POST OFFICE (MONTHLY INCOME ACCOUNTS) RULES, 1987

[Mr. M. GOVINDARAJAN]

Introduction

By virtue of powers conferred by Section 15 of the Govern­ment Savings Banks Act, 1873 the Central Government made the Post Office (Monthly Income Accounts) Rules, 1987 which came into force with effect from 15.08.1987.  This scheme is much helpful to those who want to save their hard earned money, especially those who retired from service on superannuation.  They may deposit the amount under these Rules.

Who may deposit?

An individual who,-

• on his own behalf; or
• on behalf of a minor or a person of unsound mind of whom he is the guardian,

may deposit money in an account in any post office under these rules.  Minor after attaining majority has to apply for conversion of the account in his name.

Deposit maximum amount

A depositor may operate more than one account under these rules subject to the condition that deposits in all accounts taken together shall not exceed ₹ 4,50,000/-  in case of single account and ₹ 9,00,000/-  in case of joint account.  The investment may be in multiple of ₹ 1500/- subject to the threshold limit.  For the purpose of maximum balance, the depositor's share in the balance of a joint account shall be taken as one-half or one-third of such balance according to the account is held by two adults or three adults.

There shall be only one deposit in the account in the multiple of one thousand five hundred rupees not exceeding rupees four lakh fifty thousand in case of single account and rupees nine lakhs in case of joint account.  No withdrawal shall be permitted under these rules before the expiry of a period of six years from the date of opening of an account.

Joint Account

Joint account can be opened by two or three adults.  All joint account holders have equal share in each joint account.  Single account can be converted into Joint and Vice Versa. Account can be transferred from one post office to another.

Mode of deposit

The deposit may be made-

• in cash, or
• by cheque or demand draft drawn in favour of depositor or the postmaster of the Post Office and endorsed in favour of the postmaster.

Where deposit is made by cheque or demand draft, the date of deposit under these rules shall be the date of encashment of the cheque or the demand draft.

Nomination

The depositor may at the time of opening the account under these rules, nominate a person or persons who, in the event of death of the depositor, shall become entitled to payment of amount due on the account.  If such nomination is not made at the time of opening ac­count, it may be made by the depositor at any time after the opening of the account, but before its closure by means of an application, accompanied by the pass book to the postmaster of the Post Office.

Interest rate

The deposit made under these rules shall bear interest at the rate of-

• 12% per annum for the deposits made between 15.08.1987 and 23.08.1992;
• 14% per annum for the deposits made between 24.08.1992 and 01.09.1993;
• 13% per annum for the deposits made between 02.09.1993 and 31.12.1998;
• 12% per annum for the deposits made between 01.01.1999 and 14.01.2000;
• 11% per annum for the deposits made between 15.01.2000 and 28.02.2001;
• 9.5% per annum for the deposits made between 01.03.2001 and 28.02.2002;
• 9% per annum for the deposits made between 01.03.2002 and 28.02.2003;
• 8% per annum for the deposits made between 01.03.2003 to 31.12.2017;
• 7.3% per annum for the deposits made from 01.01.2018;

Payment of interest

The following are to be noted in respect of the payment of interest for the deposits-

• The interest shall be payable monthly to the depositor on completion of a month from the date of deposit;
• If so authorized, interest payable monthly shall be deposited by the Post Office in the savings account of the depositor held at the Post Office where deposits held subject to the condition that by so depositing the interest, maximum limit on balances in savings account is not exceeded.
• If the interest payable every month is not claimed by a depositor, such interest will not earn by additional interest.
• Interest shall be rounded off to nearest multiple of rupee one and for this purpose any amount of 50 paise or more shall be treated as rupee one and any amount less than 50 paise shall be ignored.
• A Post office shall, as soon as it comes to the notice that a deposit made under rule 4 by a subscriber exceeds the pre­scribed ceilings specified therein, such Post Office shall re­quest the subscriber to withdraw the excess deposit immediately.
• The excess amount shall carry an interest at the rate applicable from time to time to the Post Office Savings Account and shall be payable to such subscriber on such amount.
• The interest shall be admissible from the date of deposit of the excess amount till the end of the month preceding the month in which the subscriber has been re­quested to withdraw such excess amount in the account

Closure of account

The deposit made at the time of opening of account shall be paid by the Post Office at which the account stands to the depositor on or after the expiry of six years from the date of the opening along with bonus equal to 10 per cent of the amount deposited, on production of the pass book accompanied by a writ­ten application. no bonus shall be paid on the deposits made in the accounts opened on or after the 13th day of February, 2006.  a bonus equal to five per cent of the amount deposited, on production of the pass-book accompanied by a written application (withdrawal form) shall be paid on the deposits made in new accounts opened on or after the 8th day of December, 2007.  No bonus is payable after 01.12.2011.

In case of death of a depositor before maturity, account may be closed and deposit refunded along with interest up to the month preceding the month in which refund is made.

Premature closure

On an application made by the depositor in this regard, he may be permitted to withdraw the deposit and close the account any time after the expiry of a period of one year from the date of opening of such account, subject to the condition that-

• if the account is closed on or before expiry of three years of opening of such account, an amount equal to two per cent. of the deposit shall be deducted and remainder paid to him, and
• if the account is closed after expiry of three years from the date of opening of such account, an amount equal to one per cent. of the deposit shall be deducted and remainder paid to the depositor.

Pass book

On opening an account, the depositor shall be given a pass book bearing the date of opening of account, the number of his account, his name and address and the amount deposited and also the monthly interest payable along with the date on which the deposit will be due for final payment.   The pass book shall be presented to the Post Office at the time of collecting interest every month and also at the time of closing the account. The depositor availing facility of credit of interest in his savings account  shall present the pass book to the Post Office at least once in six months for completion of entries.

Maturity period

Maturity period is 5 years from 1.12.2011.

Post maturity interest

Where repayment  of a deposit, inclusive of bonus has become due but has not been made, interest shall be allowed on the amount due for a maximum period of two years from the date of maturity to the date of repayment of the deposit subject to the following conditions, namely:-

• The interest shall be simple and shall be calculated at the rate applicable from time to time to savings accounts of the type of single or joint account.
• For the purpose of payment of interest, any part of the period which is less than one month shall be ignored.
• The interest shall be paid to the depositor in lump sum at the time of repayment of amount due.

Tax benefits

No TDS will be allowed on the interest earned.  The deposit made will not cover under Section 80C of the Income Tax Act.  The interest earned in liable for income tax.

Conclusion

This a perfect scheme for superannuated employees, senior citizens and those who looking for a fixed monthly income.