Post Office Monthly Income Scheme

Post Office Savings Scheme India: Post office Monthly Income Scheme (MIS)

Overview -

The post-office monthly income scheme (MIS) provides for monthly payment of interest income to investors. It is meant for investors who want to invest a sum amount initially and earn interest on a monthly basis for their livelihood. The MIS is not suitable for an increase in your investment. It is meant to provide a source of regular income on a long term basis. The scheme is, therefore, more beneficial for retired persons.

Brief Details of Monthly Income Scheme (MIS) -

The Post Office MIS can be opened with any Post Office. This scheme gives a fixed return of 8% and pays interest monthly. The MIS matures in 6 years and the maximum amount that can be invested is Rs. 3 lakhs for an individual and Rs. 6 lakhs for a joint account. The interest income accrued in the MIS is taxable.

Key Features -

• Interest rate of 8% per annum payable monthly.
• Maturity period is 6 years.
• Minimum investment amount is Rs.1000/- or in multiple thereof.
• Maximum amount is Rs. 3 lacs in single account and Rs. 6 lacs in a joint account.
• Account can be opened by an individual, two/three adults jointly and a minor through a guardian.
• A minor having attained 10 years of age can open an account in his/her own name directly.
• Non-Resident Indian / HUF cannot open the Account.
  Minor has a separate limit of investment of Rs. 3 lacs and the same is not clubbed with the limit of guardian.
• A separate account is opened for each deposit.
• Any number of accounts can be opened subject to the maximum prescribed limit.
• Facility of automatic credit of monthly interest to saving account if accounts are at the same post office.
• Facility of premature closure of account after one year @ 3.50% discount.
• No deduction of 3.5% if account is closed on completion of three years.
• Facility of reinvestment on maturity of an account.
• Interest not with-drawan does not carry any interest.
• Maturity proceeds not drawn are eligible to saving account interest rate for a maximum period of two years.
• Account is transferable from one post office to any Post office in India free of cost.
• Nomination facility available.
• Rebate under section 80 C not admissible.
• Interest income is taxable, but no TDS
• Only scheme in Post office where monthly interest is payable.
• Most suitable scheme for senior citizens and for those who need regular monthly income.
• Deposits are exempt from Wealth Tax

How much to Invest? -

Minimum -  Rs. 1500/-

Maximum -  (i).  Rs. 3.0 lacs for single  account

                    (ii).  Rs. 6.00 lacs for joint account.

Withdrawals -

(i).   On Maturity with bonus

(ii).   Premature

        (a).   After one year with deduction of 2% of deposited amount.

         (b).   After three years with 1% deduction.

Maturity Bonus -

5% Maturity Bonus w.e.f. 08-12-2007

Advantages

Premature closure of the account is permitted any time after the expiry of a period of one year of opening the account. Deduction of an amount equal to 5 per cent of the deposit is to be made when the account is prematurely closed. Investors can withdraw money before three years, but a discount of 5%. Closing of account after three years will not have any deductions. Monthly interest can be automatically credited to savings account provided both the accounts standing at the same post office. The interest income accruing from a post-office MIS is exempt from tax under Section 80L of the Income Tax Act, 1961. Moreover, no TDS is deductible on the interest income. The balance is exempt from Wealth Tax.

How to Open an Account?

You can buy a post office MIS at any post-office in India. When you open an MIS, you will get a certificate issued by the post office. In addition, the investor is provided with a passbook to record his transactions against his MIS.