stipulated limit. The upper limit for the minor accounts is Rs. 3 Lakh and the lower limit of the amount which can be invested is Rs. 1,500 for any individual. 

2. Lock-in period: When you open a Monthly Income Scheme account with a post office, you cannot revoke the amount deposited before the lock-in period of 5 years.

3. Eligible residential status: Talking of the eligibility under the residential status, every Indian citizen can open a POMIS account. However, this scheme cannot be availed by the Non-resident Indians(NRIs).

4. Joint account: A joint account could also be opened under this scheme with a maximum of 3 individuals. In such cases of joint accounts, each investor under POMIS possesses equal rights over the account held. The upper limit in case of joint accounts is Rs. 9 Lakh; however, the singular limit is Rs. 4.5 Lakh.

5. Minor account: A minor POMIS account could also be opened by you but in the name of your child. The age limit for the minor Post Office Monthly Income Scheme is above 10 years. The amount of this account can be withdrawn when the account holder turns 18 years old.

6. Investment amount: Any amount in the multiples of Rs. 100 is valid as an investment under the post office monthly income scheme.

7. Tax benefits: The interest amount does not incur any Tax Deducted at Source (TDS). However, it also does not attract any tax benefits under Section 80C. 

Benefits of the POMIS

The Post Office Monthly Income Scheme is widely opted by the masses. It is not a market-linked investment scheme. However, it is backed by the government and considered as a reliable investment scheme. Apart from this, there are two major advantages of POMIS that attract investors or depositors towards it. These are:

• Reinvestments: The great benefit of POMIS is that you could choose to further invest the interest earned by you into high-profit generating securities such as equity shares, equity funds. But, it is important to remember that these investment options also encompass much higher risks.
  
  Hybrid funds which comprise of both equity funds, as well as fixed income instruments, are an achievable option to engage in stock markets, formulate a distinct investment portfolio, attain comparatively higher returns and also come with lower risk as compared to equity shares and funds. 
  
  If you wish, you could also reinvest the funds into the Post Office Recurring Deposit, which is a recent feature that has been recently by the Post Office.
• Constant returns: The best thing about the post office monthly income scheme is that here you would reap a continuous flow of income every month on your investment corpus, irrespective of market variations. As it was also mentioned above, an interest rate of 7.6% p.a. is remedied by the post office.

What is the procedure of opening an account under POMIS?

Opening an account with the monthly income scheme is very easy and not at all rocket science. However, you must have a post office savings account to avail the benefits of this scheme. 

Once you have opened an account with the post office, you can go with the following procedure to continue with your POMIS account:

Step 1- From your nearest post office, procure a POMIS Form.

Step 2-  After filling it, submit the POMIS form along with the necessary documents.

Step 3- Submit the original documents for verification purposes.

Step 4- Lastly, collate the signatures from beneficiaries and witnesses.

Through a post-dated cheque, you can invest the capital amount. The date that is cited on the cheque will be assumed as the account opening date. The interest received on the investment will be expended one month from the opening date of the POMIS account. 

What documentation is required for a POMIS account?

As mentioned above, while submitting the application form of the POMIS account, you will need to submit the following documents:

Identity Proof: For identity proof, you need to give any of the identity cards that have been issued by the government of India. These are Passport /PAN card/ Voter ID card / Driving License/Aadhaar, etc.

Address Proof: For the address proof, you need to submit any recent utility bills or any of the government-issued ids (Aadhar card, voter id, etc.). 

Last but not least, you are also required to submit your passport size photograph.

Post Office Monthly Income Scheme Vs Other Saving Schemes

Conclusion

Today’s world is not about keeping money in the vault; rather it’s about making such adjustments in your financial planning that it doubles your income in every possible way. The Post Office Monthly Income Scheme is yet another attempt by the government which seeks to make the masses more financially stable and gives them another option to safeguard and invest their money with utmost safety and trustworthiness. 

If you are someone who is not entirely satisfied with their regular income and seeks to earn more with less risk, then the post office monthly income scheme can be an ideal investment scheme for you. 

Even for the future, the Post Office Monthly Income Scheme helps you in gaining the required confidence to not just stay on the shallow, safer side of the pool, but to explore the deeper waters and develop interests into bigger and better investment options, by getting better prepared for higher risks which in turn, result in much higher returns.