If interest is not withdrawn directly from MIS, SCSS, Time Deposit accounts, then additional interest will be available on the interest deposited in savings accounts.
This news is important for those investing in small savings schemes of the post office . From 1st April 2022, you will not be able to withdraw the interest income earned on Post Office Monthly Income Scheme ( POMIS ), Senior Citizens Savings Scheme ( SCSS ) and Term Deposit Accounts in cash.
Government has made it mandatory to use savings account for depositing monthly, quarterly, annual interest in case of MIS, SCSS, Time Deposit accounts. In small savings schemes like Monthly Income Scheme, Senior Citizen Savings Scheme Account or Time Deposit Account, the investor has to compulsorily open a post office savings account or bank account.
Interest on MIS, SCSS, TD accounts will only be credited to the account holder’s post office savings account or bank account with effect from April 1, 2022. In case an account holder is unable to link the savings account with MIS, SCSS, Time Deposit accounts by March 31, 2022, the outstanding interest will be paid by credit or check to the PO savings account only.
According to the media report , with effect from April 1, 2022, interest payment in cash from Monthly Income Scheme, Senior Citizen Savings Scheme Account or Time Deposit Account will not be allowed.
When is the interest paid
Under the 5-Year Monthly Income Scheme (MIS), the interest is paid only on a monthly basis whereas in the 5-Year Senior Citizens Savings Scheme Account (SCSS), the interest is paid on a quarterly basis. Interest is paid on a time deposit account only on an annual basis.
Process to link savings account with MIS/SCSS/TD accounts-
Post Office Savings Account- In case of Post Office Savings Account, the account holder can avail automatic transfer facility for linking MIS, SCSS, Time Deposit accounts.
Bank Account- In case of Bank Account, the depositor has to submit the ECS Mandate Form along with a canceled check or a copy of the first page of the passbook of the bank account for crediting the interest amount.
Benefits of linking savings account with MIS/SCSS/TD account-
>> If interest is not withdrawn directly from MIS, SCSS, Time Deposit accounts then additional interest will be available on interest deposited in savings accounts.
>> Depositors can withdraw due interest without visiting the post office and can use the same through different electronic means.
>> Filling up of multiple withdrawal forms for each of the MIS, SCSS, Time Deposit accounts can be avoided.
>> Depositors can avail the facility of automatic credit of interest amount to Recurring Deposit (RD) account through Post Office Savings Account from their MIS, SCSS, Time Deposit accounts.
