Post Office Monthly Income Scheme (MIS) is an investment scheme that promises you a safe and constant stream of income. As the name suggests, in this scheme you invest a certain amount and earn a fixed interest every month.
National Savings Monthly Income Account is a very popular scheme and you can invest in this scheme from any post office. In this post, I will discuss everything about the Post Office Monthly Income Scheme (MIS).
Table of Contents
Post Office Monthly Income Scheme (MIS)
National Savings Monthly Income Account (MIS) is a small savings scheme which gives you a guaranteed return on your investment. It is a scheme in which you can invest a certain amount of money and earn a fixed rate of interest every month.
You can invest up to Rs. 4.5 lakhs in a single account and Rs. 9 lakhs in a joint account. In a joint account, each joint holder has an equal share in each joint account.
National Savings Monthly Income Account (MIS) keeps your capital intact as it is a Government-backed scheme. The maturity period for this scheme is 5 years.
You can open a Monthly Income Scheme account and generate a steady monthly income source.
Features of Post Office Monthly Income Scheme (MIS) Account
1. The investment is risk-free as it is a Government-backed scheme.
2. Any individual may open an account.
3. An account can be opened by cash or cheque.
4. You can open an account in the name of the minor and a minor of 10 years and above age can open and operate the account. The minor after attaining the majority need to apply for conversion of the account in his or her name.
5. A joint account can be opened by two or three people. All joint account holders have an equal share in each joint account regardless of who is investing.
6. You can convert a single account into a joint account and Vice Versa.
7. The maturity period for this scheme is 5 years.
8. The scheme can be prematurely closed after completing one year but before three years at a penalty of 2% of the deposit and after completing three years at a penalty of 1% of the deposit.
Documents required for opening of Post Office Monthly Income Scheme (MIS)
1. National Savings Monthly Income Account opening form
2. Two passport size photographs
3. Address proof
4. Identity proof (PAN card or declaration in form 60 or 61 as per the Income Tax Act).
Eligibility for the opening of MIS account
1. It can be opened by any individual.
2. A joint account can be opened by 2 or 3 people.
3. It can be opened in the name of the minor and a minor of 10 years and above age can open and operate the account.
How to open the MIS account?
Opening a National Savings Monthly Income Account is a simple and easy task. Just open a savings account in the post office if you don’t have one.
Submit the duly filled National Savings Monthly Income Account opening form. You also need to submit a copy of your address proof, Identity proof and 2 passport-size photographs at the counter.
You need to carry the original documents for verification purposes. Get the signature of your witness on the form. Make the initial deposit via cash or cheque. If you are giving a post-dated cheque then that date will be your account opening date.
Interest payable on Post Office Monthly Income Scheme (MIS)
Interest rates are 6.6% per annum payable monthly from 01.04.2020.
For example, Mr. X has invested Rs. 4.5 lakh in this scheme for a period of 5 years. The interest rate is 6.6% per annum. Therefore, his monthly income will be Rs. 2475 for that period.
Monthly interest earned can drawn through auto credit into savings account standing at the same post office, via PDCs or ECS.
If this scheme account standing at CBS Post offices then interest can be credited to savings account standing at any CBS Post offices.
After maturity, Mr. X can withdraw his deposited amount of Rs. 4.5 lakhs, either from any post office or get it to his savings account via ECS.
The minimum amount for opening of an account
Account can be opened with minimum of Rs. 1000 and in multiple of Rs. 100.
The maximum balance that can be retained in this scheme
You can invest up to Rs. 4.5 lakhs in a single account and Rs. 9 lakhs in a joint account.
Number of MIS Accounts
You can open more than one account in your name at any post office. But the total investment by adding balance in all accounts should not exceed Rs. 4.5 lakhs.
Account Transfer Facility
You can transfer your MIS account from one post office to another at no extra cost.
Nomination Facility
You can nominate a beneficiary at the time of opening and also after the opening of an account to avoid difficulties for the nominee later on.
Tax Benefits under this scheme
The investment in this scheme does not offer any tax benefit and the monthly interest income is subject to taxation. However, there is no TDS on the interest amount.
Note: This post was originally published on June 4, 2018 and has been completely updated for accuracy and comprehensiveness.
Final Thoughts
Post Office Monthly Income Scheme (MIS) Account still offers an appealing interest rate for low-risk appetite investors. Moreover, this is a government-backed scheme. Therefore, you can consider investing in these schemes if you think, you belong to that category. However, the investment in this scheme does not offer any tax benefit.
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