Post Office Monthly Income Scheme – POMIS

If you are planning to invest your money in safe hands with a good handful returns then you should consider the Post Office Monthly Invest Scheme (POMIS). This scheme is not too popular as, it is hardly used in the urban areas of the country. But this monthly investor scheme offered by the Postal Office provides quite interesting benefits to its customers or the investors. People may not be knowing this fact that, Post Office is considered as one of the largest banking service providers in the country. Since it is governed by the Ministry of Finance, it is also associated with a greater credibility than the other Income avenues.

Post Office Monthly Income Scheme(POMIS)

The Post Office Monthly Income Scheme is a six-year savings scheme that is offered by the designated Post- Offices. It offers guaranteed monthly returns on the deposits. The account can be either opened singly or jointly. It holds a minimum investment of Rs 1500 along with a return interest rate of 7.7% Per Annum. These returns can be availed as fixed monthly income. This Income Scheme is very much beneficial for the investors as it provides the three main benefits:

• The POMIS keeps the capital intact.
• It ensures that the customers receives a fixed monthly income.
• It yields better income than the instruments that are debt-based.

Key Features of Post Office Monthly Income Scheme (POMIS)

The maturity period of the Investment Scheme is for 5 years. Thus, the customer has to withdraw the respected amount only after the duration. At the end of the term, the customer will receive all the funds that were invested in the scheme. The investor will also receive the benefit in addition of the fixed monthly income for the complete duration.

If the customer withdraws the funds before the term of 5 years then, the following benefits will be implemented:

• If the deposit is withdrawal within 1 year then the customer receives no benefits.
• If the deposit is withdrawal within 1 and 3 years then the customer will receive the entire deposit after a nominal deduction of 2% as a penalty.
• If the fund is withdrawal after 3 years then the customer receives the entire deposit after a nominal deduction of 1% penalty.

Other Significant Features of this Scheme are as Follows

• It is a risk-free investment scheme.
• The customer has the right choose another nominee to receive the benefits and the funds in the event of his/her unfortunate death.
• The scheme also provides the option of a recurring deposit into which the funds can be moved.
• The minors can also invest in this scheme.
• The POMIS account can be transferred from one post office to another. No fees is charged for this activity.
• For every deposit the customer makes, creates a separate account. The basic advantage of this feature is that the customer has the ability to open several number of accounts up to a maximum possible account balance of 4.5 Lakhs. This is the total amount that can be invested by the customer, including his/her share in all the Joint Accounts.
• The maturity amount that is received at the end of the investment term can be reinvested in POMIS.
• There is no Tax Deduction at Source (TDS. However, the interests earned through this scheme is taxable.
• The amount invested in the POMIS is not eligible for the tax rebates under the Section 80C of the Income Tax Act 1961.
• The account can be opened by cash or cheque. In case the customer chooses to provide initial payment through a cheque, the date of the realization of the cheque in the Government account will be the date of the opening of the customer’s account.
• A joint account can be opened by two or three adults. All the account holders in the joint account have equal share. A single account can be converted to a joint account, if needed. The reverse is also possible.

How Post Office Monthly Income Scheme Works?

The process of the POMIS is quite easy and it requires a minimal documentation. The investor has to submit a copy of his/her proof of identity, an address proof and passport size photographs. The ID Prof can be a Passport, Ration Card, PAN Card or a Voter ID Card.

Firstly, the customer has to open an account. It can be an individual account or a joint account. The table below shows the maximum and minimum funds that can be invested in the post office monthly scheme.

A new feature has also been added to the POMIS in order to make the income scheme more effective in terms of returns. The customer can associate the account with a recurring deposit. Hence, the interest earned on this scheme can be invested in the recurring deposit on a monthly frequency.

Eligibility Conditions for the Post Office Monthly Income Scheme (POMIS)

The eligibility conditions for the Post Office Monthly Income Scheme:

• The only prerequisite to be able to invest in this scheme is that the customer should be a citizen of India. They should be a resident of India.
• The minimum age limit for this income scheme is 10 years.
• The maximum amount that a minor can invest in the POMIS is Rs 3,00,000

Important Things to Note on Post Office Monthly Income Scheme (POMIS)

• If in case the applicant invests more amount than the prescribed limit then, he/she has to immediately withdraw the extra amount. For the time period between the deposit and the deposit of the excess amount and the withdrawal, the investor will be paid only the Post Office Savings Account Interest rate for the excess amount.
• If the amount is not withdrawn after 5 years then, it earns a simple interest of 2% and the final amount is kept idle.
• The customer can assign a Nominee at the time of the initial investment or during the term of the scheme. In case the depositor wants to nominate after the account is nominated then he/she will be required to submit an application to the required Post Office.
• If in case the depositor dies, then the nominee of the investor must close the account. He/she is not allowed to continue investing in the account. The amount that has been deposited earlier along with the interest will be paid to the Nominee.
• The different ways of availing Interest amount are:
  • The interest is credited automatically to the savings account.
  • The depositor can request for an interest withdrawal every month. The investor can receive the amount either through cash or cheque.
  • You can also avail the interests through Post-Dated Cheque.
• If in case the interest payout date is on a Postal holiday then, the interest will be credited immediately on the preceding working day.
• There are basically no bonuses paid at the time of the Maturity. However, if the accounts are opened in between 8^th of December to 30^th of November 2011, then they can receive a 5% bonus of Maturity.
• The amount that is invested in the Post Office Monthly Income Scheme is exempted from the wealth tax. A GST of 18% is applicable on the Life Insurance effected from 1^st of July 2017.

Hence these are the complete information regarding the POMIS – Post Office Monthly Income Scheme.