Over the years, the Government of India has been offering several ways to create a habit of saving amongst tax payers. The Post Office Monthly Income Deposit scheme looks forward to generate monthly savings for people who are ready to invest in a 5 year term scheme. The minimum required amount is INR 1500 or value in multiple of the minimum amount. However, investors can liquidate their investments in the middle of the tenure by getting their deposit discounted. The total investment limit of an individual in INR 4, 50, 000 and for joint account the limit is INR 9, 00, 000.
Who can open a Post Office Monthly Income Deposit Account?
Since the main objective of creating a habit of savings amongst the taxpayers is concerned, the Government of India has put minimum obligations under this scheme. The benefit of this scheme is available for the following:
- An individual
- Two/ Three individuals (for a joint account)
- A minor, account has to be opened separately under his name and his age should be atleast 10.
Post Office Monthly Income Deposit Scheme Nomination, Maturity & Withdrawal
There are confirmed provisions for investors who are looking forward to invest in Post Office Monthly Income Deposit scheme. A person wishes to invest in this scheme has the option to place the name of a nominee at the time of availing the scheme or during any time within the operation of the account.
The deposit will mature after 5 years. Nevertheless, if the depositor wants to liquidate his investment any time within the period of 5 years, he can do the same by way of getting his deposit discounted. The process includes a nominal deduction charge which the depositor will be charged. Once the deposit gets discounted, the person can withdraw his deposits from this scheme.
Post Office Monthly Income Deposit Scheme Interest, Post Maturity Interest & Bonus on Closure
One exclusive feature of this deposit scheme is that the taxpayers get a flat rate of interest every year. The current rate which the Government offers is 8.40% on an annual basis.
For investors who have complied with the term of deposit, i.e, have kept their deposit for a period of 5 years, they will be eligible for an additional bonus of 5%, which will be computed on the principal amount. However, the benefit is only available for people who had invested during the phase of 8th December, 2007 to 1st December, 2011. If your investment falls either before or after the mentioned period, then no such bonus is applicable.
Tax Benefits of Post Office Monthly Income Deposit
No TDS required on interest or amount withdrawn.
Points to Note:
When pre-mature deposits are liquidated, then the rate of discounting will depend upon the period of deposit. The same can be understood with the help of the following table:
|Term of Deposit||Rate of Discounting|
|Less than 3 years||2%|
|3 years or more||1%|