If you are looking for an investment option that provides regular additional income, has a government-backed guarantee, and is risk-free, Post Office Monthly Income Scheme (POMIS) is the way to go.
It is one of the many services offered by the Indian post and comes under the purview of the Finance Ministry. Since it is governed by the Central government, it is highly reliable and risk-free.
Like in an RD or a PPF, you can deposit the monthly amount in this scheme and receive monthly interest. Currently, it gives an interest of 6.6 percent per annum.
This feature is available at any and all post offices and is preferred by low-risk investors, senior citizens who are in need of an additional regular income. It generally offers a higher interest rate than an RD and FD.
Eligibility
This feature can only be utilized by a resident of India. NRI's cannot benefit from this scheme. Only an individual above 18 years can open a POMIS account, however, an adult can also open an account on behalf of a minor who is above 10 years of age.
The minor can only access this fund once he/she becomes an adult. After reaching the age of 18, the minor can close the account or get it transferred to his/her name.
Now let's look at the features and benefits of a POMIS account:
1) Minimum investment for a POMIS account is as little as ₹1,000 or you can deposit in multiples of ₹1,000.
2) It offers a monthly interest on the deposited amount, which you can withdraw at your own convenience or opt for an automatic withdrawal.
3) An individual can invest up to ₹4.5 lakh in a single account. For a joint account, this maximum investment can be up to ₹9 lakhs.
4) The lock-in period to withdraw the entire deposited amount is 5 years from the date of opening the account.
5) Premature withdrawal is also possible but it attracts penalties. Withdrawing before 3 years attracts a penalty fee of 2 percent while withdrawing after 3 years but before 5 years levies a penalty of 1 percent on the account holder.
6) The monthly payout received starts after 1 month of opening the account.
7) While the investments in a POMIS scheme are not covered under Section 80C, there is no TDS levied on the monthly payments as well.
Now let's look at the features and benefits of a POMIS account:
1) Minimum investment for a POMIS account is as little as ₹1,000 or you can deposit in multiples of ₹1,000.
2) It offers a monthly interest on the deposited amount, which you can withdraw at your own convenience or opt for an automatic withdrawal.
3) An individual can invest up to ₹4.5 lakh in a single account. For a joint account, this maximum investment can be up to ₹9 lakhs.
4) The lock-in period to withdraw the entire deposited amount is 5 years from the date of opening the account.
5) Premature withdrawal is also possible but it attracts penalties. Withdrawing before 3 years attracts a penalty fee of 2 percent while withdrawing after 3 years but before 5 years levies a penalty of 1 percent on the account holder.
6) The monthly payout received starts after 1 month of opening the account.
7) While the investments in a POMIS scheme are not covered under Section 80C, there is no TDS levied on the monthly payments as well.
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Step by step process
1) Visit the nearest post office and collect a POMIs account form.
2) Fill in all the details and provide necessary documentation including nominee details and nominee signature.
3) Submit the form and required documentation. Carry original documents for verification.
4) Deposit cash or cheque of a minimum of ₹1,000 and open the account.
To open a POMIS account, you will need the following documents:
1) Identity proof: Aadhar, PAN, Driver License, passport, Voted ID, etc
2) Address Proof: Bank passbook, utility bills, passport, aadhar, etc
3) 2 passport size photographs.
POMIS is a very safe, government-backed investment option for individuals who require additional monthly income. While there are a lot of benefits of starting a POMIS, you can get better interest rates in mutual funds, however, the risk is also higher.