Investments are generally made with a twinfold purpose. One is to save tax and the other being regular flow of income. An investment, which provides a regular stream of income and that, do not entail too much of risk is sought after by most of the people. One such investment that satisfies both the criteria is Post Office Monthly Income Scheme.
The scheme is meant for those investors who want to invest a lump sum and earn interest on monthly basis for their livelihood. The scheme is, therefore, a boon for retired persons and middle class investors.
Individuals are only eligible to invest in P.O.MIS.They can either open a single account or a joint account and even a minor account can be opened along with the parent/guardian.
The minimum investment in a Post-Office MIS is Rs.1,000 for both single and joint accounts. The maximum investment is Rs.3lakhs for a single account and Rs.6lakhs for a joint account.
P.O.M.I.S can be availed through out the year at any post office in India.
Number of accounts
There is no restriction in the number of accounts a person can hold. The investor can have more than one account in the same post office or in a different one.
Mode of Holding
Post office MIS is held physically in the form of a certificate issued by the post office. In addition, the investor is provided with a passbook to record his transactions against his MIS.
The duration of MIS is 6 years.
The P.O.M I S fetches an interest at 9% p.a. on the amount invested, which is paid on a monthly basis.
Premature closure of the account is permitted any time after the expiry of a period of one year of opening the account. Deduction of an amount equal to 5 per cent of the deposit will be made when the account is prematurely closed. No such deduction will be made if the account is closed after three years.
A bonus of 10% on the amount invested is paid at the time of maturity. However, such bonus is not available in the case of premature withdrawal.
Nomination facility can be availed at the time of opening the account or anytime during the tenure of investment. The account can even be transferred from one post office to another, anywhere in India.
Loan cannot be obtained from the post office against the instrument. However, a banker may treat the instrument as valid security and issue loans against the same.
Like all post-office schemes, the MIS has the backing of the Government of India, and is, therefore, a safe investment. One can be assured of getting the interest income as well as the amount invested without any hassles.
The interest income on the amount invested is eligible for deduction under Section 80L of the Income Tax Act, 1961. Moreover, no TDS is deductible on the interest income. The balance is exempt from wealth tax too. However, the investment does not qualify for rebate u/s 88. If you are one among those who wish to receive a steady stream of income with least amount of risk, then Post office Monthly Income Scheme would be an apt choice.
An investment option that is barely unknown to a person would be National Savings Certicate.The first thing that strikes anyone when it comes to investments for availing tax benefits as well as safety is NSC. Here is a digest on all that you want to know about this hero of investments.
The scheme that is currently available in the market is the NSC VIII Issue.
An individual either singly or jointly can participate in the scheme. He can invest on behalf of a minor too. A trust is also eligible to invest in the certificate. The certificates are available through out the year in all the head post offices and other authoirsed post offices in the country.
The minimum amount that can be invested is Rs.100 and there is no maximum limit. The certificates are available in the denomination of Rs.100, Rs.500, Rs.1000, Rs. 5000 and Rs.10,000.
The maturity period of the investment is 6years.Premature encashment is available only on exceptional circumstances like death of the holder or by an order of the court.
If the premature encashment is made within one year of the issue, then only the face value is paid. However, if the encashment is done after 1 year but before 3 years, then simple interest at the rate notified by the Govt from time to time is paid.
However, the certificates can be transferred from one person to another by making an application to the concerned Post office and on payment of a prescribed fee.
The scheme offers interest at the rate of 9% p.a, which is compounded half yearly and payable on maturity. For an investment of Rs.1000, the amount that can be got back at the end of 6 years is Rs.1695.90.
Loans can also be availed by pledging the certificates to the banks and other institutions. The bank will have the certificates assigned to its name and offer up to 75%of the face value and the interest accrued till date, on the certificate.
The amount invested in the NSC is eligible for rebate u/s 88.The interest accrued on the investment is eligible for a deduction under Section 80L,upto a sum of Rs.12,000.Such accrued interest is deemed to be reinvested and hence eligible for rebate u/s 88.
The NSC is an excellent investment scheme for those investors who wish to avail a fair amount of return, utmost safety and high tax benefits.
About Post office Time deposit
The Post Office Time deposit Account is an added feather in the cap of the Post Office savings schemes.
With a minimum amount of Rs.50 an individual can open the time deposit either for himself or on behalf of a minor. The account can be opened even in the name of a trust, Regimental Fund and Welfare Fund. There is no maximum limit of deposit. The account can be opened in any of the post offices in the country, all throughout the year. The account can be operated even as a joint account. Nomination facility is available at the time of opening the account.
Time Deposits have a term ranging between 1 and 5 years. The scheme pays annual interest, but it is compounded quarterly, thus giving a higher yield. Time deposit account for 1 year carries interest of 7.25%, a 2 year account offers 7.5%, 3 year account being 8% and a 5 year account carrying a rate of 8.5%.
Premature encashment can be done after 6months of opening the account. No interest will be payable on amount withdrawn after 6months but before one year. Interest will be paid at reduced rates for the withdrawal made after one year.
Time Deposits are not meant for regular income. Since Time Deposits, as their name suggests, are time-bound, the account holder gets a lump sum (principal + interest) at the maturity of the deposit.
The account holder can even borrow against the time Deposit. The balance in your account can be pledged as a security for a loan.
With respect to the safety of the deposit, there is no need to be worried as post office ensures utmost safety.
The interest on the deposit is eligible for deduction u/s80L up to 12,000.Tax is not deducted at source on the interest payable. There is no rebate available for the amount deposited.
(Source :: sify.com)