Post Office Monthly Income Scheme (POMIS)

 The one and only thing which we humans always fear to say enough is MONEY. Imagine a situation where you get paid every month aside your monthly income. Today I would like to introduce you to a monthly scheme called Post office Monthly Scheme (POMIS).

Though there are many investment schemes this post office monthly scheme is a wonderful scheme which is handy for many college students, senior citizens, a working profession who has started his career only a few years back and even a 10 years kid. 

The concept of POMIS is simple. You invest a lump sum money in the scheme, you are paid the interest on a monthly basis. People may think that this sounds quite similar to a Recurring deposit but the difference here is you invest a huge amount and the interest is provided on a monthly basis and the investment at the time of maturity whereas in recurring deposit, both the interest and the investment gets matured at the end of tenure.

The minimum investment here is Rs.1500 and you can invest in multiples of Rs.1500. The maximum investment is about Rs.4,50,000. A maximum of Rs.9,00,000 can be invested when it is a joint account.

An interest rate of 6.6% p.a is provided and this remains unchanged throughout your tenure period, irrespective of any changes made by the government. The interest can be directed to post office savings account or the bank savings account

A person who is above 10 years, an Indian citizen is eligible to enroll in this scheme. 

POMIS doesn't encourage premature withdrawal. The tenure period is around 5 years. Mandatorily you need to invest the amount for one year. After that if you wish to withdraw the money somewhere between 1 to 3 years a penalty 2% is levied, where as if you wish to withdraw the money after 3 years a penalty of 1% is levied on your investment.

The POMIS can be transferred from one Post Office to another.

This scheme has no tax benefit. Though the post office doesn't charge any taxes on the source, the interest is considered as a source of income and you will have to pay the tax if it falls under the taxable slab.

The above tabulation gives an idea on the Interest obtained per month for various investments.

An investment must be in such a way where the risk rate must be less and the interest rate must also be quite higher. POMIS is one such instrument which is guaranteed by the government and 100% safe.

So, think and grow your money.

Inflation

 Have you ever wondered why the cost of a Coconut has raised from Rs.20 to Rs.30 in a span of two months. Okay, don't think too much. Today I would like to bring in the concept of Inflation which acts as a main reason behind the price hike.

Inflation is nothing but continuous increase in price of goods and services in a country. With the increase in inflation, the power of the currency decreases. 

Inflation happens mainly due to two reasons.

• When the demand for the good or service is more than the supply.
• The cost of production increases with increase in wages, raw materials etc. which in turn increases the cost of goods and services.

Every individual's ultimate aim in life is to make huge money and have sufficient savings. What happens when this aim breaks down due to inflation factor. Generally, inflation grows at a rate of 6%-8%. Consider that you had invested 1 lakh rupee and it yields an interest of 6%, then you will be making around Rs1,06,000 during the end of the investment period. But if you keenly observe you would have been back to square one. Due to inflation all the goods and services cost would have been increased the same time when you thought you were making money from you investment. 

An investment should be in such a way that it gives you higher interest rate overcoming the inflation factor. So think wisely and make your investment in such a way where you are yielded with highest benefits.

What is Financial Year?

After graduation I started working in the year 2018. My salary credits every month on 25th. So whenever I receive the pop up message stating Rs XX has been credited into your account YY, I'll be in a transport of Joy. This continued for few months and one fine day there was a hustle amongst my colleagues and for the first time I heard a friend asking me "Have you filed your Income Tax  for the financial year ?" . I was in a clearly confused state and not sure what to answer. That evening I returned from my work and wanted to know what is Financial year and why everyone goes crazy on hearing the word.

Generally, the calendar year starts from January 1 and ends on December 31, where as the financial year starts on April 1 and ends on March 31. This year which spans two calendar year is called as financial year.

The financial year in which you earn the income is termed as Previous year where the following year on which your IT returns gets assessed is referred to as Assessment year. Consider that I file my IT returns for the financial year 2019-2020, this span of period is referred to as Previous year. Now the filing which I did will be assessed in the year 2020-2021. So on filing the Income Tax Return (ITR) form for the financial year 2019-2020, it will be mentioned as Assessment Year 2020-2021.