POMIS: How to open Post Office MIS account offering 7.4% returns? A step-by-step guide

In this age, when saving bank accounts offering 2.75% to 3.50% interest rates, there are some sovereign-backed depository schemes, giving more than 7% interest on the deposited amount. The Post Office Monthly Income Scheme (POMIS) is one among them.

The Post Office Monthly Income Scheme (POMIS) is one of the highest-earning, low risk and steady-income plans offering an interest rate of 7.4% per annum. In this scheme, the investor can deposit every month, and the interest—as the name suggests—is disbursed monthly. And above all, no TDS is deducted from the interest generated. The scheme—like other post office schemes—is recognized and validated by the Ministry of Finance. The sovereign guarantee makes the Post Office MIS account a safer investment option compared to equity shares and many fixed-income options. 

Post Office Monthly Income Scheme (MIS): Features and Benefits

Capital protection and Low-risk investment: Being a sovereign guaranteed scheme, your capital is safe until maturity and also the investment is not subject to market risks.

Affordable deposit amount: As per your affordability, you can open a Post Office MIS account at a nominal investment of Rs.1,000 and in multiple of ₹1,000. The maximum investment limit in a Post Office MIS account is ₹9 lakhs in a single account, for joint accounts the maximum deposit limit is enhanced to ₹15 lakhs.

Maturity period: The maximum lock-in period for a Post Office MIS account is 5 years. The investor can withdraw the invested amount after the scheme is matured or reinvest the corpus.

Pre-mature closure: As per the scheme norms, the investor can not withdraw the deposit before the expiry of 1 year from the date of deposit. In case, the investor withdraws the investment amount before the expiry of the lock-in period, a penalty is charged. If the account is closed before three years from the date of account opening, 2% of the amount is deducted from the principal and 1% from the principal if closed before 5 years. 

Tax-efficiency: TDS does not apply to the interest generated every month, however, the investment is not covered under Section 80C.

Guaranteed returns: The interest is generated every month and returns are not inflation-beating.

Transferability: In case, you are changing your residential status, you can transfer your POMIS account to another post office anywhere in India

Nominee: As per the scheme norms, the investor can nominate a beneficiary so that he/she can claim the benefits and the corpus after his/her demise. It is important to note that a nominee can be assigned even after opening an account. 

Post Office Monthly Income Scheme (MIS): Eligibility

To open a POMIS account the investor needs to be a resident Indian. Non-resident Indians (NRIS) are not eligible to open a Post Office MIS account. A resident Indian can also open a POMIS account on behalf of a minor child who is aged 10 years and above. However, the child can avail of the fund only after attaining 18 years of age.

Post Office Monthly Income Scheme (MIS): Documents required

The following documents are required to open a Post Office MIS account:  

• Identity Proof: A copy of any government-issued ID such as a passport or Voter ID card or a driving license or an Aadhaar number etc.

• Address Proof: A government-issued ID having the investor's residential address or a recent utility bill.

• Photographs: Passport-size photographs

Post Office Monthly Income Scheme (MIS): A step-by-step quick guide to open an account

• You must have a Post Office savings account, if not open the same 
• Get an application form from your nearest post office. An investor can  download the Post Office MIS Account application form from the following link: https://www.indiapost.gov.in/VAS/DOP_PDFFiles/form/Accountopening.pdf
• The investor has to fill out and submit the form along with the self-attested copies of all the above-mentioned required documents at the nearest post office.
• Carry the original documents as they are needed at the time of verification.
• Provide the Name, Date of Birth, and Mobile number of the nominees (if any)
• Don't forget to carry a minimum of ₹1000 in cash or a cheque of the same amount. As per the scheme norms the investor needs to deposit an initial amount of a minimum ₹1000 via cash or cheque to open a POMIS account.