The Monthly Income Scheme of the Indian postal department is suitable for those looking for guaranteed income from a very safe and risk-free investment.
How does it work?
You make a principal deposit. You receive monthly interest/income from it for 5 years. At the end of the 5 years, you get your principal amount back.
The different features of this scheme are as follows:
Eligibility
- Any resident Indian can open an MIS account.
- NRIs cannot opt for this scheme.
Types of Accounts
Single Accounts – These can be opened by individuals.
Joint Accounts – 2 or 3 persons can open a joint account. Each person has an equal share.
Notes-
- Single accounts can be converted into joint accounts, and vice-versa.
- You can open any number of accounts, subject to the maximum investment limit.
How to Open a Post Office MIS Account?
Opening an MIS account is very easy. As of now, you can’t open it online. To open it offline, follow the given steps:
- Go to your nearest post office.
- Submit a properly filled account opening form and the above documents.
- Carry the original address and identity proof for verification.
- Get a witness signature.
- Make the payment in cash or by cheque. In case of cheque, the date of realization of the cheque will be considered the date of opening the account.
Documents Required to Open MIS Post Office Account
You need to submit the following documents to open an MIS account:
- An account opening form. You can get it from your nearest post office, or you can download it here.
- Two passport-size photographs.
- Address and identity proof – any of the following – Aadhaar card, driving license, voter ID, passport, ration card, PAN card, or declaration in form 60 or 61 as per the Income Tax Act.
MIS Account for Minors
- MIS accounts can be opened in the name of minors.
- Any minor over the age of 10 can open and operate an MIS account.
Investment Amount
Minimum Investment
- Single Account – Rs.1,500
- Joint Account – Rs.1,500
Maximum Investment
- Single Account – Rs.4,50,000
- Joint Account – Rs.9,00,000
Notes-
- An individual’s investment in MIS cannot exceed Rs.4,50, 000, whether it is in a single account, a joint account, or more than one accounts.
- The maximum investment limit for a minor is Rs.3,00,000.
Interest Rate
- The current rate of interest is 7.6% per annum.
- The government updates it periodically.
- The interest is payable on a monthly basis.
- The interest is calculated from the date of making the investment, and not from the start of the month.
Post Office MIS Interest Rate for Senior Citizens
The interest rate for senior citizens is 7.6% per annum. It is the same as the regular interest rate.
Monthly Income
- Since this is a monthly income scheme, interest is paid on a monthly basis.
- You can either withdraw the interest/income every month from the post office or have it credited to a savings account via ECS.
- It is ideal to collect the income monthly because if you don’t, and let it accumulate, the collected income won’t earn any interest.
- To make this scheme more beneficial, the government has added another feature. You can invest the income directly in a recurring deposit. Hence, here the collected income would earn interest.
Post Office Monthly Income Scheme Bonus
- At the end of the maturity period, you will get the principal deposit back.
- For accounts opened on or after 8/12/2007 and up to 30/11/2011, a bonus of 5% will be paid on the principal deposit upon maturity.
- For accounts opened on or after 1/12/2011, no bonus is payable.
Maturity Period
The maturity period for MIS is 5 years.
Premature Withdrawal
- You can make a premature withdrawal only after completion of 1 year.
- If you withdraw after completion of 1 year, but before 3 years, it will be at the discount of 2% of the deposit.
- If you withdraw after completion of 3 years, but before maturity, it will be at the discount of 1% of the deposit.
Nomination Facility
You can nominate someone at the time of opening the account, or even after opening the account.
Transfer of Account
- You can transfer the account from one post office to another.
- This facility is free.
Tax Benefits
- There is no TDS on the interest.
- However, the interest paid is taxable income.
- The amount invested is not tax deductible under Section 80C.
So there are no real tax benefits.
Understand the features of MIS properly before investing. It is perfect for people who want a completely risk-free investment that gives monthly income.