Post Office Monthly Income Scheme

Post Office Letter Boxes, EC1A 1AA .London Chief Office 1994photo © 2008 Felix O | more info (via: Wylio)

Couple of weeks ago, I wrote about Monthly Income Plans or MIPs, and this week I’m going to write about a similar monthly income scheme from the Indian post office called the Post Office Monthly Income scheme.

This is a fixed income scheme which provides you a guaranteed return on your investment, and is meant for people who are looking for a monthly source of income without taking any risk at all.

Where the mutual fund MIP invests a part of its assets in equity, and even gold in some cases – and may sometimes even get you a higher than 10% return (with commensurate risk of course) this scheme has a fixed rate of return and is meant for people looking for an ultra safe investment.

Here are some features of this scheme.

Post Office MIS Interest Rate

This is a scheme from the Indian postal service that earns you an interest of 8% per annum, and generates a monthly income for you.

So if you invest Rs. 100,000 in it – your annual interest at 8% will be Rs. 8,000, and you will get Rs. 666.67 monthly.

Post Office MIS Tenure

The maturity period of the scheme is 6 years, at the end of which you will get your money back. You cannot redeem your money within a year, but you can redeem it after that upon paying a penalty.

Here is how that works.

Less than 1 year: MIS can’t be encashed.

1 – 3 years: You are penalized 2% of deposit.

After 3 years: You are penalized 1% of your deposit.

5% Bonus

If you retain your Post Office MIS till maturity (6 years) – at the end of the time period you will be given a 5% bonus on your deposit.

Minimum and Maximum Investment

The minimum sum you can invest is Rs. 1,500, and you can go up to Rs. 450,000 in case of a single account, and Rs. 900,000 in case of a joint account.

Tax on Post Office MIS

There is no TDS on the Post Office MIS, but the interest income is taxable in your hands. The interest income from post office MIS used to be tax free under section 80L, but that section has been withdrawn from April 1 2005.

Interest can be automatically credited to your bank

At the time of opening the scheme you can give in your bank account details, and interest will be automatically credited to your bank every month.

Transfer from one post office to another

There is a provision that allows you to transfer your money from one post office to another. So, if you opened your account in one post office, and moved to another place you can fill up a transfer form with them, and move your scheme to another post office.

Conclusion

This scheme is meant for people who are looking for an ultra safe investment and a regular source of monthly income on top of it. A lot of retired people will fall under this category, and if you fall under that category then you need to evaluate other options like the Senior Citizens Savings Scheme before you invest in this scheme. I”ll cover that scheme in the days to come, and if you have any questions about this particular scheme or any other observations please leave a comment.

255 thoughts on “Post Office Monthly Income Scheme”

  1. Sir,
    I invested in 6 year MIS on 28.6.2010. Now upon maturity I am told by the post office that during that investments during that period (for few months) do not attract maturity bonus. Is it right?

  2. My mother had opened MIS account in Post Office for Rs. 2 lacs on 31-05-2006. On maturity date 31-05-2012 , i.e. complete period of 6 years , she received only Rs. 2 lacs. Bonus amount has not been paid to her. Please clarify whether the bonus amount is admissible to her or not.

    1. As per my information prior to FEB 2006 the bonus was 10% & in FEB 2006 the same was discontinued but w.e.f. December 8, 2007 the government reintroduced the bonus option on maturity in the scheme but with a lower rate i.e 5%. Your mother opened the MIS in MAY 2006 which is the period during which Bonus was discontinued hence bonus has not been paid. I hope this is the reason your mother was not entitled for a maturity bonus. At that time It was a wise decision & hence many individuals withdrew their MIS & opened new MIS with bonus on maturity.

  3. I invested 500,000 in mis and renewal was jan2012,by mistake cannot do it on time but do it on the month of may 2012 now I want know can I get monthly income from jan to april,kindly clear me

    1. Please check with the post office – they will let you know how to handle the situation a lot better than anyone on this forum.

  4. Hi Manshu,
    First of all i would like to Thank you for taking time to answer all of our questions, i really appreciate it !.
    Like others i too have a question, My Father opened a MIS account on my name 3 years ago, now it is time to encash the MIS principal and the interest that was going into the linked SB account.
    the problem is i do not have a Bank account in india, i do not want to open a bank account either just to encash the MIS. would they just pay me by cash or other means if i am willing to show up in person at the post office.

    With Best Regards
    Ashwin

    1. Thanks for your kind words Ashwin – as far as I know post offices don’t hand out cash like that for the MIS scheme but my knowledge about this is limited so I can’t say with 100% confidence whether you’ll be able to get cash or not.

  5. sir
    joint account pe 9 lack mis invest to kiya ja sakta hai agar family member ke naam se 4 join account agar khola jaye to aur sir isme jo monthly retyrn milta hai usme to tds & tax included hota hai

  6. kya mis 4000000 tak invement kiya ja sakta hai aur us me in cometax bhi dena parega kya ? plz sir guide kare hindi me

    1. 4.5 lakh ki upper limit hai to aap 40 lakh nahi invest kar sakte. Aur income tax to dena hi padega chahe jitna bhi investment ho.

  7. Dear Sir

    had visited post office today to update my POMIS passbook, there i heard the officer telling another investor that Bonus has been withdrawn wef 13 Feb 2006, can you please clarify regarding Bonus on POMIS Scheme.

    regards
    bhandary

      1. As per my information prior to FEB 2006 the bonus was 10% & in FEB 2006 the same was discontinued but w.e.f. December 8, 2007 the government has reintroduced the bonus option on maturity in the scheme but a lower rate of 5% but as per the recent information w.e.f 01 DEC 2011 bonus has been discontinued, but I hope it should be applicable to MIS opened post DEC 2011 but I am still unclear of what will happen to the bonus on MIS opened prior to DEC 2011, I am searching for this information, if someone have any confirm source pls reply.

  8. in a mis of either or survivor account who is the owner of that mis….example,,

    (1) mrs, x
    (2)mr. y
    (3)mrs. z

  9. in case of MIS if the account holders are both dead the monthly installment of MIS will change or
    remain same , in case of nomination.

  10. i want to know what can be the maximum amount in Monthly Income of post office to avoide Income tax by senoir citizen of 70 year.

    1. That question doesn’t make any sense to me. What are you trying to do? Reduce taxable income? You can invest up to Rs. 1 lakh in some investments fixed deposits and then another 20K in some more bonds. That’s the way to reduce taxable income.

      You can’t just avoid paying tax by investing in a post office scheme.

  11. Govt increases the interest rate from 8% to 8.2% but scraps the 5% bonus on maturity. Also it states that rate notification will be from Dec-1 and the MIS of old schemes maturing after Dec-1 won’t get the 5% or 10% maturity bonus? Is this true? If yes then we should take forward it; how can govt not increasing the interest rate of our savings from the date of invested even not giving a single penny of increased interest rate rather they are snatching the maturity bonus (5% or 10% of old schemes) from us if the maturity date falls after 1-Dec.

  12. I have suficiant amount iin co operative bank and i want my money deposit in post office as mis . Tell me the proceedure.

  13. DO any body knows this?
    After maturing RD or MIS account do post office return back the money through the agent if we have given signed documents or is it compulsory the person should present for withdrawel?

  14. if i invest 1lac in POMIS then after maturity how much extra amount i will get.for example every month i will take the monthly interest .excluding that amount how much i will get after 6 years.

    1. Excluding the Interest amount you received every month, you will be receiving your principal invested amount back but with addition of a 5% Bonus i.e total 105000/- in your case.

        1. Even I have heard of the same but what about the MIS accounts opened prior to 1 DEC 2011, I don’t think this new rule is applicable for old MIS, are they going to pay us the interest as per new interest rates, there are such things still to confirm, I searched & am searching for such information even PO agents are still in a confusion, even though once again I will be asking my PO agent about this & forward the related info as soon as the same reaches me, till then it would be really fine if you or anyone on this forum could confirm the same if possible.

          1. Once again I reconfirmed with my PO Agent and she also confirmed that the discontinuation of Bonus will not affect old PO MIS i.e the bonus of 5% will be applicable on maturity only PO MIS opened post DEC 2012 will not get bonus.

              1. Thanks Manshu for your Reply & the Link for reference. I went thru the same & found a comment of Shri. S.KRISHNAN even he had raised his concern over the scrapping of bonus but in an immediate reply to his post itself he had cleared that the Bonus on Maturity remains unaltered for PO MIS opened prior to Dec 2011. Find below the excerpts from his post for reference.

                [ “Further to my post on 29.11.11 i wish to clarify that our fear was unfounded and based on misleading reports in newspaper. As per Notification i have read to day no.113 dt 24.11.11 the maturity bonus is not applicable ONLY ON new MIS accounts opened on or after 1.12.11.Therefore the interest of existing ongoing account holders stands unaltered. One may visit post office web site and see the notitification No.113 which is very clear.

                from: S.KRISHNAN
                Posted on: Nov 30, 2011 at 13:22 IST “]

  15. well there will be no gift tax in this case as father’s money passing on to son will be considered as gift received from a relative which is exempt (any amount)(father son any lineal ascendant or desendant)

  16. Dear Mr.Manshu,
    Many thanks.One more query.If father has invested the principal amount in the PO MIS A/C & it is held jointly with his son ,whether son has to pay gift tax on the principal amount also after its maturity in case his father expires before the maturity?

  17. we have mis scheme in post office for rs450000/-in two names,either or survivor,ist person is expired&survivor wnats to withdraw itbefre maturity ie after 9 months. idon!t want to be penalized. kindly suggest .thanks

    1. I’m sorry for your loss – unfortunately, I don’t know enough to give you a definite answer, and will advise you to go to the post office and find that out.

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