Post Office Monthly Income Scheme (MIS)-Who should invest?
One of the safest investment options is investing in post office saving schemes. Among the various investment offerings from the Post office, Monthly Income Scheme (MIS) is a unique scheme which provides regular monthly income. There are several good things about Post Office Monthly Income Scheme (MIS). What are the features of Post Office MIS Scheme? Who should invest in such Monthly income Schemes (MIS) of Post office?
Features of Post Office Monthly Income Scheme (MIS)
- Post office MIS Scheme provides guaranteed regular monthly income.
- The rate of interest is 8.4% per annum. E.g. if you invest Rs 3 Lakhs, you would get Rs 2,100 per month.
- Maturity period is 5 years.
- Minimum investment is Rs 1,500 and multiples of Rs 1,500 each.
- The maximum investment limit is Rs 4.5 Lakhs.
- You can open any number of MIS schemes. However the overall maximum limit unchanged.
- You can also open this scheme as joint holder. The investment limit for the joint MIS scheme is Rs 9 Lakhs.
- You can open SB account with same post office so that interest is credited to such SB account.
- Nomination facility available when opening the account or at a later point of time.
- PO MIS Scheme can be transferred to any post office across in India free of cost.
- Guarding / Parent can open PO MIS scheme on behalf of a minor who has completed 10 years of age. Upon majority, minor need to convert such account in his name.
What are the positive factors of Post office MIS Scheme?
- Risk free monthly income as Post Office is owned by Govt. of India.
- Regular monthly income @ 8.4% per annum interest rate. Rs 1 Lakh invested would earn Rs 700 per month.
- No TDS is deducted by Post office. However, in case the interest amount is taxable, tax payer needs to declare this in his / her income tax returns and pay necessary income tax based on his income tax slab.
- Good for Sr. Citizens, retired individuals and individuals who do not want to invest in equity or mutual funds or bank FD schemes.
- The deposit amount is exempted from wealth tax.
What are the negative factors of Post office MIS Scheme?
- Low returns compared to bank FD schemes which offer 9% returns.
- Non Resident Indians cannot apply for this PO MIS Scheme
- If you do not open SB account with the post office and do not withdraw interest on time, such interest would not earn any interest.
- Interest in the such PO MIS scheme cannot be transferred to the bank SB account.
- No tax rebate u/s 80C though this is 5 year deposit.
Are there any penalties for premature withdrawal of PO MIS Scheme?
- You cannot withdraw the PO MIS scheme within 1 year
- 1-3 years – 2% of penalty on deposit amount
- >3 years – 1% of penalty on deposit amount
How to maximize returns from Post Office MIS Scheme?
Keeping some limiting points into consideration, I can suggest below strategy to maximize returns from MIS scheme.
- Open a SB account with the Post Office and put a request to transfer, PO MIS scheme interest to be credited to such SB account. You can expect some returns from SB account in case you are not withdrawing it immediately after the interest is credited. You can also transfer such money to any other bank account.
- In case you do not need this money on a monthly basis, you can re-invest by opening a recurring deposit with the same Post Office and giving auto instructions to debit your Post office SB account. This way, PO MIS scheme interest credited in SB account would get re-deposited under recurring deposit. Currently recurring deposit rate in Post Office carries a 8.4 % interest per annum.
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Post Office Monthly Income Scheme (MIS)