Kolkata: The world of financial services demonstrate an old adage — the more it changes, the more it remains the same. The world of financial services is maturing rapidly in India with the launch of many products such as mutual funds, ETFs, REITs, InvITs, pension plans, annuity products, cryptocurrency in the past few decades. However, the quest of investors for stable. low-risk regular income remains an eternal one. There is one particular instrument that has not lost its charm to millions simply because of its guarantees a monthly income and provides the highest safety of capital.
The Post Office Monthly Income Scheme (POMIS) is often referred to as POMIS, or simply MIS. It approximates a monthly pension scheme. As the name indicates, it is available only at post offices, which itself spells trust for the common people of this country. Simply put, it is a government-backed deposit scheme which offers interest payments every month. The sovereign guarantee provides the highest safety of capital.
Who can open POMIS
An MIS account in the post office can be opened individually or jointly. Even in this world where more and more people are losing their night’s sleep on how to earn superior returns even taking a fair degree of risk, a large number of people simply cannot afford to take risk. Some are averse to risk by nature, while a lot of people survive on the returns from a meagre amount and cannot put even a part of it in any instrument that carries nay risk at all. These people are mostly the retirees and the elderly, who think that if their capital erodes a bit, they will be on the verge of financial disaster.
MIS interest rate
The interest rate payable by MIS stands at 7.4%. This interest is paid on completion of a month from the date of opening and is payable till maturity. The point to note is that if one does not collect the interest, it won’t expand the principal and earn a bigger interest next month. One can withdraw the interest through auto credit into a savings account at same post office, or via ECS.
What returns does Rs 9 lakh in MIS generate?
One can use a Post Office MIS calculator to calculate the interest one can earn by investing Rs 9 lakh. These calculators are available free online. The interest on deposit of Rs 9 lakh in MIS is Rs 5,550 every month. If a joint account has Rs 15 lakh, a monthly payment of Rs 9,250 will be obtained from it.
Is POMIS tax free?
The interest paid by a POMIS account becomes taxable in the hand of depositor and the appropriate slab rate for the individual will be applicable. The account can be closed after expiry of five years from the date of opening. However, one can close it prematurely a year after opening the account but by paying a penalty. If the account older expires, the POMIS account can be closed by the nominee or legal heir and the entire amount is paid to him/her.
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