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Post Office Monthly Income Scheme: A good investment option post retirement

With POMIS, senior citizens can safeguard themselves from re-investment risk for a lock-in period of 5 years.

October 31, 2018 / 10:40 AM IST

Out of the wide variety of scheme present for you to invest towards your retirement planning, Post Office monthly income scheme (PO-MIS) can be one of the best instrument to invest after you retire. As the name suggests, it means that any individual investor who needs regular income can park their money in such scheme.

Harsh Gahlaut, CEO – FinEdge told Moneycontrol that with SBI slashing senior citizen FD rates to 6.75%, the Post Office MIS (POMIS), at 7.5%, still has an edge of 75 bps over instruments of comparable risk. With the POMIS, senior citizens can safeguard themselves from re-investment risk for a 5 year period, as the rate gets locked in.  “The higher than FD rates, coupled with the sovereign guarantee, makes POMIS worthy of consideration for risk-averse senior citizens,” he added.

Here are eight important features you should know about POMIS scheme:

=> POMIS account can be opened by resident individual especially suitable for retired employees or senior citizen whereas NRI and HUF cannot open the account.

=> One can make a minimum investment of Rs 1500 which can be increased in same multiples thereafter.

=> Maximum deposit of Rs 4.5 lakh can be made in single account while in case of joint account maximum investment can go up to Rs 9 lakh.

=> The investment made by an individual cannot be claimed under section 80 C of income tax act.

=> Account for the minor can be opened in the name of a guardian where the limit for depositing the money is capped at Rs 3 lakh.

=> Premature closure of an account is possible after 1 years where one will be charged for up to 1% to 2% of deduction on deposit as per the pre-mature withdrawal made after the completion of 3 years or before the completion of 3 years respectively. However, no deduction is made in case of death.

=> There is a provision of auto credit facility available where interest to a savings account can be transferred directly. The interest income is taxable under the head “Income from other sources” of the income tax act.

=> No bonus is paid if the investment is made on or after December 1, 2011, and also no TDS is deducted at the time of maturity.

“The monthly interest can be either collected directly from the post office or transferred to a bank or post office savings account. The monthly interest can also be invested in a recurring deposit or a SIP, earning you even more interest. Though the tax benefits are few, the versatility of the product, the flexibility it offers, and the dependable monthly income it offers makes it an attractive product for retirees,” told Ajit Narasimhan, Category Head – Savings and Investment, BankBazaar.

 Here are few things you require to open an MIS account in Post Office

You need to have a copy of the following documents ready before opening a POMIS account at your nearest location.

=>Two passport size photographs

=>Address proof and identity proof which can be your Aadhaar card, voter ID, ration card, PAN card, a valid passport, driving license, etc. You should not forget to carry the original identity proof for verification purpose as mentioned thereon.

Also, while filling up the form carefully, you should not forget to provide the nominee details. And once the procedure is completed, deposit your money to get the regular income out of it.

Navneet Dubey
first published: Nov 3, 2017 10:35 am