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Tax sops for Post Office schemes, bonus on PO MIS
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The government has announced that the benefit under Section 80C of the Income Tax Act (IT Act) would be extended to two Small
Savings Schemes:
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This benefit will be available on investments made on or after 1 April, 2007.
The government has also restored the bonus on Post Office Monthly Income Scheme (PO MIS) / Post Office Monthly Income Account (PO MIA). The bonus would be paid at the rate of 5%, upon maturity. This would be applicable for new accounts opened on or after Dec 8th, 2007.
(To know all about PO MIS, please read “Post Office Monthly Income Scheme (PO MIS)”)
The effective yield would jump to 8.9% (from the current 8.3%) due to this bonus.
It should be noted that there was a bonus of 10% on Post Office Monthly Income Scheme (PO MIS) / Post Office Monthly Income Account (PO MIA) earlier, but it was withdrawn by the government some time back.
These steps have been taken as a measure to encourage and promote small savings.
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Note: Please treat the opinion expressed here as a broad suggestion. Please consult your financial planner / investment advisor before making any investment decision.
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Oct 10, 2008
Although the bonus was stopped, and was later reinstated at a lower rate of 5%, MIS accounts opened before this change would continue to have this bonus at the bonus rate prevailing at the time of opening - 10%.
You must have opened your MIS account in 2002 - therefore, you would get a bonus of 10%.
Feb 22, 2009
Since your section 80C limit has been reached, there would not be any difference in these from income tax point of view.
Investment in MIS are anyway not considered u/s 80C. A 5 year FD would give you tax breaks, but you have already reached the 80C investment limit.
Also, investing in your wife's name would not give you any additional tax benefit as your 80C limit has been reached.
If we consider taxation of interest earned - there too, both MIS and FD are the same. Interest earned from both these is taxable.
Thus, in your case, the only consideration is the rate of return - since the FD is giving you 9.5% interest, it would be better if you invest in the bank FD.
Mar 05, 2009
I had invested 3 Lacs in MIS on 2002 and getting interest on regular basis.
Next to next year my MIS will mature. Suggest me what scheme should I opt to renew so that interest will be continue as this.
Thanks
If you want to get regular interest and absolute safety, MIS remains the best option.
Other good option is a bank fixed deposit with monthly interest payment.
(Please read "Fixed Deposit (FD) – A favourite for generations" for more)
You can also save some tax if you invest in specific FDs for maturity 5 years or more.
(Please read "Fixed Deposits (FD) for saving income tax through section 80C" for more)
Two points to note, though:
1. MIS now has only 5% bonus (when you opened the MIS account, it would have been 10%).
(Please read "An introduction to Post Office Monthly Income Scheme (PO MIS)" for more)
2. If you opened the MIS account, it should have matured in 2008, as it is for 6 years. I am puzzled...
Mar 11, 2010
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