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The Indian Post Office offers a diverse range of investment schemes that assure guaranteed returns. Backed by the government, these schemes ensure the safety of your deposit. Among these, the Post Office Monthly Income Scheme is a renowned option that pays out interest on a monthly basis.

If you are considering investing in this scheme, it is essential to understand the Post Office Monthly Income Scheme tax benefits and other key features. This will help you make an informed investment decision.

To know the meaning, features, and benefits associated with the scheme, read on.

What is the Post Office Monthly Income Scheme?

The Post Office Monthly Income Scheme (MIS) is an investment program recognised by the Ministry of Finance. This scheme enables you to deposit a specific amount and receive a fixed monthly interest payout.

It is a low-risk investment scheme that offers a consistent source of income while safeguarding your capital. You have the flexibility to invest up to ₹9 Lakhs individually or ₹15 Lakhs jointly. The investment term for this scheme is 5 years. The interest rate for the period of April to June is 7.40% per annum, with monthly interest payouts.

Taxation Rules of the Post Office Monthly Income Scheme

Learning the Post Office MIS tax benefits and rules before investing is key. Your deposits in the Post Office Monthly Income Scheme enjoy an exemption from Wealth Tax. It is essential to note that your investment is not covered under Section 80C of the Income Tax Act, and the Tax Deducted at Source (TDS) or any tax rebate is not applicable.

It is important to note that the TDS is only deducted on interest earnings exceeding ₹40,000. The TDS is deducted on interest earnings of more than ₹50,000 for senior citizens.

The interest that you receive from this scheme is subject to taxation. To ensure compliance with tax regulations, you must declare the interest income under the ‘Income from Other Sources’ category when filing your income tax.

Note that you need to pay the applicable income tax on your interest earnings as per the income tax slab that applies to you.

Features and Benefits of Investing in the Post Office Monthly Income Scheme

Steady Returns

Monthly interest payouts of the scheme allow you to earn a steady income every month. Any fluctuations in the market do not influence the interest payouts. Currently, the interest rate is set at 7.40% per annum.

Reinvestment

Another benefit is that you can choose to reinvest the interest earnings into profitable securities like equity funds and equity shares. You must research and compare various options to choose a reinvestment option that suits your risk appetite and preferences.

Low-Risk Investment

As mentioned, the Post Office MIS scheme is backed by the government. Therefore, your principal investment remains secure until maturity.

Affordable Minimum Investment

You can start investing in this scheme with a nominal amount of ₹1,000. This feature makes this investment option highly accessible. You can invest according to your affordability in multiples of this amount.

Multiple Accounts

You can choose to open multiple accounts, but the total deposits in an individual account cannot exceed ₹9 Lakhs. You can also open a joint account with a maximum of 3 people. The maximum investment limit in a joint account is ₹15 Lakhs.

You can also open a minor account for your child above the age of 10 years. They can withdraw the amount at the age of 18 years.

Account Nominee

You get the option to nominate a family member as a beneficiary to your Post Office MIS account. In the unfortunate event of death, the nominee can claim the benefits and corpus.

As you can see, the Post Office Monthly Income Scheme stands out as a secure investment option that provides guaranteed returns. This option is ideal if you are an investor who prioritises safety and desires a steady monthly income flow.

Disclaimer

The information provided by BFDL herein above is related to the Non-Partnered Banks/ NBFCs and is just for the purpose of information and under no circumstances the information provided hereinabove is intended to be source of advice or recommending any financial investment advice or endorsement of any sort.

The information including interest rates with regard to fixed deposit, provided on this website is gathered through publicly available sources over the internet and is considered as accurate and reliable to the best of our knowledge. BFDL disclaims any responsibility or liability regarding inaccuracies, omissions, mistakes etc. as well as offers by the Non-Partnered Banks. The use of information set out is entirely at the User’s own risk and User should exercise due care prior taking of any decision, on the basis of information mentioned hereinabove. You are advised to visit/ contact the respective Banks/ NBFCs to verify the information before making any investment or opening an account. Further, BFDL does not undertake any responsibility or liability to update this information. YOU ARE SOLELY RESPONSIBLE FOR ANY LIABILITY OR DAMAGE YOU INCUR THROUGH ACCESS TO OR USE OF THE SITE OR SUCH INFORMATION OR MATERIALS EXCEPT WHERE THE LAWS AND REGULATIONS OF A PARTICULAR JURISDICTION CONCERNING WARRANTIES CANNOT BE WAIVED. Additionally, display of any trademarks, tradenames, logo and other subject matters of intellectual property owners. Display of such Intellectual Property along with the related product information does not imply BFDL’s partnership with the owner of the Intellectual Property of such products.

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Monthly Interest on FD

Each joint account holder of the Post office MIS scheme has an equal share in the joint account.

Yes, the Post Office MIS scheme offers several benefits to senior citizens. It is a safe investment option that offers monthly interest payouts. This provides a stable monthly income stream that you can use to cover your monthly expenses or save your earnings for unplanned expenses.

Yes, you can convert your individual post office MIS account into a joint account. You can also convert a joint account into an individual account.

Yes, you can easily transfer your Post Office MIS account to any post office in India at no additional cost.

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Tax benefits by Post office MIS

What is the Post Office Monthly Income Scheme?

Taxation Rules of the Post Office Monthly Income Scheme