Indian Post Office MIP (Monthly Income Plan)

One day I was discussing with my father regarding good investment options for retired people. Our discussion ended with a conclusion that out of all investment options Indian post office MIP is best for retired people. The reason why we concluded this is because Indian post office covers almost all part of India, even rural areas.

Indian post office will be present in those remote-places which does not have a bank. Moreover Indian post office MIP can give regular and reliable monthly income to its investors. In old age what else one needs apart from safety & reliability. Indian post office MIP is controlled by Government of India.

Hence it is considered as one of the safest investment options for retired individuals. I will personally recommend Indian post office MIP for widows as it is least complicated. Indian Post Office MIP is in a real sense a risk-free investment. The return offered by this MIP is also reasonably good. This MIP not only gives steady income but also protects the principal amount.

Indian Post Office MIP is similar to Bank’s Fixed Deposits

Like in fixed deposits, where the payout is made each month, Indian post office MIP also effects monthly payouts. The payout is made from the interest earnings.

A depositor can deposits a lump-sum amount in Indian post office. Under MIP scheme, he can earn monthly interests on his deposited amount. At present the rate of interest offered on deposits in Indian Post Office for MIP is 8.5% per annum with effect from 01-April-2012. All deposits in MIP of Indian post office shall be made either in cash, cheque or demand draft. Only one deposit is allowed in one MIP account. Money can be deposited to MIP account in Indian Post Offices in multiples of Rs 1,500 with maximum of Rs 4.5 lakhs in single account. For a joint account deposits can be made in multiples of Rs 1500 with maximum limit of Rs 9.0 lakhs. Earlier Indian Post Offices used give 5% bonus on maturity of 5 years, but this scheme has now been shelved from Dec’2011.

post office monthly income Plan (MIP)

At present majority Indian banks offers interest rate of 9% on fixed deposits of 5 years. The interest income from fixed deposits can also be cashed each month. The monthly income from fixed deposit gets deposited in linked savings account (after tax adjustments)s . In the same way, in Indian Post Office MIP scheme, interest income gets credited to the savings account of Post Office. A person who wants to start MIP in post office should first open a savings account in post office to make MIP work. The interest earning of Indian post office MIP will does not get credited to any other banks savings account. If one does not have saving account in post office then he has to approach post office and ask for cheque payment. In this case he has to visit post office each month to claim payments. In case the interest portion of MIP is not claimed by the depositor (cheque payment) will not earn any interest. But if one has post office savings account it will pay interest of 4%. The interest earning from Indian post office MIP is taxable.

Deposits in post office for purpose of generating MIP has a lock-in period of 5 years. There is a possibility of withdraw the money after one year but this can be done by paying a penalty.
> If the amount is withdrawn after one year but before three years then 2% of the deposited amount will be deducted.
> After three years but before five years the penalty percentage will be 1% of deposited amount.

In the event of death of the account holder of post office MIP scheme, the nominee will be eligible for the payment of interest or withdrawal of funds. As this scheme is for senior citizens, I will suggest that better to nominate more than one person as nominee for post office MIP.

Disclaimer: All blog posts of are for information only. No blog posts should be considered as an investment advice or as a recommendation. The user must self-analyse all securities before investing in one.

5 Comments on "Indian Post Office MIP (Monthly Income Plan)"

  1. Sandeep gautam | March 5, 2018 at 3:55 am | Reply

    Better intrest rate

  2. The interest rate as on today it is 8.4% monthly payment.Opem a savings account with any post office with cheque facility.(minimum deposit is Rs.500 For cheque facility)Then deposit your amount max.4,50,000 for one person aged 18 years or more.The interest will be credited to your PO sb A/c.No TDS deductable.You open a RD a/c with the same post office equivalent to the interest received through MIS a/c.This is for 60 months.If you deposit Rs.15000 in MIS you will get 105 per month.Then deposit in RD a/cin the same PO by standing instructions monthly 105 the maturity amount is 7838.56.This works out 10.45%.For senior citizens the scheme is Senior citizen Savings scheme which will give more.


  4. Post office MIP is another good option for a safe and risk free return along with FDs, if one has a large corpus.

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