What is Post Office MIS?
The Post Office Monthly Income Scheme (MIS) is a safe and government-backed investment option that provides steady monthly interest income. It is ideal for retirees or conservative investors looking for guaranteed income over a 5-year tenure.
Formula Used
Monthly Interest = (Principal x Annual Interest Rate) / 12 Maturity Value = Principal (since interest is paid monthly, not reinvested)
Example
Suppose you invest Rs. 6,00,000 in MIS at an interest rate of 7.4% annually:
- Monthly Interest = (6,00,000 x 7.4%) / 12 = Rs. 3,700
- Total Income over 5 years = Rs. 3,700 x 60 = Rs. 2,22,000
- Maturity Value = Rs. 6,00,000 (initial principal returned)
Benefits
- Assured monthly income from a government scheme
- Ideal for senior citizens and conservative investors
- No market risk or volatility
- Can be linked with a savings account for auto-credit
Frequently Asked Questions (FAQs)
Can I withdraw my MIS before maturity?
Yes, but with penalties. Withdrawal is allowed after 1 year with reduced interest or a deduction from principal.
Is there any tax benefit under MIS?
No, MIS does not offer tax deduction under Section 80C.
Can I reinvest the interest automatically?
Interest can be transferred to a savings account or recurring deposit for reinvestment manually.