Are you looking for a safe option to invest your money and earn decent returns? If yes, then can explore one of the post office schemes. Today, we look at post office monthly income schemes which are not that well-known among urban investors. We often look to fixed deposits and other debt options to park our money or generated monthly income. But the monthly income scheme post office offers myriad possibilities. Lets explore!
Post Office Monthly Income Account
Post Office Monthly Income Scheme is one of the post office schemes which gives you a guaranteed return on your investment. Anyone who wants to generate a monthly income can open this account and get an assured monthly income.You get 8% interest per year, which is payable on per month basis. You will get the interest each month from the date of making the investment, not from start of the month.
For example : Ajay invests Rs 4.5 lacs in the post office monthly income scheme. His interest per year is Rs 36,000 @8%, hence he gets Rs 3,000 per month as income. If you do not withdraw the amount for some month, it would not earn any interest and just lie in the account.
This post office saving scheme does not come under sec 80C so there is no tax-exemption for the amount you invest in this, and interest income is taxable, but there is no TDS cut in this scheme. Read 7 Tax saving Tips
You can deposit the money in the POMIS with cash, demand draft or local cheque. Once you open a monthly income scheme account, you will be issued a scheme certificate and a passbook to record the transactions against the post office MIS scheme. The maturity period of this scheme is 6 years. You will also be eligible for a 5% bonus if you retain your scheme foe 6 years, so eventually your overall return including this bonus can turn out to be around 8.9% . There is a limit on the amount you can invest in POMIS. It’s limited to Rs 4.5 lacs for a single account and 9 lacs for a joint account. You can have any number of accounts, but within the overall upper limit. There is no compulsion to take your money out after maturity, you can leave the money in the account, but then it would earn the interest equal to saving bank account for next 2 years only.
Getting Interest income in your Saving account
You get withdraw POMIS income amount by directly going to the Post-office. However, there seems to be a bit of confusion, if you want the income in your saving bank account. According to per some resources, you can get it credited to your savings bank account, provided its in the same post-office. But elsewhere, some guys confirm that you can provide ECS information at the time of opening the account and get the interest amount created in your Bank account (see the list of cities covered by Post-office) . I found the comment below on this website, where a user claims of using ECS .
YES! you can opt for a ECS facility whereby your monthly interest amount will be credited to any savings account of your choice (here HDFC). After you open the POMIS account, you need to fill up the ECS form, attach a blank cheque of your HDFC savings account and you’re all set. You don’t need to open a Savings account at the Post office just for credit of monthly interest.
The information I’ve given here is authentic, because I’m personally using the ECS facility.
Pre-mature Withdrawal from Post-Office monthly Saving Scheme
Even though the maturity period for POMIS is 6 yrs , there is facility to break it and take your money out. However you can take your money only after 1 year. You have to pay some penalty which is as follows
- If you break it within 1-3 yrs : 2% penalty on Deposit amount
- If you break it after 3 yrs : 1% penalty on Deposit amount
Example : If you deposit Rs 1 lac in POMIS , and want to take money out in 2nd year, you will have to bear the penalty of 2,000 and you will get back 98,000. If you take money out in 5th year, you get 99,000.
Confusion of returns by mixing POMIS along with RD ?
There are some claims which says one can invest the monthly income coming from Post office monthly income scheme in to the Post office RD and earn a return of 10.5% . This at first looks amazing , but its kind of untrue and marketing gimmick . I did a XIRR analysis of the whole cash flows and found out that considering everything , your final and actual return is just 8.77% , which means that when you invest your money in POMIS , direct all the monthly income to an RD and at the end when you get the maturity amount along with the bonus of 5% , in total you have made an annual return of just 8.77%, which is quite ok considering the safety and conservativeness of the product. But consideing the tax to be paid at the end of the tenure , again you might not get great Real Returns ! , Remember that the RD comes for the 5 yrs , but it can be extended for 1 more year and it can be made for 6 yrs .
However the Post office website claims that you earn 10.5% when you put your monthly income into an RD, which is just to attract investors and not give a complete picture . This 10.5% figure is actually only after considering the bonus amount you get at the end, If you remove the Bonus of 5% from the scene , then the return drops to 7.92% . In the below example , you can see that a person who has invested Rs 1,20,000 will get Rs 800 as monthly income , and he gets 72808 as maturity amount from RD , 1,20,000 back as the initial investment and 6,000 as bonus amount .
Scene 1 : If you consider the 800 payment per month in RD for 6 yrs and the maturity amount of 72,806 at the end of 6 yrs , then the returns are just 7.92% (XIRR)
Scene 2 : If you consider scene 1 along with the Bonus amount also , which means you get 72,806 + 6,000 Bonus also = Rs 78,806 , in that case your returns are 10.32% , but its misleading as this bonus is the cost of your 1,20,000 getting stuck at one place for 6 yrs and not an RD feature . So this is not the right way of looking at it . (See chart above)
In case of scene 2 into consideration , then the return from “Only POMIS” is just 8% , but if you consider POMIS + Bonus only then its 8.91% .
Note that this setup operates automatically, you have to set up this once and then no more overseeing. It will happen automatically each month (official link)
Other Features of Post Office Monthly Income Scheme
- A minor above age 10 years can open an account on his/her own name directly. There is a limit of 3 lacs for guardian and it would not be clubbed with guardian limit (More on Clubbing rules)
- Non-Resident Indian / HUF cannot open the Account.
- Interest not withdrawn does not carry any interest.
- You POMIS account can be transferred from one post office to any Post office in India free of cost.
- The amount deposited in POMIS is exempt from Wealth Tax
Nomination
You have to make the nomination for your Post office monthly Income scheme at the time of applying, however if you don’t do it at the time of opening, you can also do the nomination later. Incase of the death of account holder the money will be paid to the nominee. Read more on nomination here.
{ 172 comments… read them below or add one }
Nice information about POMIS. I knew about it but RD point was new to me.
RD with 10.5% is worth considering, it looks much better than PPF in this case, isn’t it?
Hi Jayaprakash,
The after-tax return would be lower than PPF. And note that 10.5% is only available on the RD of interest, not the original deposit. Hence the effective interest rate would be closer to 8%, not 10.5%.
Smart
hmm.. I verified it using the XIRR tool in excel . when a person redirects all the interest to RD , with the maturity amount he gets at the end + bonus , it turns out to be 10.60% interest overall . Have a look at the graph I have added back to the article .
Manish
Hi Manish,
Investor can also invest this monthly income in SIP. This may give them better returns & work as a capital protection fund.
Hemant
Yes .. SIP in MIP or some pure debt fund is an option , but I wanted to highlight the utlra safe option here , thats why I have put RD
Manish
Every where NRI’s treat really like Non Indians… though providing boost to the overall economy in worst scenario like 2008. what do you say?
Jig
I am not sure on this . I guess all the investments products which are pure-desi (i mean post office etc) , they do not allow NRI’s to invest in it
Manish
As usual, Once again a good post Manish….
I know about the POMIS but on the RD its a news to me… if you can please clarify my point on interest rate earned, you said 10.5% on the RD that means, on POMIS 8% + RD 10.5% (Annaully….)
@ Hemant – Can you please elaborate on which SIP, is that on the MF’s or in Post office itself…
Tks & Rgds,
Mani
Look at the article again , I have added teh chart . I verified it using the XIRR tool in excel . when a person redirects all the interest to RD , with the maturity amount he gets at the end + bonus , it turns out to be 10.60% interest overall . Have a look at the graph I have added back to the article .
Manish
You have mentioned the amount got on maturity of RD is 72806. It is actually Rs. 728.90 per Rs. 10 (invested for 5 years). The calculator at projects a 6-year RD rate (which doesn’t exist really, you get to choose a 5 yr. RD and can only extend that by blocks of 5 years — see .
Err … so the interest rates they have given is only imaginary , but we get to save our money with us for 1 yr
.
At the end we have got the point
Manish
Manish, the 5 year post office Rd can be extended for 1 year to coincide with the maturity of the POMIS and hence the true interest you would get is about 10.5%-10.6% only.
So, anyone going with MIS+RD option can get better returns than ppf for the period of these 6 years if one continues th RD for 6 years
Is it .. I assume you have experienced it personally
.
padmanbhan
In post office RD is 5yrs Rd and 10 yrs RD
only 3 yrs lockin period after 3yrs if you discontinue only SB interest 4%
After 5 to 10 yrs you can close the account any time
@ Mani, I think what Hemant means is that one should invest in POMIS and then re-invest the monthly income from the POMIS through SIP in a good Mutual Fund to enhance the returns. This way, the capital which is invested in POMIS stays secure and only the monthly incoome gets invested in the market (preferably a goood equity MF).
Yes .. looks a good option to me , but rather than a Equity funds, i would suggest a balanaced fund assuming the investor is conservativer already
Manish
Hi Manish
The RD which you had mentioned is 5 Years, but it actually for 6 years. Because MIS is for 6 years, so RD will continue for 6 years which gives 10.94% approx.. Second, i dont think that MIS intrest will transfered to HDFC SB through all postoffice as they dont have any internet facility. As much as i know for transfer you have to open Saving Bank account at the same post office not even in another postoffice of the same city.
Link-
Mukesh
Hare Krishna
Mukesh
Yes . the interest comes out to be 10.60% , have a look at the chart i added to the article .
I am not sure about the interest transfer thing .. Thats debatable
Manish
A couple of scenarios where the MIS could prove useful:
http://www.vinayahs.com/archives/tag/monthly-income-scheme/
I didn’t know that you could ECS the monthly income. That’s certainly a great option to have though. I’ll verify this with a Post Office Agent who I personally know.
Vinaya
Thats would be a good idea if you can really verify and let us know . We need that data as we are not very sure on that
Manish
10.5% is the attempt by India Post at marketing gimmicks. [To compete with the gimmicks of private players?
]
One could calculate the IRR for the POMIS+RD arrangement, and it should come out somewhere between 7.5% & 8%. [I'm too lazy & tired to do so myself now.
]
The funda is this: When your money rests with the POMIS it earns 8%, and when it goes into the RD it earns 7.5%. Compare it with a cumulative FD at X%. The principal earns interest at X% and the interest earns further interest at X% so the yield is X%. The POMIS+RD arrangement is similar except that the principal earns 8% and the interest earns 7.5%, so the final yield would between the two (pre-tax).
Note that both POMIS and RD interests are taxable so the yield will get reduced accordingly. Also note that the POMIS bonus and the quirks of RD formula* would slightly increase the yield.
[* in case one is interested, the quirk of RD formula is thus: If one makes an investment every quarter all with the same maturity date, each of the principals will be compounded for an integral number of quarters. However with RD there is a funda of compounding for fractions of quarters, e.g. the first monthly installment gets compounded 20 & two-thirds times, the second gets compounded 20 & one-thirds times, the third 20 times, the fourth 19 2/3 times, etc. Check ou t the formula at
Slight mistake in the RD explanation I think. Instead of 20 2/3, 20 1/3, 20, 19 2/3, … it is actually 20, 19 2/3, 19 1/3, 19, …, 1 1/3, 1, 2/3, 1/3 (last installment compounded for 1/3 quarter, i.e. one month).
I don’t understand Padmanabhan that how 10.5% becomes 7.5% even with fractional compounding?
@Manish and others,
The RD will not fetch you 10.5% it is the interest part which earns which is approx. Here it is how.
You need to open a savings a/c and RD simultaneously while opening a POMIS. Then the interest will be transferred to Savings A/C automatically and it will be transferred to RD. The rate of interest for savings a/c is 3.5% p.a and on RD is 7.5% which translates to 10.5% totally, which is approx.
Krishna
Actually, I tried the calculator on the India Post page ). There is really no need to calculate an IRR. Just calculate what you deposited and what you got, in the best case it comes around 8.8%.
I tried it with the deposit of Rs. 75000.
Very well said!
Here is an example to get a clear view of what you get.
Suppose you invest Rs.1,00,000 for 6yrs in this scheme. The total amount you get after 6 yrs including the 5% bonus is 1,65,702.
Now calculate the Cumulative interest using the calculator(http://www.jagoinvestor.com/calculators/html/Return_Calculator.html) . The interest turns out to be 8.781 %.
Also note that the returns may not be TDS exempted. (I am not sure if the interest deposited in RD for 6yrs will be tax exempted or not?)
Kamal and Smart Singh
I tried calculating the returns with XIRR with an example , looks like when you include the bonus , the actual returns are in range of 10.5% . See the chart I added in the main article
Manish
Manish,
I am still not clear. For the example you had, you invest 1,20,000 for 6 yrs(forget the details how it gets put into RD and stuff for time being).
The total return at the end of 6 yrs is
1,20,000 + 72806 + 6000(bonus) = 1,98,806.
Now calculate the interest if compounded annually using one of your CAGR calculator(http://www.jagoinvestor.com/calculators/html/Return_Calculator.html)
The interest rate it gives out is 8.778 %. Let me know if I have missed something or if I am using the wrong calculator
8.778% is correct. The reason it is not between 7.5% and 8% plus bonus is because the 7.5% figure is compounded quarterly, not yearly.
(1+0.075/4)^(6*4) = 1.5618, plus 5% bonus gives 1.6118
(1+0.08/4)^(6*4) = 1.6084, plus 5% bonus gives 1.6584
The return for MIS+RD for 6 years is 1,98,806/1,20,000 = 1.6567 which is between the above two as I promised.
This is same as (1+.08778)^6, i.e. equivalent to 8.778% p.a. compounded yearly. It is also the same as (1+.08503/4)^24, i.e. equivalent to 8.503% p.a. compounded quarterly.
And yes, all that you get from POMIS and RD are taxable. However these have no TDS provisions.
The current Direct Tax Code Bill http://164.100.24.219/BillsTexts/LSBillTexts/asintroduced/DTC%20(110%20of%202010)%20To%20be.pdf takes its TDS language from the IT Act so even under the DTC probably RDs may not incur TDS. However for POMIS to remain out of the TDS purview the Govt. would have to notify it specifically for the purpose under the DTC.
Padmanabhan
Its my bad actually , I recalculated everything from scratch and found out the marketing gimmick part . Once again go through the article , I have updated it with my inputs now , see if you find it right now ,. Thanks for pointing it out
Manish
Please update http://img.jagoinvestor.com/ji/returns-from-pomis-rd.png to use the 5-year RD maturity amount of 58312 instead of 72806 and change the other figures appropriately.
Oops!
Please update http://img.jagoinvestor.com/ji/returns-from-pomis-rd.png to state the maturity date as 1.1.2007 instead of 1.12.2006. That is what confused me into thinking you are giving 5 year returns instead of 6 (I just read the years, not the date
).
Update: OK so you have already updated that.
Please update http://img.jagoinvestor.com/ji/returns-from-pomis-rd.png to state the yield as 8.778% [which is (1 + 78806/120000)^(1/6)] instead of 10.32% as it says now.
Kamal
I have revised the article now , the interest of 8.77% is 100% correct
. thanks for pointing it out
Manish
The reason for the need for an IRR calculation is the RD is a 5 year product and POMIS is a 6 year product. Simply using the India Post calculator (which is another gimmick — not faulting them though, they have to compete with other marketing folks!) instead of IRR is comparing apples to oranges.
Padmanabhan
I tried calculating the returns with XIRR with an example , looks like when you include the bonus , the actual returns are in range of 10.5% . See the chart I added in the main article
Manish
Please, anyone tell me that after mataurity of POMIS can we extend this or we have to restart this.
Virag
You can start a new account anytime , you can open a new account even paralally , just that the whole limit of 4.5 or 9 lacs (joint) has to be there .
Manish
@Manish
Nice post. Its understandable that the interest earned on POMIS scheme will earn 10.75% in RD.(But slightly confusing the readers that if we invest in POMIS scheme and choose RD, in total the proceeds will earn 10.75% interest). As SmartSingh mentioned deposits at best will earn 8.8%. I guess it will be good if you include a sample calculation as given in india post calculator to clarify the doubt.
Regards
Jagadees
Jagadees
Yes , I have added the example chart in the main article . I agree that the overall returns turn out to be 10.60%
Manish
yeah Manish, can you clear up the doubts raised in comments?
Abhishek
I cleared it
. Any thing else ?
Manish
Last year I made an investment in POMIS for my parents. At that time banks interest rate were around 6-7% which made POMIS attractive.
The scenario is changed in Jan’11. SBI is offering 8.75 rate upto 10 years. HDFC bank is giving 9% for 2+ years and looks to me that all bank deposit rates are much higher than POMIS. To me in the changed environment, it does not make any compelling reason to invest in POMIS. The banks like HDFC also ready to give out interest money on monthly basis. That too they credit to your account and you can withdraw using ATM card whenever you want.
Dear,
The Bank will deduct 10 % TDS straightly on the Interest earned on any FDs and if you don’t provide PAN, the TDS will be 20 %.
Thanks & Regards,
Sudhahar R
Hi Manish,
Is there any minimum limit for investing in POMIS.
Whether it can be done with lumpsum one-time amount in a year or like a SIP?
Considering the city change, how i can manage the account?
Sangmitra
There is a lumpsum investment option in POMIS , you cant do SIP kind of investment ,. its mainly to get montly income , so you generally make a big investment in expectation of getting monthly return .
Minumum investment is 1500 i guess .
manish
10x
What is SIP?
Hi Manish,
Thank you again for a very nicely written article on POMIS…As we know the interest on POMIS is taxable.Kindly let me know how much tax I would pay taking the same example above
thanks
Manish
Its simple, the income you get out of it will be added to final income of the year .. So as per your tax slab you will be taxed
Manish
The XIRR calculation is fallacious in the article.
The calculation in the article assumes that one invests 800/- every month.
But that is really not the case. We invest at the beginning and keep quiet and take back the returns at end of 6th year. The movement of money from POMIS to rd happens automatically and should not find an entry in our xirr calcluation!
Here are the inputs for xirr calculation!
1-Jan-01 -120000
1-Jan-07 192806 (=1,20,000 + 72806 (RD proceeds) + 5% bonux from MIS)
XIRR = 8.2200053
Lakshman
Its not fallacious , I am only considering the part where you calculate the returns out of RD and bonus, so if you invest 1,20,000 in POMIS ,you get 800 per month ,now thats going to RD , so eventually it was your money which you are investing in RD and then some maturity value is coming out of it + BONUS ,the chart shows only that part and it turns out to be 10.60% , and yes I agree that its not the right figure , because it includes BONUS value ,without Bonus value it will be somewhere around 7.9%
What you said at the end that we just pay 1,20,000 in start and get 1,98806 total at the end is the actualy RIGHT picture and the absolute returns out of the whole situation ,but its coming to be 8.77% for me . Not 8.22% , check again
manish
Great information Manish! Especially the RD part.
Thanks Atul
Hi Manish & All Members
One more thing i want to say that POMIS is good as comapred to NSC, if anyone wants to invest over 1,00,000 u/s 80c for saving Tax. POMIS gives better return than NSC. Below is a comparing chart between POMIS & NSC.
6 YearsPOMIS+RD 6 Years NSC
Sum Assured(A) 1,00,000 1,00,000
Monthly Interest 667 _
M.V Of R.D of 6yrs (b) 60,702 _
5% Bonus on SA (c) 5,000 _
Total ( b + c = D) 65,702 _
After 6 Years Total (A+D) 1,65,702 1,60,100
No TDS No TDS
So its better to invest in POMIS which gives you Rs 5,702 more than NSC on 1 Lakhs, And Rs 25,659 upto 4.5 Lakhs. Isin’t It ?
NOTE- investment upto rs 1 lakhs is good in NSC as it saves tax u/s 80c but after that limit intrest earned on NSC is Taxable. So why not to choose POMIS ?
Mukesh
Hare Krishna
Mukesh
yes ,, one can invest in POMIS , if one’s requirement is of monthly income , this makes them better than NSC
Manish
I thought.. irrespective of how much you invest, the returns in NSC is taxable.
Regards,
AK
Hello Mansih,
Good information like always. Just want to add my 2 cents here. ECS facility for direct credit of interest of MIS is currently available only in 36 locations of post office and not throughout in India. One can check these locations through official website of Indian Post office at
Gopal
Thanks good info .. added it in blog
Manish
which scheme is more beneficial post office monthly income plan or fixed deposit scheme
pradeep
You cant compare like this ..MIP might give higher return , but it comes with some risk
manish
Hi Manish , nice article as usual
POMIS gives 8% return and Senior Citizens Savings Scheme (SCSS) gives 9% return
so please give ur sight on that one too.
what if we combine SCSS with RD so that we can generate 1% extra return?
Pankaj
SCSS gives 9% and its better than POMIS when it comes to returns, but its because its limited to senior citizens , govt gives better facility to them .. so if there is some senior citizen , its makes sense for him to invest in SCSS
thanks buddy my dad is a senior citizen having 10 lakhs lookin for monthly return policy . i will suggest this to him
thanks
Pankaj
He can look at Senior Citizen saving scheme option as investment , he will get 9% interest
Manish
This is really a good post, I’ll try to remember. I think MIS ia good for retired person.
Caribou
Yes .. it can be
Dear Manish,
Thanks for all I know about investments through your blog/site. This link given below gives where ECS is available for Indian postal departments. I have few quires about my investment and Portfolio but first I would like to learn more so I could ask right question to you.
Thanks
Mohinder bidht
Thanks for the link
Regarding crediting of MIS interest to SB accounts in post offices,I have had bad experience,they just do not give any regular interest credit in SB account for the balance amount .If any one knows the rules about Interest Payment To SB Accounts in Post Offices,kindly let me know ? It is better to avail ECS facility and get the interest credit to any Bank.
I dont have any experience in this .
Anyone else knows about this ?
hello, nice site
can you tell me the folowing.
1. i opened an RD account in the year 2000, and continue to pay the monthly amount of 500 regularly, even after maturity i continue to do so till now. now from march onwards if i stop what happens if i keep the amount without withdrawing tilll another 5 yr?
do i get any interest?
if so at what rate?
or is it beter to withdraw and open MIS seperately linked to RD?
can you explain?
regards
MIS talks of joint investment upto 9lakhs what happens in event of demise ofone of the jointholder if this amt has been invested already ===can a fresh joint holder be added to this existing mis a/c
Aruna
If one of the depositors of an MIS account dies, the account will be treated as a single account in the name of the surviving depositor from the date of death of the said depositor. When a report to this effect is received in the post office, the Postmaster will ask the surviving depositor to withdraw the excess amount in excess of the limit prescribed for a single depositor (Rs 4.5 lakh) and this excess amount will not carry interest from the date of death of the joint depositor. The interest already paid on this excess amount will be recovered or adjusted.
A small care has to be taken. The surviving single account holder should effect a nomination as soon as possible.
Hi Manish,
Just a tweak to aruna’s example.
My uncle was having an MIS account with deposit of 3lac with his wife as a nominee. He used to withdraw the interwst money in every 3-4 months.
Uncle died last year in April 2010. Aunty , got to know of the account and had taken time to collect the documents like death certificate n all and gone to post office in in May 2011 to inform Post office as well as to withdraw interest (2000 per month ) from post office. Still they gave her the interest money and told her some procedurs needs to be done to close the acount. (uncle had last withdrawn the interest accrued in March2010 )
Now, in september 2011, she requestd for MIS account closure, then they asked her to return the interest from April 2011 till september 2011 .
1) If they were not supposed to give the interest then why did they give in the first place in May 2011? ..
Post office people state that they came to know about uncle’s death in Sept 2011, only
2) Now aunty had given the interest back to them, is she eligible to get atleast the basic interest of saving bank account from April 2010 till September 2011. Since the deposit money of 3laC (April 2010 – Sept 2011) as well as the interest of 2000 rs (April2010 – May2011 = 14* 2000 = 28000) was with Post office only.
Please excuse for the length of the question.
Thanks,
Akshay
Hi Manish,
A small correction to the previous post,
When Aunty requestd for MIS account closure, then Pos office people asked her to return the interest from April 2010 till september 2011
(not from April 2011)
Thanks ,
Ashay
i have one doubt please clarify it.i would to invest in POMIS.
if invest 100,000 for 6 yrs on that i will get montly income but at the maurity period whether i get my full principal amt with bonus or not.
Ansh
Yes you will get monthly interest and you will also get maturity amount along with 5% bonus.
So in your case, if you deposit Rs. 100000 for 6 years you will get Rs 800 per month and at maturity you will get Rs 105000.
-
Jagoinvestor Team
Whether monthly interest paid in POMIS is taxable?Whether there is any TDS?What is the rate/amount of income tax one has to pay on maturity of such MIS ,say for a principal amount of Rs.10000/-?
i have a little confusion about principal amt. could you plz let me know whether i will get my whole principal amt on maturity period or not. Say by investment of 1,20,000 in POMIS for 6 yrs. on this i will get my monthly interest. but at maturity period how much i get.
We already repplied this : http://www.jagoinvestor.com/2011/01/post-office-monthly-income-schemes-pomis.html#comment-21915
Manish
just visited your page for the first time, and let me tell you it is realllly interesting and informative. i’ll search for all materials that interest me. good work, thanks a lot.
Sure
. Keep reading
I wanted to invest my 60,00000 money in POMIS which i got from sale of my house..Is it possibel
Nitin
No , there is restriciton of 4.5 lacs in POMIS
Manish
Manish,
very nicely presented matter and most important, very informative.
1) I would like ask one thing after reading this article that whether one should invest in POMIS with RD or FDs.
2) I came to know that we don’t have any taxation on POMIS…is it right?
Hoping for ur great response.
Adesh
Dr Adesh
1) where to invest ? It totally depends on what you want, you know what is FD , its locking thing , its return , its risk and same for POMIS , now what is it that you want ? POMIS will lock in your money
2) Who said that , POMIS interest is full taxable .
Manish
I Have invested rs. 600000=00 date-26-4-2006. please give me bonus rate after 6 years.
rate of bonus investe date in mis=26-4-2006
its a nice article . is there any more scheme or plan that can attract my intention because i already knew about it.
There are MIP’s or FD’;s
Manish
Hi Manish
One important query and help, Is it possible for the post office RD account, every month the amount can get auto credited from the post office SB account…
Thanks
VJ
This can be told by Post office only . See what rules they have there .
Manish
My MIS will mature shortly with 10% bonus. I have been paying Tax on the interests I have been getting. Will the bonus be taxable at the applicable rate for me. My highest slab of tax at present is 30%. Is there a way I can save tax on this bonus?
Swapan
Bonus will be taxable
Manish
Hi, I want to invest 4 to 5 lac per year in post office or any other monthly scheme. I want very good monthly return.
pls guide me
Pooja
If you want a fixed and secure return , then you can get average returns only , not “good” or “great” returnrs . for that you need to invest in MIP or something else
Manish
hello
I want to know that i am having 100000 to invest, no. of years is unlimited as i am 32 yeras and i want monthly return from this money.
So how much i will get as monthly return..please suggest
Pooja
You can expect 600-700 per month
Manish
If your intention is to make your money grow, then probably KVP is a better option than going for POMIS + RD.
Smith
Have you done any number crunching on this ? please share
Sir
i have deposited an amount of Rs. 90000 during january 2006.i want to know how much bonus i will get
Venkat
venkat
it would be 5% of 90k which is 4.5k
Manish
Hi,
Govt recently change the POMIS interest rate from 8% to 8.2% and discontinue the 5% bonus.
My question is which scheme is better, new one or old. from which i will get the more return?
Amit
from absolute return point of view , the old one was better because you got 5% bonus at the end .
Manish
Hey Manish
Read you blog for the first time today, and I must tell you, its just great !
keep writing and keep helping us
And, I assure you, I will pass on this information to others as well!
Rohit
Good to hear that
Govt increases the interest rate from 8% to 8.2% but scraps the 5% bonus on maturity. Also it states that rate notification will be from Dec-1 and the MIS of old schemes maturing after Dec-1 won’t get the 5% or 10% maturity bonus? Is this true? If yes then we should take forward it; how can govt not increasing the interest rate of our savings from the date of invested even not giving a single penny of increased interest rate rather they are snatching the maturity bonus (5% or 10% of old schemes) from us if the maturity date falls after 1-Dec.
Jit
As far as I know , the new rates and scrapping of Bonus is applicable only for new accounts . Any old account will get all those benefits which was mentioned before . Where did the info that old accounts will also not get BONUS ?
Manish
Manish;
Here is the extract of an article published in Times Of India which states that:
“There are some disappointments as well. The government is withdrawing Kisan Vikas Patra, on suspicion that this is being used for money laundering. It has also decided to do away with the 5% bonus that MIS customers got at the time of maturity. What is even more disappointing is that this withdrawal of bonus payout will be applicable even on old accounts that remain operational on or after December 1. ”
The link is:
http://timesofindia.indiatimes.com/business/india-business/Now-get-more-on-small-savings/articleshow/10913006.cms
Please clarify on this.
Jit
As far as we know also that anything new should be applicable on new items only and old schemes would be in tact as it offered earlier till its maturity. But if this is the case of hampering old ones too as per claim made by Times of India’s article then don’t you think investor are going to lose a large chunk of their waited bonus.
Jit
Jit
Yes .. but if at the time of taking the product , it was mentioned that the govt rules can change and the rules at the time of maturity will apply , then you cant do anything
Manish
Jit
yes .. i saw that article
Manish
I gone through the official notification on MIS by MoF; it states that
” There shall be no bonus admissible on maturity in the accounts opened on or after 1-12-2011″
So how come this is possible as per Times Of India article to curtail the bonus on existing accounts maturing after 1-12-2011.
Jit
Actually I also saw that and I could not get an offical wordiings on this . It might happen that TOI thing is wrong . You must check with PO directly on this
Manish
please tell me the bonus rate with effective date to closing date
What is the meaing of SIP?
Manju
SIP is Systematic Investment Plan. It means investing monthly in mutual funds .
Manish
I want to invest Rs.10 lacs, so pl advise me where/how to invest?
Hi Manish,
Gone through your blog, its very good and informative.
Please revert on my query. Thanks in advance.
My uncle was having an MIS account with deposit of 3lac with his wife as a nominee. He used to withdraw the interwst money in every 3-4 months.
Uncle died last year in April 2010. Aunty , got to know of the account and had taken time to collect the documents like death certificate n all and gone to post office in in May 2011 to inform Post office as well as to withdraw interest (2000 per month ) from post office. Still they gave her the interest money and told her some procedurs needs to be done to close the acount. (uncle had last withdrawn the interest accrued in March2010 )
Now, in september 2011, she requestd for MIS account closure, then they asked her to return the interest from April 2010 till september 2011 .
1) If they were not supposed to give the interest then why did they give in the first place in May 2011? ..
Post office people state that they came to know about uncle’s death in Sept 2011, only
2) Now aunty had given the interest back to them, is she eligible to get atleast the basic interest of saving bank account from April 2010 till September 2011. Since the deposit money of 3laC (April 2010 – Sept 2011) as well as the interest of 2000 rs (April2010 – May2011 = 14* 2000 = 28000) was with Post office only.
Please excuse for the length of the question.
Thanks,
Akshay
@ Akshay
Recently we faced similar situation like yours. This is what we have learnt. When a person is died, there should not be any interest withdrawls from the account henceforth. No one else is supposed to operate the account. Once the death certificate is submitted, PO has to cancel the account and refund the amount to the nominee. PO would investigate the nominee claim and verifies the death certificate through investigation. It takes about 2 months. Once it makes sure everything in order, the principal and interest (from date of death to cancellation date) would be refunded to the nominee.
Krish,
Does that mean that The Nominee will receive the interest (standard 2000 rs @ 8% or @ savings bank account rate(example 3- 4%) ) for the period from date of death to cancellation date
i.e. Will my aunty eligible to get the interest from April 2010 – September 2011
(SOme post office people are only suggesting that you file a complaint against this, you should get atleast the interest @ savings bank account rate.
Please clarify and tell the actual amount of interest for amount deposited of 3lac .
Thanks a lot
Akshay
Your aunt should receive Rs.2000 a month from Apr’10 to the refund date along with a principal. In our case, PO paid it like that (8%). I don’t see any reason why PO should deny the interest or pay less interest if person is not alive but money is with them.
Thanks a lot Krish,
Now, i will tell my aunt to file a case against PO and ask for the relevant interest.
I have 10 lacs. Pz advise where and how to invest?
Manju
What is your requirement ?
Manish
Dear Manish,
I want to know how to invest in PPF – On monthly basis or yearly.If yearly when it has to be deposited to earn maximum interest.I have opened PPF account just one month back.
Please suggest.
Regards
Rahul
Rahul
invest monthly before 4th
Manish
I want to know that interest from MIS with RD is taxable or not?
Taxable
MIS means monthly income scheme,but till today ie 6 2 2012 the interest has not been credited to my s/s a/c.It will take another 2 or 3 days which has been informed by the po authority,when it was enquired. I do not like to complain but sorry to say service should be improved immediatelly.
Dear sir, i am planing to invest 8 to 10 lack in post office monthly income plane, how much money i will get every month ??? or where should i invest in monthly income plane????
Dear sir, i am planing to invest 8 to 10 lack in post office monthly income plane, how much money i will get every month ??? or where should i invest in monthly income plane?
thnks frnd this is realy good information about mis and to reinvest the interest in RD further …………….
Thanks Pradeep !
hello all
Going through a tough time as my father expired last month…my father had 3 FD accounts for the POMIS of Rs 3 lakh each…all 3 are joint accounts…2 in name of my mom-dad with my name as nominee,,and one joint in name of dad-me n mom as nominee….Date of deposit 12-5-08,,dateof maturity 12-5-14….same in all 3 FDs…….I want to know is it necessary to close these joint FD accounts prematurely??One thing more,,the saving account passbooks of post office in which the Monthly income/interestRs 2000 from each FD was deposited dont mention any nominee name??will the nominees of these saving accounts be same as FDs???plzz advise…i shall be highly obliged….thnxx in anticipation
Sahaj
No its not neccessary to close down those FD’s , because its on joint name , so the other person is now the main person who can manage those FD;s . the FD nominee’s can be different than the saving bank account . Check the saving bank data
Manish
thnxx a ton manish….i m really grateful
I wanted to know from which month/year the 10% bonus on MIS discontinued
SHernaz
From this year itself . Now onwards when you invest in the MIS , the bonus will not be given and it was 5% , not 10%
Girish, Dt 17th march 2012
from the above articles many of my confusion have been cleared. Pl let me , which is more beneficial, whether to keep money in G.P.F account or to withdraw the money from G.P.F account and then invest it in POMIS and P.O saving account.
Girish
GPF would be more better, but then its not 100% in your control
Manish
Thanks for the mentioning the ECS part in the post. Jus verified ECS to other s/b accounts is allowed in select cities only !! link below
http://www.indiapost.gov.in/ECS.aspx
Rajiv
Yes , it might be the case that htey allow it in some cities only !
Thanks , Manish. Please also tell me about some best available monthly income schemes of different banks, which are similar to POMIS. Also clarify the investment limit of those schemes, rate of interest given by the banks and TDS deducted from the interest.
Girish
The only comparable things like that is Bank FD with monthly or quarterly interest nothing else. MIP mutual funds with divident options also are one of the option !
hi sir
what will happen if an NRI hides his status and opens PO-MIS with RD…..
PTM
Its possible that NRI can hide his status and open the POMIS , but incase they come to know that you are NRI , then all those rules will get applied.
what are those roles that will be applied? can u clarify more please?
PTM
I mean whatever penality/rules are defined . In this case you will not get any interest
is there any check point between all POST offices that in one name maximum limit 4.5 lacs only allowed?
i mean: imaging one guy opened PO MIS in mumbai post office 4.5 lacs
& he also later open another PO MIS in pune or delhi post office for another 4.5 lacs…
is there any cross checking there existing?
PTM
I dont have info on this .. Its possible that one person can open a MIS at two places … Better ask it on our forum to get more clarity http://www.jagoinvestor.com/forum/
Dear Manish,
How NRE can invest in this scheme? What kind of documents has to be submitted while opening this account?
PTNM
that info you can get from POst office website .. you will mostly be needed to be physically present !
The info. you provide is of great help to senior citizens. Is it possible to get back the investment done on 11th may 2011, fifteen days prior to the year, as we need the money urgently.
Thank you
regards
saras
Look at the minimum lock in period , I think its one year only
The interest rates have changed recently.
MIS – 8.50% per annum w.e.f. 01.04.2012 and no Bonus
RD – 8.4% per annum
Thanks
thanks for the update Srinivas
I have changed the dates already , also the chart is only to show returns for RD part , so 10.32% is right there .. The chart is not to show the actual return
Manish
Manish plz tel me if a person can open on his name every year an accouant in POMIS, with say an amount of 50k
Shekhar
yes , your overall limit should be not more than 4.5 lacs
Thanks Manish, also can you pls compare total sum acquired from ppf and POMIS for 70k returns at the end of 6th year, though i dont remove the money from ppf at the end of 6th year
Raja
Not clear !
Manish
Ha manish, plz conclude whether the returns are finally 8. 5% or 10.5%
Manish, suppose two friends A and B invest there money in the following manner. Person A invests 70000 every year in PPF for 12 years and person B invests in a joint account with his wife same 70000 every year in POMIS for same 12 years, then what would there final corpus amount to at the end of after 13 years, after tax deduction
Its 8.5%
Shekhar
If you are looking at 12 yrs , then PPF is better
Thank you very much for clearing my doubt.
What is the difference between Single & Joint A/c in MIS?
Manju
When you open an account with just your name , its single , when you open it jointly with some one else ,its JOINt
Manish
which scheme is better PPF or MIS (with R.D.) for 6 years?
Manju
You cant compare PPF and MIS that way . .their purpose , tenure and structure is different . The better thing would be that you let us know your requirement and then we can suggest what is the best thing in your case
Manish