Secure Monthly Income with the Post Office Monthly Income Scheme (POMIS)
Secure Monthly Income with the Post Office Monthly Income Scheme (POMIS)
The Post Office offers a variety of investment options, and the Post Office Monthly Income Scheme (POMIS) is a popular choice for risk-averse investors seeking a steady stream of income. Backed by the Government of India, POMIS offers attractive features and benefits, making it a secure way to grow your savings.
Understanding POMIS
POMIS allows you to invest a lump sum amount and receive monthly interest payments throughout the scheme's five-year lock-in period. The current interest rate, as of April 2024, is a beneficial 7.4% per annum. This rate is determined by the Ministry of Finance and can be revised quarterly based on government bond yields.
Key Features of POMIS
- Guaranteed Returns: POMIS is a government-backed scheme, offering a safety net for your investment. Unlike market-linked investments, POMIS provides assured returns, making it ideal for those seeking stability.
- Monthly Income: A key advantage of POMIS is the regular monthly interest payouts. This provides a predictable source of income to supplement your regular income or meet ongoing expenses.
- Investment Flexibility: POMIS allows you to invest a minimum of Rs. 1,000 in multiples of Rs. 1,000. The maximum investment limit for a single account is Rs. 9 lakhs and for a joint account it is Rs. 15 lakhs.
- Joint Account Option: POMIS allows up to three individuals to open a joint account, increasing the investment limit and offering shared benefits.
- Minor Accounts: You can open a POMIS account for a minor above 10 years old. Once the minor reaches 18, they can manage the account independently.
- Transferable Accounts: POMIS accounts can be conveniently transferred to other post offices if you relocate, ensuring continuity of your investment.
- Automatic Withdrawal: For added convenience, you can opt for automatic transfer of your monthly interest to your savings account through PDCs or ECS.
Things to Consider
- Early Withdrawal Penalty: POMIS has a five-year lock-in period. Early withdrawals are subject to penalties, with the penalty amount varying depending on the withdrawal timeframe.
- Tax Implications: While POMIS interest is not subject to Tax Deducted at Source (TDS), it is also not eligible for tax deductions under Section 80C of the Income Tax Act.
Opening a POMIS Account
Opening a POMIS account is a straightforward process. Here's what you need to do:
- Existing Savings Account: Ensure you have a Post Office Savings Account. If not, open one before applying for POMIS.
- Visit Your Local Post Office: Collect a POMIS application form and submit it with the required documents, including ID proof, address proof, and passport-sized photographs.
- Investment and Interest: Make your initial investment through a dated cheque. The interest payout starts one month after the account opening date.
POMIS Compared to Other Post Office Schemes
POMIS offers a competitive interest rate compared to other Post Office saving schemes. Here's a quick comparison:
|
Scheme |
Interest Rate (as of April 2024) |
TDS Deducted? |
|
POMIS |
7.4% |
No |
|
Post Office Recurring Deposit (RD) |
6.7% |
No |
|
Post Office Time Deposit (1-3 years) |
6.9% - 7.10% |
No |
|
Post Office Time Deposit (5 years) |
7.50% |
Yes |
|
National Savings Certificate (NSC) |
7.7% |
Yes |
|
Senior Citizen Savings Scheme (SCSS) |
8.2% |
Yes |
|
Public Provident Fund (PPF) |
7.10% |
Yes |
Conclusion
The Post Office Monthly Income Scheme (POMIS) is an attractive option for those prioritizing security and steady income by seeking guaranteed returns and a predictable income stream. Backed by the government and offering a competitive 7.4% interest rate (as of April 2024), POMIS provides stability and flexibility. While there's a 5-year lock-in period, POMIS caters to various needs with features like joint accounts and minor accounts.