Which investment is best in a post office, MIS or NSC? 

Post Office investment options are diverse with varying interest rates. Finance Ministry has developed reliable sources of income to generate steady monthly income. Check each scheme’s detailed feature and eligibility criteria and choose the best investment option that suits your requirement and affordability.  

MIS – Monthly Income Scheme

Among the number of savings schemes that the post office has introduced, the post office monthly income scheme is one in which you can invest a certain amount. From this, you can earn fixed monthly interest. This is open for investment from any post office.

The post office monthly income scheme or MIS is suitable for a post office senior citizen scheme. As the name goes, it is meant to offer fixed monthly income and gives zero investment risks. Therefore, it is a favorable option for senior citizens or individuals who have entered a no-income zone.  

In this, one can invest rupees 4.5 lakh individually or rupees 9 lakhs jointly for a tenure of five years. Here, the interest rate is 6.6%, which is charged annually. However, the main benefit it offers is capital protection. Let us look at its benefits and features that make it perfect among other schemes.

What are the features offered by Post Office MIS?

1. Level of protection – Money is safe in this government, backed up until maturity.
2. Tenure – The lock-in period is 5 years, and you can withdraw the money upon maturity and again invest it.
3. Risk factor – The money invested in this fixed income scheme isn’t subject to any risks.
4. Guarantee of return – The income in the form of monthly interest rates is higher than other fixed-income investments such as FD.
5. Tax efficiency – The investment isn’t covered under Section 80C, and the TDS isn’t applicable.
6. Deposit amount –  Start with a nominal investment of rupees 1000.
7. Joint account – If you invest with 2 or 3 people together, you can invest up to 9 lakhs
8. Account ownership – You can have more than one account in your name, but the total deposit cannot be more than rupees 4.5 lakhs
9. Nominee- The person can nominate a beneficiary from a family who will claim the benefit if the person passes away during the account’s tenure.
10. Fund movement – The investor can shift MIS funds to a recurring deposit, a newly added feature by Post Office.
11. Ease of transaction – You can collect the monthly interest from the post office or transfer it to your savings account. However, you can also add the interest in a SIP that gives lucrative returns.
12. Payout – The payout will start after one month of the first investment and not at the beginning of every month.
13. Scope for reinvestment: You can reinvest post maturity after 5 years and start earning interest again.

NSC – National Savings Certificate

It is a type of fixed source of income from the post office’s saving scheme sanctioned by the state government of India. A customer must activate the scheme from the post office; the minimum requirement for the scheme is rupees 100. However, there is no such upper limit to apply for in the scheme. The interest rate remains fixed, no matter what its tenure is. The current rate is 6.8% which is to be payable upon maturity of the savings. It has a 5 years lock-in period that cannot be extended further. If you wish to invest again, you have to go for a fresh certificate with a new tenure and get it at the prevailing rates.

Some of its highlighting features are:

• The maturity period is 5 years, and the interest rate is 6.8% yearly which is compounded half-yearly, but one has to pay it upon maturity.
• There is no upper limit for investing, but the minimum limit is rupees 1000, which is fixed. The investment can be done in different denominations such as rupees 500, rupees 1000, rupees 10 000, and so on.
• The NSC certificate will be given to the person for a single holding. However, one can opt for joint holding, where up to 3 adults are allowed. A guardian must be on behalf of the person if they are a minor below the age of 10.
• This scheme is tax-deductible under section 80C as per Income Tax rules. The interest on the scheme is to be reinvested under the section stated above, and there should be a tax deduction that would continue except for the final year of maturity of the NSC.
• The certificates of NSC can be considered security documents when you opt for loans from any bank
• The NSC certificates are transferrable and can be done from one person to another. However, it is allowed only once during the tenure of the investment.

Therefore, this scheme is a risk-free option that is tax efficient. For the traditional or long-term investors, with almost no risks, this is the best one to go for.

Who can open a POMIS account?

• Only Indian residents can open it
• NRIs cannot get the scheme benefits
• Any adult person can have this account
• An adult can open an account on behalf of a 10 years old minor who can access the fund after 18 years
• A minor, after maturity, should get the account transferred in their name

Eligibility criteria for NSC

The key eligibility criteria for investment are listed below:

• Indian residents can invest in NSCs
• Adults, either individually or jointly up to 3, guardians of a minor or minor of 10 years can apply for the scheme
• Though non-resident Indians cannot get purchase the NSC if they become NRI before the maturity of the scheme, Post Office will hold the NSC will maturity.
• Any trust and Hindu Undivided Family aren’t eligible for this investment

Wrap it up

Considering the interest rate, features, and eligibility criteria, NSC is a suitable investment form. It will give fixed monthly return to elder persons who have invested long back in this scheme of Post Office. Here, for every scheme, the interest rate is decided by the Indian government at the beginning of every quarter of a particular financial year.