Post office monthly income account schemes

The Post Office Monthly Income Scheme is a scheme available to investors which gives you a guaranteed return on your investment.

It is a popular scheme with investors are rewarded with assured returns every month on their deposit and is one of the most beneficial investment options that can be procured as it offers returns, ensures that the capital invested is intact and also provides a fixed income every month. 

This scheme is provided by the Indian Postal Service and is administered by the Finance Ministry of India, making this one of the most secure options to invest in. 

Anyone who wants to generate a monthly income can open this account and then get an assured monthly income.

There are many ways to invest and you can lend money to someone to use it for a specific period of time and this will come back with an interest or you can also invest in stocks.

You get interest per year, which is payable on per month basis and you will get the interest each month from the date of making the investment, not from start of the month.

If you do not withdraw the amount for some month, it would not earn any interest and just lie there in the account.

This post office saving scheme does not come under sec 80C so there is no tax-exemption for the amount you invest in this, and interest income is taxable, but there is no TDS cut in this scheme.

You can deposit the money with cash, demand draft or local cheque and once you open a monthly income scheme account, you will be issued a scheme certificate and a passbook to record the transactions against the scheme. 

The maturity period of this scheme is for a specific period of times, you will be eligible for a bonus if you retain your scheme foe 6 years and your overall return including this bonus will be higher although there is a limit on the amount you can invest in the scheme.

You can have any number of accounts, but within the overall upper limit and you do not need to take your money out after maturity, you can leave the money in the account, but then it would earn the interest equal to saving bank account for next 2 years only.

You get withdraw from the income amount by directly going to the Post-office but you need to check if you want the income in your saving bank account. 

You need to confirm that you can provide ECS information at the time of opening the account and get the interest amount created in your Bank account.

Even though the maturity period for the scheme is fixed, there is an option to break it and take your money out.

 You can take your money only after 1 year and have to pay a penalty for early withdrawal which is as follows

If you break it within 1-3 yrs : 2% penalty on Deposit amount

If you break it after 3 yrs : 1% penalty on Deposit amount

A minor above age 10 years  can open an account on his/her own name directly, there is a limit for the amount invested by the guardian and it would not be included with guardian limi.

If you are a non-resident Indian / HUF then you  cannot open the Account.

The interest not withdrawn does not carry any interest.

You account can be transferred  from one post office to any Post office in India free of cost.

The amount deposited that is invested is exempt from Wealth Tax.

One of the benefits of having these schemes you as an investor, have the option to pick one that is most suited to their income and other requirements.

 Most individuals would prefer opting for those investment schemes that are relatively risk free, while offering guaranteed returns and although post office schemes are not very risky by nature do not offer high returns, whatever offered is substantial enough for applicants to invest high amounts in.