Investment options offered by India Post are one of the most trusted schemes in the market. While they offer low return compared to other options, their risk-free nature and government backing makes it hit among investors especially the old school ones. One such popular saving and investment option is the Post Office Monthly Income Scheme. It allows you to invest a certain amount and earn a fixed monthly income. An account under this scheme can be opened at the nearest post office by furnishing the required documents.
Lock-in Period and other key features.
Post Office Monthly Income Scheme comes with a lock-in period of five years, and you can choose to withdraw your investment or reinvest it after maturity. The fact that you can start investing with a sum as low as Rs 1,000 makes it affordable and thus very popular among middle- or low-income group investors. In addition to the guaranteed returns offered by the Post Office, the scheme also comes with tax benefits under the provisions of Section 80C of the Income Tax Act.
Investment and Interest
You can invest up to Rs 4.5 lakh individually or Rs 9 lakh jointly in the Post Office Monthly Income Scheme. The government revises the interest rate based on the market situation and for the quarter ending on September 30, 2021, the interest rate was set at 6.6 % per annum. Investors have the option to withdraw the interest directly from the post office or get it transferred to their savings account. The Post Office Recently added the option to move the funds to a recurring deposit account.
So, in case of investment of Rs 4 lakh in this scheme, the investor shall receive a monthly income or return of Rs 2000. After completion of the maturity period, the investor may choose to withdraw the sum or re-invest it.
POMIS account is available for only a resident Indian. Any adult can open their account with the nearest Post office by furnishing the required documents. POMIS accounts can also be opened for minors who are 10 years or above in age. They will be able to avail the benefits when they turn 18
The investment made in Post Office MIS can be withdrawn before their maturity completion but that will invite certain penalties. If an investor decides to withdraw their investment before the completion of the first year, they shall not be entitled to any benefits. Any premature withdrawal made between 1st and 3rd year will invite a 2 per cent penalty and in case of withdrawals between the r3rd and 5th year, the entire corpus shall be refunded after 1 per cent penalty.