MIS stands for Monthly Income Scheme.

This scheme provides regular monthly income.

This is suitable for those who expect to receive regular and guaranteed income monthly. 

How Does MIS Work?

1.      Deposit a lump sum amount

2.      Every month you will receive interest till the end of the tenure

3.      At the end of the tenure, you will get your deposit amount back 

Features

1.      Backed by the Government of India

2.      Safe investment option

3.      Guaranteed returns

4.      regular monthly income 

Income Tax Benefits

Income tax benefits will be same on both old and new tax systems.

No income tax benefits.

No tax deduction for the deposit amount under Section 80C of Income Tax Act.

No TDS (Tax Deducted at Source) under this scheme by the Post Office.

Interest received under this scheme is taxable. You need to declare the interest income under "Income from Other Sources" during tax returns and pay the income tax as per your income tax slab. 

Who Can Open the Account?

Only Indian residents can open the account.

Account can be opened by an individual adult.

Joint account can be opened by two or three adults. All joint account holders have equal share in each joint account.

A Guardian or Parent can open an account in the name of minor.

A minor of 10 years and above age can open and operate the account. 

How Do You Open the Account?

Account can be opened by cash or cheque.

In case of cheque, the date of realization of cheque in the account will be the date of account opening.

Any number of accounts can be opened in any Post Office subject to maximum investment limit by adding balance in all the accounts. 

Deposit Limits

Minimum deposit amount is Rs. 1,000.

For a single account, maximum deposit limit is Rs. 4.5 lakhs.

For a joint account, maximum deposit limit is Rs. 9 lakhs.

Deposit amount should be in multiples of Rs. 1,000.

An individual can invest a maximum of Rs. 4.5 lakhs in MIS (including his share in joint accounts). 

Term

Maturity period is 5 years in this scheme. 

Interest Rate (%)

Current annual interest rate is 6.60%.

Interest amount is paid monthly.

Interest rate (on the day of account opening) will remain the same throughout the tenure of MIS. It will not change even if there are changes to the interest rate thereafter.

From 01-Apr-2016, the interest rate of this scheme has been announced on a quarterly basis. Note that it used to be on a yearly basis earlier. 

Compounding Frequency

Compound interest is not applicable for this scheme.

Simple interest calculation is followed in this scheme. 

Interest Credit Method

You can receive monthly interest through auto-credit facility into savings account present at the same post office.

In case of MIS accounts present at CBS (Core Banking Solution) Post offices, monthly interest can be credited into savings account present at any CBS Post offices. 

Pre-Mature Closure

Account can be closed pre-maturely after one year of opening the account.

If you close the account before 3 years, 2% of deposit amount will be deducted and you will get the remaining amount.

If you close the account after 3 years, 1% of deposit amount will be deducted and you will get the remaining amount.

Examples:

If you close the account having a deposit of Rs. 1 lakh before 3 years, then Rs. 2,000 (2% of Rs. 1 lakh) will be deducted and you will receive the remaining amount Rs. 98,000 (Rs. 1 Lakh minus Rs. 2,000).

If you close the account having a deposit of Rs. 1 lakh after 3 years, then Rs. 1,000 (1% of Rs. 1 lakh) will be deducted and you will receive the remaining amount Rs. 99,000 (Rs. 1 Lakh minus Rs. 1,000).

Account Conversions

Single account can be converted into Joint account and vice versa.

Minor after attaining majority has to apply for conversion of the account in his name. 

Account Transfer

MIS Account can be transferred from one Post Office to another. 

Nomination Facility

Nomination facility is available.

You can nominate either at the time of account opening or after opening the account (but before maturity). 

NRI And HUF

NRI (Non-Resident Indians) and HUF (Hindu Undivided Family) can NOT open the account.