Post Office Savings Schemes: Fixed Deposit Account Vs Monthly Income Scheme Account

Post office offers a host of saving schemes with attractive rates of interest. It offers nine different types of saving schemes ranging from Sukanya Samriddhi, which is for girl child, to Senior Citizen Savings Scheme. Post office also offers Post Office Fixed Deposit Account (FD) and Post Office Monthly Income Scheme Account (MIS) for individuals, according to post office's official website -- indiapost.gov.in. For post office Fixed Deposit account, interest is payable annually but calculation is done quarterly whereas for post office MIS account, the interest rate is 7.3 per cent per annum, which is  payable on a monthly basis.
 

Post office Savings schemes in detail:
 
Post Office Fixed Deposit Account (FD):
 
Features:
 
1. Post Office FD account can be opened by an individual by cash or cheque and in case of cheque, the date of realisation of cheque in government account shall be date of opening of account. 
 
2. Customers also get nomination facility, which is available at the time of opening and also after opening of the account.
 
3. Post Office also offers the option of transfer of account from one post office to another and opening of multiple numbers of accounts in any post office.
 
4. Post Office FD account can be opened in the name of a minor and a minor of 10 years and above can open and operate the account. However, when a minor attains majority, he/she has to apply for conversion of the account in his/her name.
 
5. Joint account can be opened by two adults and single account can be converted into joint and vice versa, said indiapost.gov.in.
 
Interest Rates and Amount:
 
Under the Post Office Fixed Deposit Account, interest is payable annually but calculation is done quarterly. One needs to invest a minimum amount of Rs 200. Investments can only be made in multiples of 200. However, thers is no maximum limit of investment.
 
Income Tax Benefits:
 
The investment under five year-fixed deposit qualifies for the benefit of Section 80C of the Income Tax Act, 1961.
 
Post Office Monthly Income Scheme Account (MIS):
 
Features:
 
1. Post office Monthly Income Scheme account can be opened by an individual by cash or cheque and in case of cheque, the date of realisation of cheque in government account shall be date of opening of account. 
 
2. Customers also get nomination facility, which is available at the time of opening and also after opening of the account.
 
3. Post Office also offers the option of transfer of account from one post office to another and opening of multiple number of accounts in any post office. However, there is a cap on the maximum investment limit by adding balance in all accounts.
 
4. Post Office FD account can be opened in the name of a minor and a minor of 10 years and above can open and operate the account. However, when a minor attains majority, he/she has to apply for conversion of the account in his/her name. 
 
5. Joint account can be opened by two or three adults but it is mandatory for all joint account holders to have an equal share in each joint account. Single accounts can also be converted into joint and vice-versa.
 
Premature Withdrawal
 
The maturity period of the scheme is five years. One can be prematurely withdraw the amount after one year but before three years. However, the investor has to bear a deduction of two per cent of the deposit in such a case. Withdrawal after three years attracts a deduction of one per cent of the deposit. 
 
Interest Rates and Amount:
 
Post Office Monthly Income Scheme Account (MIS) offers an interest rate of 7.3 per cent per annum which is payable monthly. One needs to deposit the amount in multiples of Rs 1,500. However, the maximum investment limit is Rs 4.5 lakh in single account and Rs 9 lakh in a joint account. An individual can invest a maximum amount of Rs 4.5 lakh in MIS, including his/her share in joint accounts.