All you need to know about Post Office Monthly Income Plan?

Post Office Monthly Income Plan

The Indian Post Office Monthly Income Scheme (POMIS) is a popular savings scheme offered by the India Post, the country's postal department. It is designed to provide a regular and guaranteed monthly income to investors, particularly retirees and those seeking a fixed-income investment option. Here's everything you need to know about the Indian Post Office Monthly Income Scheme (POMIS):

Key Features of POMIS:

1. Eligibility:

POMIS is open to individual investors and can be opened as a single or joint account. It is not available to Hindu Undivided Families (HUFs) or non-individual entities.

2. Investment Limit:

The minimum investment amount for a POMIS account is Rs. 1,500, and the maximum limit for a single account is Rs. 4.5 lakh. For a joint account (up to three adults), the maximum limit is Rs. 9 lakh.

3. Interest Rate:

 The interest rate on POMIS is determined by the government and is subject to change from time to time. It is typically higher than the interest rates offered by most banks for fixed deposits. The interest rate is paid monthly.

4. Tenure:

POMIS has a fixed tenure of 5 years.

5. Interest Payment: 

The interest earned on your POMIS account is paid out monthly. This can provide a regular source of income for investors.

6. Taxation: 

The interest income earned from POMIS is taxable. However, there is no tax deduction at source (TDS) for the interest payments.

7. Nomination:

Investors can nominate a beneficiary to receive the investment amount in case of the investor's demise.

8. Transferability:

POMIS accounts can be transferred from one post office to another anywhere in India.

9. Premature Withdrawal:

 While the scheme has a 5-year tenure, premature withdrawal is allowed after one year but before 3 years, subject to certain conditions. The premature withdrawal penalty may apply.

Pros of POMIS:

- Guaranteed monthly income.

- Investment safety as it is backed by the government.

- No market-related risks as with investments in stocks or mutual funds.

- Option to receive interest through automatic credit to a savings account.

- Relatively higher interest rates compared to regular savings accounts.

Cons of POMIS:

- Taxation of interest income.

- Limited investment tenure (5 years).

- Investment amount capped at Rs. 4.5 lakh (single account) or Rs. 9 lakh (joint account).

- Premature withdrawal restrictions and penalties.

- Interest rates are subject to change with government policies.

POMIS can be a suitable investment option for individuals looking for a safe and regular income source. However, it's important to consider your financial goals and taxation implications before investing. Additionally, you may want to explore other investment options like fixed deposits, post office time deposits, and mutual funds to diversify your portfolio and potentially earn better returns.