Post Office Monthly Income Savings Scheme, it is an option for individuals to save money. The scheme is also known as National Savings (Monthly Income Accounts).
A person can open an account in his or her own name as an adult. The guardian can open an account on behalf of a minor or an individual who is mentally incompetent. It is possible to open a joint account, which means that you can share the account with another person. There is no limit to the number of POMIS accounts one can have, but the maximum deposit limit is Rs. 4,50,000 for individual accounts and Rs. 9,00,000 for joint accounts.
Maximum deposit limits have been raised in the budget for 2023-24. You can now save up to Rs. 9 lakh in single accounts, previously Rs. 4.5 lakh. Joint accounts now have a limit of Rs. 15 lakh instead of Rs. 9 lakh. There is currently a 7.4% rate of interest.
Here we will discuss the Post Office Monthly Income Saving Scheme in detail, including eligibility, interest rates, interest rates in 2023, withdrawals, maturity, and tax benefits.
Who can open Post Office Monthly Scheme?
The Post Office Monthly Income Scheme is a flexible savings option available to a wide range of individuals. Whether you’re an adult looking to save in your own name, a guardian responsible for a minor or someone of unsound mind, or even if you prefer to share an account with another person, this account offers versatility. You can even open multiple accounts, though it’s crucial to stay within the maximum deposit limits, which stand at Rs. 4,50,000 for individual accounts and Rs. 9,00,000 for joint accounts.
Minors who can manage their finances are also eligible to open an account, with a minimum deposit requirement of Rs. 1,000, allowing you to add funds in convenient multiples of Rs. 100. Keep in mind that when you have joint account holders, the total deposit limit is distributed among them proportionally to prevent exceeding the caps. If you happen to deposit more than the permitted amount, you will be required to withdraw the excess, which will still earn interest at the Post Office Saving Bank rate until the withdrawal date.
1. Individual Account: Any person can open an account in their own name.
2. On Behalf of a Minor or Person of Unsound Mind: If you are the guardian of a minor (someone under 18 years old) or a person of unsound mind, you can open an account for them.
3. Joint Account: You can also open a joint account with another person, and in some cases, with more than one person. In joint accounts, the maximum deposit limit is important.
4. Multiple Accounts: An individual can open more than one Post Office Monthly Income Scheme. However, the total amount deposited in all of these accounts should not exceed Rs.4,50,000 individually and Rs. 9,00,000 in a joint account.
Budget 2023-24 Update for Monthly Savings Scheme:
- Single Accounts: You can now save more money in a single account. The maximum limit for deposits has been increased from Rs. 4.5 lakh to Rs. 9 lakh. This means you can put aside up to Rs. 9 lakh in this savings scheme by yourself.
- Joint Accounts: If you’re saving with someone else in a joint account, the limit has been raised from Rs. 9 lakh to Rs. 15 lakh. This provides more flexibility for families or partners who are saving together.
In simple terms, the government has made it possible for you to save more money in the monthly savings scheme. Whether you’re saving alone or with others, you can now put aside a larger amount of money to secure your financial future.
5. Minor Opening an Account: A minor, who has reached the age where they can understand and manage their finances, can open an account in their own name.
6. Minimum Deposit: To open an account, you need to deposit at least Rs. 1,000, and you can add money in multiples of Rs. 100.
In simple terms, an individual or guardian can open a Post Office Monthly Income Scheme, even joint accounts are allowed. You can have more than one account, but be careful not to exceed the maximum deposit limits. The minimum initial deposit is Rs. 1,000, and deposits should be in multiples of Rs. 100. If you put in too much money, you’ll need to take out the extra, and it will earn interest in the meantime.
Important Note: When determining the maximum ceiling for deposits in joint accounts, each joint holder’s share is considered as one-half if there are two joint holders, and as one-third if there are three joint holders. This is to ensure that the total deposits don’t exceed the allowed limits.
If you deposit more money than the specified limit, you will be asked to withdraw the excess amount. The excess deposit will earn interest at the Post Office Saving Bank rate from the date of deposit until the date of withdrawal.
Important Information about Joint Accounts and Excess Deposits
Sharing the Deposit Limit: In joint accounts, when there are two joint holders, the maximum deposit limit is divided equally between them, with each holder’s share considered as one-half. If there are three joint holders, the limit is divided into one-third for each holder. This division ensures that the total deposits in the joint account do not exceed the allowed limits.
Exceeding the Deposit Limit: If, for example, two people in a joint account collectively deposit more money than the specified limit of Rs. 9,00,000, the excess amount beyond this limit will need to be withdrawn.
Interest on Excess Deposit: The extra money that has been deposited beyond the allowed limit will still earn interest. This interest is calculated at the Post Office Saving Bank rate, starting from the date of deposit until the date when the excess amount is withdrawn.
In simple terms, when you have a joint account, the maximum deposit limit is shared among the account holders to prevent exceeding that limit. If you put in too much money, you’ll be asked to take out the extra amount, but the extra money will still earn interest while it’s in the account.
Where You Can Open a Monthly Income Account?
You have a few options for where you can open a Monthly Income Account:
- Authorized Post Offices: You can go to any post office that is authorized to offer savings bank services. They can help you open a Monthly Income Account.
- Public Sector Banks: You can also go to public sector banks like SBI, Bank of Baroda, and Punjab National Bank to open of National Savings/ Post Office Monthly Income Scheme.
- Specific Private Banks: You can also visit certain private banks like ICICI Bank, Axis Bank, and HDFC Bank. These banks are authorized to help you open a Monthly Income Account as well.
So, in simple terms, you can choose to open a Monthly Income Account at authorized post offices, government banks, or specific private banks like ICICI Bank, Axis Bank, and HDFC Bank.
Aadhaar Requirement for Post Office Monthly Account Scheme
- For New Applicants:- Your Aadhaar Number is required if you are applying for a Monthly Income Account for the first time. You can provide proof that you applied for Aadhaar if you haven’t received your card yet, as long as you have enrolled for it.
- For Existing Account Holders:- It is also necessary to provide your Aadhaar number if you already have a Monthly Income Account. In order to link an Aadhaar number to an account, people who previously had an account need to provide their Aadhaar information.
You can choose someone to be your nominee for the account. This means that in case something happens to you, the person you nominate will have the right to the account or its benefits. So, the nomination is available under the Post Office Monthly Account Scheme.
When you open a Post Office Monthly Income Account, it will take 5 years for the account to reach its maturity date. This means you need to keep your money in the account for this duration before you can access certain benefits or withdraw it without any penalties.
- After One Year: You can make withdrawals from your Post Office Monthly Income Scheme after the first year. However, when you do so, there will be a 2% discount. This means you’ll receive 2% less than the total amount you have saved.
- After Three Years: If you wait for three years before making a withdrawal, the discount reduces to 1%. So, you’ll receive 1% less than your total savings when you decide to withdraw.
In simple terms, if you take money out of your account within the first year, you’ll get slightly less due to a 2% discount. If you wait for three years before withdrawing, the discount is reduced to 1%.
Post Office Monthly Income Scheme Interest Rates
Interest Rates Based on Deposit Periods: The interest rate you earn on your Post Office Monthly Income Account Scheme depends on when you made your deposits.
- The current interest rate is 7.4% (Please refer official website to check the latest updates on interest rates here)
- For deposits made from October 1, 2022, to December 31, 2022, the interest rate is 6.7%.
- For deposits made from April 1, 2022, to September 30, 2022, the interest rate is 6.6%.
- For deposits made from July 1, 2019, to March 31, 2020, the interest rate is 7.6%.
- For deposits made from October 1, 2018, to June 30, 2019, the interest rate is 7.4%.
Similar interest rates apply for deposits made in other periods mentioned.
Frequency of Interest Payment: You receive your interest every month, and you can choose to get it in cash or as a cheque. It’s your preference. Alternatively, you can opt to have your monthly interest deposited directly into your Post Office Savings Bank Account.
Rounding Off of Interest Amount: The interest you earn will be rounded to the nearest whole rupee. For example, if you earn Rs. 123.50 in interest, you’ll receive Rs. 124.
CBS Platform and Monthly Interest: If your account is held in a Post Office or Bank that uses a CBS platform (Core Banking Solutions), the monthly interest you earn can be credited directly to your savings account if you authorize it.
Interest After Maturity: If your account reaches maturity (completes 5 years) but you haven’t withdrawn the money, it will continue to earn interest at the prevailing Post Office Savings Bank account rate until you decide to withdraw it.
- Deduction 80C: The investment made in this scheme does not qualify for tax benefits under Section 80C of the Income Tax Act. This means you won’t be able to claim deductions for the amount you invest in this scheme when calculating your taxable income.
- TDS: Additionally, there is no Tax Deducted at Source (TDS) applied to the interest or the withdrawals from this scheme. You won’t have any tax automatically deducted from your monthly income or the amount you withdraw when your investment matures.