Post Office MIS is seen to offer higher interest as compared to other fixed-income investments including some bank FDs but the returns from the MIS investments do not beat inflation.
The Post Office Monthly Income Scheme (MIS) is a low-risk investment scheme offering steady income and, hence, is suited for conservative investors and senior citizens. It is one of the small savings investment schemes wherein you can start investing with a minimal amount of Rs 1000.
This scheme is one of the popular investment options in India, as it is a government-backed scheme and the invested amount is protected by the government until maturity. The MIS is a fixed income scheme and is a low-risk investment. The money deposited is not subject to market risks and stays safe.
Investors can start by investing Rs 1,000 in this monthly income scheme, and the amount gradually multiplies over time. This Post Office investment comes with a lock-in tenure of 5 years, wherein the investment amount can be withdrawn or re-invested after maturity.
Under the Post Office monthly income scheme, investors can invest up to Rs 4.5 lakh individually and Rs 9 lakh jointly. Once you start investing, you will receive the payout from the investment starting from the first month, that will be credited to you at the end of every month.
With MIS, investors earn guaranteed interest returns every month. The current interest rate offered by Post Office MIS is 6.6 per cent per annum from 1 April 2020. Experts point out POMIS is seen to offer higher interest as compared to other fixed-income investments including some bank FDs but the returns from the MIS investments do not beat inflation.
An individual can open more than one account in their name, but the total deposit amount cannot exceed the maximum limit of Rs 4.5 lakh together in all of the accounts. Depositors can also open a joint account with up to 3 people, and the account belongs to all account holders equally irrespective of who is making the contribution. An account can also be opened in the name of a minor aged 10 or above, who will be able to access the funds after reaching 18 years of age. The total investment, in the case of a minor, cannot exceed a total of Rs 3 lakh.
Note that, investments under this monthly income scheme do not fall under section 80C, and the income is subjected to taxation, but it has no TDS.