Monthly Income Scheme or MIS is a very popular scheme in post office which is specially used for retired persons to generate regular monthly income. In fact as per my knowledge including my father and my friend’s parents, whoever is retired have a Monthly Income Scheme Account in bank or post office. This scheme is really a very good scheme, which will give decent return and the feeling of pension or monthly salary. But this scheme may not be that much popular in urban areas as there are various other way to invest and get regular income from investments. Anyway. Let’s explore various features of this post office Monthly Income Scheme Account.
Key Highlights of Monthly Income Scheme Account
One can open this account single or joint. The maximum individual limit of investment is 4.5 lakh and if you open a joint account also, the individual limit can’t be changed. The min amount is 1500.
The deposit can be possible in case / cheque/. But after demonetization as there might be some restriction of cash deposit up to certain amount, its better go with cheque facility. You can ask the post office executive about the latest changes in rules if any.
Nomination facility is available at the time of opening and also after opening of account.
The current interest rate on Monthly Income Scheme is 7.70% annually and the interest is payable on monthly basis. E.g. if you open a MIS scheme in post office with Rs 4.5 lakh amount @ 7.7% interest rate, then your approx annual income will be Rs 34650.00. Now you will get monthly Rs 2887.5 in your savings account.
This monthly interest amount will be automatically transfer to your SB account in post office or any other bank like ICICI bank, HDFC bank, SBI etc. You have to provide the ECS mandate to transfer the monthly interest amount.
In case you have not transferred the monthly interest, your money will not earn any further interest.
Account can be opened in the name of minor and a minor of 10 years and above age can open and operate the account.
Minor after attaining majority has to apply for conversion of the account in his name. Maturity period is 5 years from 1.12.2011.
The general maturity period is 5 years and you will get a bonus of 5% on principal amount is admissible on maturity in respect of MIS accounts opened on or after 8.12.07 and up to 30.11.2011.
If you want to break the MIS before maturity, then you have to pay a 2% of your deposit [ after one year but before 3 years ] and after 3 years at the discount of 1% of the deposit.
No bonus is payable on the deposits made on or after 1.12.2011.
If you don’t want the monthly interest income to spend, the you can easily request to transfer the same money to open a recurring deposit account. This will help you earn little more money from the idle money.
There is no income tax exemption on this account and the interest earned is taxable as per the current tax slab. But there is no TDS applicability.
How To Open Monthly Income Scheme Account in post Office [POMIS]
First of all you have to download the application form online to apply Monthly Income Scheme Account. Fill up the form properly with all necessary & personal details.
You can also collect the MIS application form by visiting your nearest post office.
Attach the xerox copies of address proof, identity proof, 2 passport-size pictures, PAN card etc.
Also carry the original documents for verification purpose.
Is MIS A Good Monthly Income Plan or a Pension Alternative?
If you have enough corpus and looking for a steady, guaranteed return without taking much risk them MIS is actually doing very good for many pensioners. In fact in various places where there is no proper banks or even if bank, but there is no proper financial education, people generally prefer to put money in MIS scheme in post office and prefer to earn monthly income as pension. Although there are better alternatives of MIS scheme, but may be it is better compared to any annuity plan as you can invest and start getting monthly income immediately and also the corpus can get mature by 5 years duration. Do you find post office MIS scheme a better option for getting regular monehtly income?