The scheme is mainly used by individuals who are looking for monthly income options from safe instruments. Even senior citizens can invest in this scheme to get monthly interest.
The interest in PO MIS is reviewed by the government every quarter. The government has hiked the interest rate for April to June 2023 quarter. From April 1, 2023, the scheme will fetch an interest rate of 7.4% per annum on fresh investments made. The interest rate has been hiked by 0.30% from 7.1% earlier. Do note that the interest rate in the scheme is reviewed and revised every quarter.
Who can invest in the scheme?
Any individual can invest in the scheme. The investment in the scheme can be made either on a single basis or on a joint basis (maximum of up to three adults).
The maximum investment limit amount will depend on the investment capacity. A single holding can invest a maximum of Rs 9 lakh. A joint holding can invest a maximum of Rs 15 lakh.
Interest earned from the scheme
As the name suggests, the interest is paid every month under the scheme. Do note that once the investment is made, the interest rate remains the same throughout the tenure of the scheme.Tenure of the scheme
Post Office Monthly Income Scheme comes with a tenure of five years. The principal amount will be repaid to the individual after the expiry of five years along with interest earned in the final month.
Tax benefits under the scheme
The scheme does not offer any tax benefits under the scheme. Further, interest earned is taxable in the hands of individuals. However, senior citizens can claim a deduction under Section 80TTB of the Income Tax Act, 1961 on the interest earned from the monthly income scheme.
Premature closure
The premature closure of PO MIS account is allowed. An individual can close the PO MIS account before the expiry of five years by paying a penalty. However, premature closure is allowed only after the expiry of one year from the date of opening of the account. No deposit shall be withdrawn before the expiry of 1 year from the date of deposit.
A penalty will be levied as follows if the monthly income scheme account is closed before 5 years:
(i) If the PO MIS account is closed after 1 year and before 3 years – a deduction equal to 2% from the principal will be deducted and remaining amount will be paid.
(ii) If the PO MIS account is closed after 3 years and before 5 years – a deduction equal to 1% from the principal will be deducted and the remaining amount will be paid.
