The once hugely popular investment option of Post Office Monthly Income Scheme has been losing its shine since February, 2006 primarily due to the removal of 10% bonus on maturity clause.
The scheme at that time was offering 8% interest payable monthly without any TDS but with rising interest rates and special deposit schemes of banks offering attractive rates, the POMIS option was turning unpopular. But w.e.f. December 8, 2007 the government has reintroduced the bonus option on maturity in the scheme but a lower rate of 5%.
With the reintroduction of bonus, the yield for a 5 year Post Office MIS has increased from 8.9% to 8.3%. Together with the bonus, the effective yield will be 8.9% as against 8.3% previously available under the scheme.
Also, the government has made 5-year Post Office Term Deposits (7.5% interest) and Senior Citizen Savings Scheme (9% interest) eligible for 1-lac benefit under Section 80C.
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Nomination
One or more nominations can be made by the subscriber to receive the amount standing to his credit in the event of his death. Nomination once made can also be cancelled or varied. If the nominee is a minor, the depositor can appoint any person to receive the amount due during the minority of the nominee. The facility of nomination is also available in case of HUF but not for minors.
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Withdrawal
The investor is permitted to make one withdrawal every year beginning from the seventh financial year of an amount not exceeding 50% of the balance at the end of the fourth year or the financial year immediately preceding the withdrawal, whichever is less. This facility of making partial withdrawals provide liquidity and the withdrawn amount can be used for any purpose.
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Introduction
PPF is a 30 year old statutory scheme of the Central Government started with the objective of providing old age income security to the unorganized sector workers and self employed persons. Presently, there are nearly 30 lakh PPF account holders in India across banks and post offices.
Eligibility
Any individual (salaried or non-salaried) can open a PPF account. He may also subscribe on behalf of a minor, HUF, AOP and BOI. Even NRIs can open PPF account.
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