All About Post Office Monthly Income Scheme (POMIS)

Even though the young professionals of today are more interested in mutual funds and others types of investments schemes offered by the banks and non-banking financial companies (NBFC), the post office has a number of great investment products too. One of these is the Post Office Monthly Income Scheme (POMIS) which is a risk-free investment that offers high returns with a short locking period.

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What is POMIS?
POMIS is an investment scheme that offers an assured monthly income on the basis of the amount of money invested. The interest rate earned is around 8% which is calculated for the entire year. The lock-in period for this scheme is 5 years.
To consider an example, if you invest Rs. 4 lakh in POMIS, then you will earn Rs. 32,000 per year in the form of interest, assuming the rate is 8%. Dividing the amount by 12, we get around Rs. 2,600. This will be your monthly income generated under the scheme.
Although no TDS is deducted under POMIS, the interest earned is considered as a taxable income under the Section 80C of the Income Tax Act.
What are some of the salient features of POMIS?

• You can transfer your POMIS investment from one post office to another in an easy manner and without paying any fee.
• No TDS is deducted from your investment under POMIS, unlike many other investment schemes.
• You can appoint a nominee for your POMIS account if you want. This way, if you pass away, the nominee will receive your investment corpus.
• You are allowed to open multiple POMIS accounts. However, the combined investment amount cannot exceed Rs. 4.5 lakhs which is the upper limit.
• Minors are allowed to open a POMIS account granted they are at least 10 years old.
• You can enable an auto-credit feature which transfers your monthly income earned directly into your post office savings account.