If you are looking for a decent capital gain with a secured investment option then Post of Monthly Income Scheme (POMIS) may end your search. Generally, we end up parking our funds in fixed deposits and in other debt investments plans but POMIS promises better benefits as compared to others. Lets have a look at what POMIS is, how it functions and what all it offers.
Post Office Monthly Income Scheme plan is one of the many investment options offered by Post Office in India. Apart from delivering mails, post office offers a bouquet of services that include sale of forms, bill collection, savings schemes, life insurance cover etc.
Schemes offered by Post Offices are risk free as there is no touch of equity in them. POMIS is also one such scheme. Let us have a look at the features and benefits of POMIS.
Benefits & Features of Post Office Monthly Income Scheme Account
Minimum investment amount is Rs.1500/- or in multiple thereafter.
A single account can hold maximum amount up to Rs. 4.50 lakhs and in case of a joint account Rs.9 lakhs is permissible.
Interest rate of 8.5% per annum payable monthly w.e.f. 01.04.2012
Maturity period is 5 years.
Claiming Bonus on Maturity has been undone w.e.f. 01.12.2011.
Account can be opened by an individual, two/three adults jointly, and a minor through a guardian.
You can avail a facility of premature closure of account after 1 year but on or before 3 years @ 2.00% discount.
There would be a Deduction of 1% if account is closed prematurely at any time after three years.
There is no Tax rebate
Tax Deduction at Source (TDS) is not applicable.
This scheme provides minors with a separate limit of investment of Rs. 3 lakhs and the same is not compiled with the limit of guardian.
It also provides you with auto credit facility of monthly interest to saving account if both accounts are at the same post office.
Deposits are also exempt from wealth tax.
Opening of this account by Non-Resident Indian / HUF is not permissible.
Nomination facility is also available under this scheme.
You can also avail the facility of reinvesting your amount on maturity of the account.
Documents Required for Post Office Monthly Income Scheme
Two passport size photographs
Identity Proof – This may include
iii) Ration Card
iv) Voter Identity Card issued by the Election Commission of India
Note: You will be required to carry all the original documents for verification at the time of opening the account.
This scheme serves to be an ideal choice specially if you are a retired employee or a senior citizen as it brings home regular monthly income. This scheme is secure and risk free and ensures guaranteed return.
Though there is no Tax deduction at source but it is important to note that POMIS does not fall under the purview of Section 80C and thus you cannot claim for any tax exemption for the amount that you have parked in the scheme and the interest thus earned is taxable.
If you wish to get yourself registered with this scheme you can deposit money through demand draft, local cheque or cash. When you get enrolled with this scheme you will be issued a certificate of the scheme and also a passbook that will hold your transactions against the POMIS.
You can withdraw your amount on monthly basis or you may also keep it idle in the account and let it accumulate for few months and then withdraw it but it will not earn you any interest. To make it more convenient for you, you may get the monthly income auto credited in your savings account provided you have a savings account in the same post office where your scheme is running.
You may also combine your post office monthly scheme with a recurring deposit. You may invest the amount that you monthly earn through this scheme in a recurring deposit. By doing so you will be able to churn more capital gains in a more secured and risk free manner.
As stated earlier, this scheme also provides you with the facility of nomination. You can give the name of your nominee when you begin with the scheme or you can also do it during the course of the scheme. In the event of demise of the account holder, the money is paid to the nominee.
POMIS account can also be transferred from one post office to any other post office across the country without incurring any extra cost bringing smiles to faces who are constantly hopping from one place to another.
If churning decent capital returns without getting caught up in equity affair is on your mind or if you are a senior citizen or retired person who is looking for a monthly income then Post office monthly scheme could be a good investment option.
Megha Sharma works as a guest lecturer in Delhi. She holds an MBA & Doctorate from the UPTU. With extensive knowledge and experience in various financial products, she also works as a consultant in banking & finance domains wherein she offers advice to her clients in managing personal finance.
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