Monthly Income Scheme ( MIS )

The Post Office Monthly Income Scheme, or PO MIS, is offered by Indian Post Offices. A lump sum amount is deposited with the post office and monthly interest earned each month is paid out to you.
                                                                      
As the scheme is offered by post offices, it is backed by the government. Thus, the PO MIS is one of the safest investments available.
                                          
Interest
The rate of interest offered on PO MIS is 8% per annum (year). Interest is paid out every month but direct credit to your bank account remains a problem as Post Offices are not that technologically advanced in India, as such one needs to go and collect the monthly income from the PO directly. However if you have a savings account in the same post office then interest can be credited directly to your account. A 5% bonus is paid on maturity of the fund, therefore, the effective yield works out to 8.9% per year.
                        
The interest earned is fully taxable. There is no tax deducted at source (TDS). The investment in PO MIS is exempt from wealth tax.
                                      
Who is eligible to invest?
Only individuals can invest in PO MIS. You can either open a single or joint account. A Non Resident Indian (NRI) or Hindu Undivided Family (HUF) cannot open a PO MIS account.
                                
Investment Limit
There is an upper limit on investment in a PO MIS scheme. You cannot invest more than Rs 4.5 Lakhs in a single account. If you invest jointly (2/3 names), the limit is Rs 9 Lakhs. The minimum investment is Rs 1,500.
                             
Duration
The tenure of PO MIS is 6 years – your investment is locked in for this time period.
                                    
Number of Accounts
Any number of accounts can be opened, but the total investment cannot exceed the upper limit across all the accounts.
                                 
Nomination
You can specify the nominee at the time of opening the account, or at any time later.
                 
Premature withdrawal, encashment, closure&Penalty
Premature withdrawal of the invested amount is allowed after 1 year of opening the account. If the account is closed between 1 and 3 years of opening, 2% of the deposited amount is deducted as penalty. If it is closed after 3 years of opening, 1% of the deposited amount is charged as penalty. The bonus amount is forfeited when you close the account early