Tax Corner

Post Office Monthly Income Scheme Who can open an account Only resident Indians can open accounts under the scheme. Even more than one account can be opened provided total deposits in all the accounts do not exceed Rs 450,000 in a single account and Rs 900,000 in joint account. There can be only one deposit in the account, which should be a minimum of Rs 1,500 or multiple thereof. Nomination There is a facility of nomination Maturity The maturity period for deposits under the scheme is 6 years. Interest Deposits earn an interest of 8% per annum and payment is made every month in cash or deposited in the post office savings account, at the option of depositors. Also deposits made after December 8, 2007, are eligible for a 5% bonus (of the initial amount invested) on maturity. Tax benefit Investments in Post Office Monthly Income Scheme are not eligible for any tax benefits. Wealth Tax The deposits are exempt from Wealth Tax. Withdrawals Permitted after 1 year from the date of making the investment. If the premature withdrawal is made after 1 year, but before 3 years, then 2% of the initial amount invested is deducted as a penalty. Similarly, a premature withdrawal after 3 years will attract a penalty of 1% of the initial amount invested. In case of death of a depositor before maturity, the account may be closed and the deposited amount refunded to the nominee/heir along with interest upto the month preceding the month in which refund is made. Transfer of Account Account can be transferred from one post office to another.