Looking for a safe and reliable way to earn a regular income along with your investment? The Post Office Monthly Income Scheme (POMIS) is a government-backed option designed for people who want monthly returns. It not only offers safety but also guarantees income every month, making it a great choice for conservative investors.
Managed by India Post, this scheme allows you to deposit money and receive monthly interest. The best part? It’s backed by the Government of India, making it a low-risk investment. Here’s what you need to know about POMIS.
Who Can Open a POMIS Account?
The Post Office Monthly Income Scheme is flexible in terms of who can open an account. Here are the different options available:
- Single Account: Any adult can open a POMIS account in their own name.
- Joint Account: You can also open a joint account with up to three people. Each member of the account will have an equal share.
- Minor Accounts: Minors who are 10 years or older can open an account in their own name, with the help of a guardian if needed.
- Accounts for Unsound Mind: Guardians can open accounts on behalf of people who are unable to manage their own finances.
Investment Limits: How Much Can You Deposit?
Investing in POMIS is easy and affordable, starting at a minimum of Rs 1,000. You can invest in multiples of Rs 1,000, with a cap depending on whether you have a single or joint account.
- Single Account: The maximum investment allowed is Rs 9 lakh.
- Joint Account: For joint accounts, the maximum is Rs 15 lakh. Remember, the total investment will be divided equally among all account holders.
How Much Can You Earn?
Currently, POMIS offers an interest rate of 7.4% annually. If you invest ₹10,000, you will earn ₹62 per month as interest. This interest is paid monthly, starting one month from the date of account opening.
Here’s an example:
- Monthly Income on ₹10,000 Investment: ₹62 every month
- Interest on ₹1,00,000 Investment: ₹620 every month
The interest will continue to be paid until the account matures. You can either withdraw your interest monthly or let it accumulate for a lump sum withdrawal at a later time. However, if you delay withdrawing your interest, it won’t earn any additional interest, so it’s better to claim it monthly.
How to Withdraw Your Monthly Interest
The interest earned can be withdrawn easily. You can opt for auto-credit into your savings account in the same post office where the POMIS account is held. This ensures timely deposits of your monthly interest without the need for manual withdrawals.
Account Maturity and Early Withdrawal Rules
The Post Office Monthly Income Scheme comes with a five-year maturity period. Upon completing these five years, you can close your account by submitting a simple form along with your passbook at the post office.
Here are some key points about withdrawal:
- Before 1 Year: No withdrawals are allowed.
- After 1 Year but Before 3 Years: If you close your account between these periods, 2% of the principal amount will be deducted as a penalty.
- After 3 Years: A reduced penalty of 1% of the principal will be deducted if you withdraw after three years but before the completion of the five-year term.
In case of the account holder’s death before the maturity period, the account can be closed, and the amount will be refunded to the nominee or legal heir.
Tax on Interest Earned
Although the Post Office Monthly Income Scheme is a safe investment, it’s important to note that the interest earned is taxable. The interest amount is added to your total income and taxed according to your applicable income tax slab.
