Post Office MIS Calculator and Scheme 2019

Post Office Monthly Income Scheme Calculator

Calculate and learn more about the Post Office MIS Calculator and the Scheme. Is it the best investment tool available for you?

What is the Post Office Monthly Income Scheme (also known as POMIS)?

The Post Office Monthly Income Scheme is an investment scheme that falls under the jurisdiction of the finance ministry and is available to native Indians. It is considered as one of the most reliable, low-risk schemes as it generates a guaranteed stream of income. For people that are interested in this scheme, protecting their invested capital is of the utmost priority.

If you’re used to a much more risky investment environment then this may not be the best investment option for you. However, most investors invest a small portion of their corpus into safe instruments like the Post Office Monthly Income Scheme, Fixed deposits, recurring deposits, savings accounts etc for protection in case the equity/real estate markets tank.

As an example, Mr. Yadav has a corpus of Rs. 2 crores. He is invested 30% in equity, 40% in real estate and the remaining 30% in the Post Office Monthly Income Scheme. This equals to an amount of Rs. 60 Lakhs invested in the Post Office Monthly Income Scheme. Using the latest interest rate of 7.7%, he would receive a monthly income of Rs. 38,500 from this scheme. He can then invest the rest of his corpus into riskier investments in the hopes of a larger gain knowing that his Rs. 60 lakhs are safe in the Post Office Monthly Income Scheme.

Calculate how much can you get back using Post Office MIS Calculator

What are the features of Post Office Monthly Income Scheme (POMIS)?

What are the features of Post Office Monthly Income Scheme

It’s very important to read all scheme related documents before investing in it. We have provided the main features of this scheme below:

Did you find out your returns using Post Office MIS Calculator?

Post Office Monthly Income Scheme is Government-backed

You read that right! And we all know that government-backed investment schemes are as safe as it gets in the investment world! There’s a small catch though. You won’t be able to achieve gains of 13-15% per annum as you might in the stock market or real estate.

Don’t believe it? Type in the investment you plan to make using Post Office MIS Calculator and see it yourself.

Scheme Tenure

If you choose to invest in the Post Office Monthly Income Scheme, you would have to keep your invested capital locked up for at least 5-6 years. If you wish to withdraw your funds prematurely, you would have to pay a fee of 1-2% of your invested amount. You will be able to withdraw the full maturity amount if you stay invested for longer than 5-6 years.

Using Post Office MIS Calculator, calculate how the duration of investment can get you better returns.

Frequency of payouts

The payouts in the Post Office Monthly Income Scheme don’t work the same way your salary does. Instead of getting credited to your bank account on the 1st of every month, the Post Office Monthly Income Scheme payout will get credited 30 days after you deposit your investment amount and every month after that day. There is only one option as far as frequency of payouts are concerned and that is monthly.

Nature of Risk

As you would have already guessed by now, the Post Office Monthly Income Scheme is a super-low risk investment. The capital that you invest into this scheme will not be affected by the general outlook of markets and will be safe from volatility found in other investment avenues.

Minimum Investment Amount

You can start investing in the Post Office Monthly Income Scheme with as little as Rs. 1,500. This makes it a great scheme if you wish to test the waters with government investment schemes with a small amount at first. You can always increase your investment afterwards.

Try the Post Office MIS Calculator and calculate how your principal can get you better returns.

Returns

The returns of the Post Office Monthly Income Scheme scheme are announced by the government of India every quarter. Historically, the interest has varied between 7%-8.5% per annum. Also note that as this is a government backed scheme, your returns are guaranteed. The returns may not be inflation beating in the long run but they are definitely higher than your typical bank fixed deposit.

Tax implications

There are two important tax implications that you should know of if you’re investing in the Post Office Monthly Income Scheme. Firstly, returns under this scheme do not fall under Section 80c and therefore, your monthly income is subject to taxation. Secondly, your monthly income is not subject to TDS.

Multiple accounts

The Post Office MIS provides you with the option to open multiple accounts if you wish to. However, note that the total amount invested across all these accounts should not exceed Rs. 4.5 lakhs.

Moving capital

The Post Office Monthly Income Scheme is very flexible in terms of allowing you to move your funds. If you wish, you can move your money to a recurring deposit (RD) using a feature that the post office launched not too long ago.

Age of investor

It’s possible to open a Post Office MIS Calculator account for a minor who is at least 10 years old. Once this minor crossed the age of 18, he would have the option to avail the funds as long as the investment is less than Rs. 3 lakh. Once the minor becomes an adult, he/she would be required to transfer the account to his name.

Eligibility criteria

If you wish to invest in the Post Office MIS Calculator, you must be an Indian resident to meet the eligibility criteria. NRIs are not eligible to invest in this scheme.

Nomination of beneficiary

As with most investment schemes, you can nominate a person to act as the beneficiary of this account. This beneficiary (usually your family member) can claim the benefits of your investment account in case you (the investor) pass away.

Collection of money

You have multiple options to collect your money from the returns of Post Office Monthly Income Scheme. Check the returns value using Post Office MIS Calculator.

You can either collect the money directly from the post office every month or get it transferred to your savings account. Some savvy investors also invest the monthly return through an SIP in mutual funds.

Transfer of account

If you’re invested in the Post Office Monthly Income Scheme and plan to shift cities, don’t worry! You can transfer your account from your current post office to the other city’s post office at no extra cost.

Reinvestment options

The Post Office Monthly Income Scheme provides you with the option of reinvesting your corpus even after your investment period has matured.

What are the benefits of Postal Monthly Income Scheme?

There are multiple benefits to investing in the Post Office Monthly Income Scheme.

Check it yourself using Post Office MIS Calculator.

We have listed some of them below:

Monthly Return: Unlike most investment options, this scheme provides you with a monthly guaranteed cash flow.

Bonus on maturity: Earlier, this scheme also used to aware a bonus on scheme maturity. These benefits are unfortunately no longer available.

Tax: The biggest benefit of investing in the Post Office Monthly Income Scheme is that tax is not deducted at source of interest income earned. However, it’s important to note that this scheme does not provide a tax rebate either.

Multiple account holders: This scheme can be owned by multiple owners. (max 3 adults).

Minor friendly: This scheme can be started for minors above the age of 10.

Low early withdrawal penalty: Penalty fees range from 1-2% of your investment amount and are on the lower side when compared to other investment products, especially insurance!

What is the Post Office MIS Calculator interest rate today?

The Postal Monthly Income Scheme has a variable interest rate that changes every quarter. This interest rate is decided by the government and our Postal Monthly Income Scheme calculator uses the latest interest rate as per the government.

The interest rate reached as high as 8.5% in 2012 and currently sits at 7.6%. You would have guessed by now that this interest rate is not too impressive. However, it’s much higher than most bank Fixed Deposit interest rates and is also guaranteed by the Indian government.

How to open a Post Office Monthly Income Scheme (POMIS) Account?

If you wish to open a Post Office Monthly Income Scheme account, you would need the POMIS account opening form, a deposit slip, your pan card and the amount to be deposited either using cash, cheque or draft.

You can make only one deposit to your POMIS account, that too only with a multiple of Rs. 1000. You cannot make an investment higher than Rs. 4.5 lakhs if it’s a single account and Rs. 9 lakhs if it’s a jointly held account.

What happens after early withdrawal of POMIS?

If you wish to close your account prematurely, you would have to send a request to your post office and submit a written application stating the reason of closure, fill the withdrawal form and bring your PO MIS account passbook. You would also have to pay the penalty of early withdrawal.

How is POMIS unique from other investment schemes?

Let’s compare the Post Office Monthly Income Scheme with monthly income mutual funds and monthly income insurances.

Use Calculators such as Post Office MIS Calculator, Sukanya Samriddhi Yojana (SSY) Calculator and more to differentiate.

Returns:

Post Office MIS Calculator guarantees an assured income at an interest of ~7.7% of invested capital.

Monthly income mutual funds invest your money in equity and debt instruments hence do not guarantee an income.

Monthly income insurance schemes provide monthly annuities with varying interest rates based on premium paid and tenure of investment.

Tax:

POMIS does not include any TDS.

Monthly income mutual funds are liable for TDS

In monthly income insurance schemes, the annuity is taxed under TDS.

Volatility:

In POMIS, the return rate is fixed for every quarter and the interest rate does not vary much across quarters. Historically, returns have been between 7% and 8.5%.

You can verify your investment’s return using Post Office MIS Calculator.

In monthly income mutual funds, the interest rate is wholly dependant on the market and may even fall below zero in some periods.

Investor type:

POMIS is suitable for investors with a low risk appetite.

Monthly income mutual funds are better suited for investors who are not risk-averse.

Monthly income insurance schemes are suitable for people who would like to avail the double benefit of investment and insurance.

Investment limit:

POMIS has a relatively low investment limit of Rs. 4.5 lakhs.

Monthly income mutual funds and monthly income insurance schemes have no limits on the amount you wish to invest.

Important things you should know about the Post Office Monthly 

It’s important to know the vehicle you’re investing your hard-earned money in inside out. The POMIS is a government backed scheme that invests your money into debt instruments.

Why you may not want to invest in the Post Office Monthly Income Scheme?

There are always two sides to a coin. In this section, we’ll discuss why the POMIS may not be the best investment for you when compared to MIPs from mutual fund schemes.

MIP mutual funds try to beat the interest from debt investments such as POMIS by investing a portion of the corpus into equities (5-25%).

When comparing the two schemes, the following factors are clear:

Liquidity:

You should account for liquidity whenever researching an investment vehicle. POMIS charges a 2% deduction on early withdrawals before 3 years and a 1% deduction on early withdrawals before 5 years.

Most MIP mutual funds charge a 1% fee if you decide to exit within one year of investment. When comparing the two, POMIS has a lower liquidity as it has a longer lock up period of 5 years.

Tax:

The monthly income from your POMIS account is added on top of your existing income. Therefore, if you are currently in the highest tax bracket, your POMIS income is taxed at the rate of 30.9%!

Mutual fund MIPs enjoy a better tax environment. They are considered as dividends and are taxed under dividend distribution taxes of 13.52%.

Inflation:

This is probably the most important set back of this scheme. There’s a good chance that if you invest in this scheme for a long period, you will not be able to beat inflation. This essentially means that there’s a chance you would lose money with time!

With Post Office MIS you would have got a clear idea on the returns you can be awarded.

Keep reading on Bachat for more such investment tools.


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