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.

You can deposit the money in the POMIS with cash, demand draft or local cheque. Once you open an 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 . 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.

Bonus Tip : How to earn 10.5% interest from POMIS ?

Here's a small bonus tip for you.  To earn a better interest from this scheme, Post office provides a facility where you can open Post office monthly income scheme and a Recurring Deposit account in same Post office and then direct the post-office to transfer the interest earned in POMIS to the Recurring deposit each month. Post-Office is going to give you 10.5% interest on this Recurring deposit. This RD would be only for 5 yrs.

Note that this setup operates automatically, you have to set up this once and then no more overseeing. It will happen automatically each month (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