If you want a steady monthly income, the Post Office Monthly Income Scheme (POMIS) is a good option because it is risk-free and offers guaranteed returns. Investors in the post office's monthly income scheme can earn up to 6.6 percent annual interest each month.
A POMIS account can be formed individually or jointly, and a guardian (acting on behalf of a minor) or a minor above the age of 10 can open one in their own name. It's worth noting that non-individuals aren't allowed to have a MIS account.
What is the maximum amount you can put in your POMIS account?
A minimum of Rs 1,000 and multiples of Rs 1,000 are required to start this account. A single account has a limit of Rs 4.5 lakh, while a joint account has a limit of Rs 9 lakh.
Each joint account holder has an equal investing portion in a joint account. The total deposits/shares in all MIS accounts of a person must not exceed Rs 4.5 lakh. A separate limit will apply to an account opened on behalf of a minor as a guardian in the case of a minor account.
How is interest paid?
From the date of account opening until the account matures, interest will be paid at the end of each month. It's worth noting that if the account holder doesn't claim the monthly interest, the interest will stop accruing.
So, if you want to earn interest, choose auto credit into a savings account at the same post office or ECS. Monthly interest earned on MIS accounts at CBS Post Offices can be credited to a CBS Post Office savings account.
If the depositor commits an overdraft, the overdraft will be refunded, and only PO Savings Account interest will be paid from the moment the account is opened until it is closed.
The scheme does not provide Sec 80C benefits and the interest is taxable, despite the absence of TDS.
Account closure and penalty if done prematurely
Within one year of the deposit's expiration date, withdrawals are not permitted. If the account is closed after one year but before three years from the date of opening, the principle will be deducted by 2%, and the balance will be paid.
If the account is closed after three years but before five years from the date of opening, the principle will be deducted by one percent, and the remaining balance will be paid.
The stages of maturation and death
The account can be terminated after 5 years from the date of opening by submitting a specific application form along with the pass book to the relevant Post Office. The account may be terminated and the monies refunded to the nominee/legal heirs if the account holder dies before the maturity date. Interest will be paid up until the end of the previous month, after which a refund will be sent.
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