Post Office Monthly Income Scheme: Features and Benefits

When we talk of investment schemes for salaried people in India, most people suggest FD or shares. Very few people are aware about the investment schemes offered by Post offices in India. One of such shcemes in MIS. Read this post for more information regarding Post Office Monthly Scheme.

When we talk about investment options with guaranteed returns the people generally think of Bank FD. However, there is another option for the investors where they can make a deposit in the Post office monthly income scheme (MIS). As the name of the scheme indicates, the investor gets monthly interest on the amount deposited in MIS. This is quite useful in situation like where you want to provide a certain sum of money to the family members for monthly expenses. Since the return is guaranteed (8%), there is not complexity involved as in case of mutual funds or share market. In this post, we will discuss the features and benefits of post office monthly income scheme.

Features of Post Office Monthly Scheme

Here are some of the features 0f POMS :
  1. The maximum amount that can be deposited in MIS account is Rs 4.5 lakh in case of single account and Rs9 lakh in joint account. The interest rate is 8.50% and the tenure of the policy is 6 years.

  2. A demerit of the scheme is that you cannot claim tax rebate for the investment made in this section as per section Sec 80 C. The interest is also taxable though TDS is not deducted.

  3. One can even discontinue the investment after a year. However, there is a penalty of 2% if the MIS is discontinued within 2-3 years. If it is discontinued after 3 years, there is a penalty of 1%.

  4. An important thing to remember here is that if you forget to get the interest for a particular month, you will not be paid any interest on that amount. It will simply lie in the MIS account.

  5. There is an option to transfer the MIS account from one post office to another free of cost.

  6. There is an option to add nominee as well. If you forget to use this option while opening MIS account, you can get it done later.

How to Get Maximum Returns from the MIS Scheme

If you have invested the money in MIS scheme just to get guaranteed interest, you can put the monthly interest in an RD. You can open the RD in the post office itself. Also since you do not need the monthly interest for expenses, it is advised to opt for ECS facility so that you can get the interest automatically to your savings bank account.


Author: Umesh12 Jul 2017 Member Level: Diamond   Points : 1

Post office MIS is a good scheme and once it was very popular among the middle class investors. However, as the Post office is slowly moving to provide bank like services and due to computerisation, they have started to deduct TDS also on the matured investments and their rates of interest are also being revised on the downside. So the investments in Post office schemes are also losing their sheen. Yet I would say that still MIS is a good option for a sustained income every month from your investment.

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