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Amidst the ups and downs of the stock market and the changing interest rates of banks, if you want a fixed fixed income (Monthly Pension/Income) every month without any risk, then the Post Office Monthly Income Scheme (POMIS) of the Post Office is a great option. Due to being fully guaranteed by the Government of India (Sovereign Guarantee), every single penny of your deposit in it remains 100% safe.
This scheme is counted among the most popular savings instruments for senior citizens, housewives and people looking for regular expenses after retirement. Currently, 7.40% annual interest is being given in this scheme of the Central Government. The special thing is that this interest payment is transferred directly to your savings account every month.
In Post Office MIS, interest is calculated on an annual basis, but it is distributed in 12 equal installments every month:
$$\text{Monthly Interest} = \frac{\text{Principal} \times \text{Annual Interest Rate (\%)}}{12}$$
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Lump Sum Deposit: ₹4,00,000 (Rs 4 lakh)
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Current Annual Interest Rate: 7.40%
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Total interest per annum: 7.40% of ₹4,00,000 = ₹29,600
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Fixed income received every month: $\frac{29,600}{12} =$ ₹2,466.66 (approximately ₹2,467)
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Total Earnings in 5 Years (60 Months): ₹2,466.66 × 60 = ₹1,48,000
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Return on Maturity: Your entire principal amount as soon as the tenure of 5 years is completed ₹4,00,000 safely returned Will get it.
In this post office scheme, maximum investment limits have been fixed according to different financial needs:
| account type | maximum deposit limit | Monthly Guaranteed Income (@7.4%) | Total interest in 5 years |
| investment of ₹4 lakh | ₹4,00,000 | ₹2,467 | ₹1,48,000 |
| Single Account (Max) | ₹9,00,000 | ₹5,550 | ₹3,33,000 |
| Joint Account (Maximum) | ₹15,00,000 | ₹9,250 | ₹5,55,000 |
If husband and wife open a joint account with a maximum of ₹ 15 lakh, they will get a fixed income of ₹ 9,250 every month for the next 5 years without any risk.
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Tenure: This account is locked-in for 5 years (60 months).
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Minimum Investment: The account can be started with just ₹1,000 and deposits can be made in multiples of ₹1,000 thereafter.
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Pre-mature closure:
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Withdrawal before completion of 1 year of account is prohibited.
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Withdrawal from principal amount between 1 to 3 years 2% cut Is performed.
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From the principal amount on closing the account between 3 years to 5 years 1% deduction it occurs.
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Tax Rules: No TDS is deducted on the interest earned in POMIS, but this interest gets added to your total annual income and is taxable as per your respective tax slab.