The Post Office Monthly Income Scheme (POMIS) is a less risky investment plan that extends regular returns. Thus, is very well suitable for those conventional investors and senior citizens as the investment begins with minimal and affordable amounts. It starts with a minimal amount of Rs 1000.
Post Office Monthly Income Scheme is one of the recommended investment options in India these days, as it is a government-backed project, and so the amounts invested are safeguarded by the government until its maturity. This scheme is seen as a fixed income scheme and is a low-risk investment. The funds deposited are not subject to market uncertainties and remain secure.
Investors can begin by funding as much as Rs 1,000 in monthly income scheme, and the amount steadily compounds over a period. The Post Office investment is issued with a lock-in term of 5 years, wherein the invested sum can be withdrawn or re-invested after maturity. As per the Post Office monthly income scheme, investors can invest up to Rs 4.5 lakh individually and Rs 9 lakh jointly. As the investment pattern begins, one can receive the payout from the investment starting from the first month which will be credited at the end of every month.
In this scheme, investors are backed with guaranteed interest returns at the end of every month. The prevailing interest rate set by the MIS is 6.6% per annum from 1 April 2020. Analysts notes this scheme is to offer higher interest as compared to other fixed-income investments including bank fixed deposits. But the returns from the MIS investments are not equipped to surpass inflation.
Investors can start more than one account in their name, but the entire deposit amount is capped at a maximum limit of Rs 4.5 lakh collectively in all of the accounts. Depositors can also open a joint account with up to three people, and the account shall belong to all account holders equally, irrespective of who is making the contribution. An account can also be opened in the name of a minor aged 10 or above, who will be able to access the funds after reaching 18 years of age. The total investment, in the case of a minor, is capped with a total of Rs 3 lakh.
A major detail to be heeded is that the investment under this scheme does not fall under section 80C, and therefore income is subjected to taxation, but no TDS.