Post Office Monthly Income Scheme

Post Office Monthly Income Scheme is a straightforward savings scheme. It is not linked to market returns and hence offers a safe and reliable investment avenue.

• One can open the account individually or jointly with 2 other persons.
• This account can be opened with a minimum investment of Rs.1000 and further in multiples of Rs.100. The maximum investment allowed by an individual is Rs.4.5 lakhs.
• One can open multiple accounts in multiple post offices across the country. However, the total deposit should cumulatively not exceed the Rs.4.5 lakhs.
• Current interest rate is at 6.6%. The interest amount shall be paid upon completion of the first month of deposit.
• Interest amount can be withdrawn as cash at the post office. You can also opt for direct debit into your post office savings account.
• The account can be transferred to any other post office within the country.

Who is eligible to open the Post Office Monthly Income Scheme?

This account can be opened by the following people:

• A resident Indian can open an individual account
• Up to 3 individuals can open an account jointly
• A legal guardian can open on behalf of a minor
• A legal guardian can open on behalf of a person of unsound mind
• A minor above 10 years can open in their own name

How to deposit money into the account?

The account opening form is available at your nearest post office. Fill in the form and submit the following documents:

• KYC Form 
• PAN Card
• Aadhaar card
• If Aadhaar card is not available, the following documents can be submitted: 
• Passport 
• Driving license 
• Voter’s ID card 
• Job card issued by NREGA signed by the State Government officer
• Letter issued by the National Population Register containing details of name and address
• Proof of date of birth/birth certificate in case of minor account. (Birth certificate is mandatory for Sukanya Samriddhi Account).

• For Joint Account, KYC documents for all joint holders to be submitted
• For minor account, KYC detail of guardian to be submitted

Points to be noted: 

• Conversion of a joint account to a single account or vice versa is not permitted.
• Upon becoming a major, the minor must send a new account opening form and KYC document to the Post Office concerned for the transfer of the document under his/her name.
• For contributions above Rs. 10 lakhs, as per the Prevention of Money Laundering Act-2002, evidence of the source of the investment must be given.
• For senior citizens investing their VRS amount, proof of the pension payment is to be given.

How much money can one invest in the Post Office Monthly Income Scheme?

• A minimum of Rs.1000 is sufficient to open the Post Office Monthly Income Scheme
• Investments are to be made in multiples of Rs.1000
• One can invest a maximum amount of Rs. 4.5 lakhs in a single account and up to Rs. 9 lakhs in joint account
• An individual is allowed to invest a maximum of Rs. 4.5 lakh in the scheme (including his share in joint accounts)
• For calculation of share of an individual in a joint account, each joint holder has an equal share in each joint account.
• Account opened as a legal guardian of a minor is considered separately

How is the interest calculated on the account?

• The current rate of interest on the Post Office Monthly Income Scheme is at 6.6% per annum (as of 1st April 2020)
• Interest is due at the end of one month from the date of opening and so on till maturity.
• If the interest accrued on a monthly basis is not asserted by the account holder, that interest shall not accrue any extra interest.
• In the event of any additional deposit made by the depositor, the excess deposit will be refunded and only PO Savings Account interest will be extended for such amounts from the date of the opening of the account to the date of the refund.
• Interest may be withdrawn or auto credited to your Post Office savings account in the same post office or via ECS. In the case of a MIS account at CBS Post Offices, monthly interest can be added to the savings account kept at any CBS Post Office.
• Interest amount is taxable in the hands of the depositor.

Premature Closure of Post Office Monthly Income Scheme Account

If you are in need of some emergency funds, you may choose to prematurely close your Post Office Monthly Income Scheme.

• You cannot withdraw the account before one year of account opening. After one year, the accounts can be pre-closed after the deduction of penalty charges.
• If you choose to close the account after 1 year and within 3 years from the date of opening of the account, a debit equal to 2% will be taken from the balance and the remaining balance will be paid.
• If you pre-close it after 3 years and within 5 years from the date of opening of the account, a debit equivalent to 1% will be taken from the principal and the remaining amount will be paid.
• To close the account, you have to submit an application form and enclose your pass book to the postal office concerned.

What happens when the account matures?

The Account may be closed at the end of 5 years from the date of opening. You can close the account and withdraw the balance amount by submitting the required application form along with the Passbook to the Post Office concerned.

In case of death of the account holder before the maturity date, the account will be automatically closed and the balance amount shall be refunded to the nominee/legal heirs. Interest shall be offered up to the corresponding month in which the refund is made.

Maturity amount shall be paid in the following modes: 

• Below Rs. 20000 - by Cash
• Rs. 20,000/- or above – through Account Payee Cheque or Transfer to PO Savings Account

Nomination

• Nominating your legal heir is necessary to make sure that the amount reaches the right person in case of your death.
• Nomination is mandatory while opening the account. 
• One can nominate up to 4 people on the account. 
• If you want to change the nomination during the tenure of the deposit, you can do so by submitting the prescribed application at the Post Office.

Charges and Fees for Opening and Operating the account

What are the tax benefits of the Post Office Monthly Income Scheme?

The Post Office Monthly Income Scheme does not offer any tax benefits to the investor. Neither the deposited amount nor the interest accrued are eligible for tax deductions. However, it is exempted from TDS and therefore, the tax liability is in the hands of the taxpayer.

FAQs