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 The interest income from post office MIS used to be tax free under section 80L, but that section has been withdrawn from April 1 2005.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.
Hi
My name is Biswajit from west Bengal well there is an urgent requirement of money due to my sister marriage next week . I am into MIS since 4 months . Is there any way out to withdraw the mis or take a loan against my deposit of 150000. Please help me guys its very urgent .
Hi, could you pls give me an eg. of tds amount that will get deduct from the monthly interest ? if i wish to put suppose Rs.10000 in POMIS than could you pls help me in calculating the interest i will get excluding te tax?
Can I open two accounts in two different post office to the amount of rs 4.5 lakhs in a single holder.
Please guide.
Rgds
Sourav
No. Would be illegal.
PL ignore the above comment.
I want to open an mis of rupees 4lac what is rate of interest now.pls kindly inform me
Hi Abhishek,
It is 8.40% p.a. payable monthly.
Roughly it is Rs.700 per month for every lakh.
I have deposited Rs. 4,50,000 in minor son’s name in post office MIS. Can I get the monthly interest deposited in the savings bank of SBI or ICICI Bank as I am not in a position to go to post office monthly to withdraw the money. Please advise.
Hi Abhinay,
I don’t think it is possible. You can open a new post office savings account and get the monthly interest transferred to it. For a minor’s account, age of the child should be 10 years plus.
hello,
i have invested Rs.210000 in MIS in January 2010, now i want to withdraw the same MIS.
Please tell me the procedure and deductions.
thanking you
siddharth
Sir , I want to know that , Is it possible to take loan either from my deposited MIS amount ( 9 lakh ) or from post office as loan ?
Loan facility is not available against Post Office MIS deposit. Also, post offices don’t provide any kind of loan. You can have loan against PPF though, if you have PPF account.
For the latest information go to: http://www.indiapost.gov.in/MIS.aspx
Hi, After 5 years the total sum will be depostited back to the savings account (or) if desired it can kept for further in MIS scheme. If yes how many years it can be kept in MIS.
Hi Kumar,
With Post Office MIS, if you do not withdraw your deposit on maturity, then simple post office savings bank interest gets paid for a maximum period of 2 years from the date of maturity.
Sir,
A depositor has 3 MIS a/c. One opened during nov.2008 and other 2 opened during june 2010. The depositor has deceased. All have nominations.
1. Can the nominee keep the deposits until maturity to avail bonus ?
2. If yes, whether to intimate PO alongwith death certificate and transfer it in nominee’s name ?
3. Since, no penalty for claim before maturity, will the PO force us to withdraw and what will happen to bonus ?
Pl clarify on the above sir,
Hi Kan S,
As per the Post Office rules, in the event of death of the depositor, the MIS account will have to be closed and the deposit will get paid to the nominee along with the interest due.
I have deposited some amount in Post Office MIS in Joint ‘B’ holder with my spouse name. I have also a S.B. Account in the same Post Office standing single holder by name. Now the monthly interest can be drawn through auto credit in to saving account standing my single name at same post office?
Hi Pramod,
Though I am not 100% sure about it, but I think you need to have a joint savings account for the same.
Sir,
at present what is the maturity period for this scheme & what is the rate of interest?
I heard that there is no bonus for the amount invested. Is that true?
Hi Rajan,
Maturity period of Post Office MIS is 5 years at present and it carries 8.40% p.a. rate of interest. Also, it is true that bonus is not payable on MIS anymore.
Please check this link for more details:
http://www.onemint.com/2013/04/03/interest-rates-on-post-office-small-saving-schemes-fy-2013-14/
Can MIS in P.O. open for Rs.900000 .00 again in joint a/c , if it is opereted previously for the same amount in jpint name
sir mai naya hu post office mei 10 lakhs post office me invest karne ki sochi hai abhi mai 20 yrs ka hu or mere dad expired ho gaye the 10 yrs phele ab mai or meri mummy rehte hai meri mummy ki age 55 yrs hai sir mai monthly income chahta hu atleast 10.000 per month please yeh possible hai post office mai or kasie please guide me
What is the charges on maturity of MIS if mode of payment is by cheque.?
Hi Sanket,
I dont think there are any charges.
I have a post office mis jointly with my husband. I am the second holder. Can I add the interest to my source of income rather than his?
Hi Mrs. Ghosh,
I’m not 100% sure about it, but I think the interest income is taxable in the proportion of your respective contributions while doing this investment. If the whole of the contribution is made by the first holder, then it will be added to the income of the first holder. So, you can show the interest income as your income, if the whole of the investment was made by your source of funds.
I have an mis a/c of Rs. 450000. I also want to invest Rs. 900000 tripple joint in mis is it possible
Hi Arun,
A single Post Office MIS account can be opened for a maximum of Rs. 4.5 lakhs and a joint account by two or three adults can be opened for a maximu of Rs. 9 lakhs.
Three persons can open three single accounts for Rs. 4.5 lakhs each totalling to Rs. 13.5 lakhs. These three persons can invest Rs. 13.5 lakhs jointly in three joint accounts of 4.5 lakhs each or by opening two accounts, one for Rs. 9 lakhs and other for Rs. 4.5 lakhs in order to complete the share Rs. 4.5 lakhs of each adult.
Similarly, a guardian can open a separate account on behalf of each minor for Rs. 4.5 lakhs.
I have invested Rs. 6000/- in MIS last month and have received Rs. 42/- as interest and got the interest amount auto-credited to my Savings Account. Thanks for the provision of auto-credit, it’s a great help. In case I want to invest more amount in MIS as and when any amount is availble with me in future, it seems I have to open a separate Account instead of adding the new amount to my alrwady existing MIS Accounts. It is very uncomfortable as the accounts are going to be splitted up and I will have to maintain a number of Accounts till I complete the amount of 4.5 lakhs. Instead of having No. of Accounts, the MIS Account for one single person should be only one, whenever any person is investing in this Scheme at different times the short amounts should be added to the original MIS Account and interest calculated accordingly. This will help the customer in maintaining only one Single Account than a number of Accounts. – Suggestion Please.
To the best of my knowledge, this is the situation as it stands today, and there’s nothing that can be done about it right now.
Hi Sujatha… One suggestion would be to open a Post Office Recurring Deposit account in which rate of interest is similar at 8.30% p.a., but the only thing is it does not pay interest on a monthly basis.
what is the proceedure for auto credit of my monthly intrest in the saving bank account
You need to get a savings account opened with the post office and you can get the monthly interest transferred into that account. Cheque book facility is also there with the post office.
who is doing this trading i want to talk to dat guy
What is the process of transfer of a joint account ?
I have an account with my father but now we are both moving to different cities.. can I get this account transferred to my city without requiring his presence. ??