Post Office Monthly Income Scheme (POMIS) - Steady Monthly Income
How POMIS works: a fixed 7.4% paid monthly over 5 years, the ₹9 lakh single and ₹15 lakh joint limits, taxable interest, premature-closure rules, and how it compares to SCSS.
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Post Office Monthly Income Scheme: A Steady Cheque Every Month
Some people don't want to grow their money. They want it to pay them, reliably, every single month, without any chance of a bad surprise. A retiree living off savings. A parent funding a recurring expense. For them, the Post Office Monthly Income Scheme is built exactly right.
You deposit a lump sum, and the post office pays you interest every month for 5 years. No market risk, government-backed. Here's how it works and where it fits.
How It Works
The design is in the name: monthly income.
- You deposit a lump sum, once.
- Every month, the post office pays you interest at 7.4% a year, divided into monthly instalments.
- After 5 years, you get your full principal back.
The monthly interest can be auto-credited to your post office savings account, so it just shows up each month without you doing anything.
- Deposit: ₹9,00,000
- Annual interest: 7.4% × ₹9,00,000 = ₹66,600
- Monthly payout: ₹66,600 / 12 = ₹5,550
- After 5 years: ₹9,00,000 principal returned
A joint account can hold up to ₹15 lakh, which at 7.4% pays about ₹9,250 a month. For a retired couple, that's a meaningful, predictable income stream with zero market risk.
The Limits and the Rules
A few specifics that matter:
- Maximum: ₹9 lakh in a single account, ₹15 lakh in a joint account (both raised in Budget 2023 from ₹4.5 lakh and ₹9 lakh).
- Minimum: ₹1,000.
- Tenure: 5 years.
- Accounts: can be single or joint (up to three adults).
These limits mean POMIS is a "part of the plan" instrument, not somewhere you park your whole corpus.
The Tax Reality
Be clear-eyed about this: POMIS has no special tax shelter.
- The deposit does not qualify for an 80C deduction.
- The monthly interest is fully taxable at your slab rate.
- There's no TDS, but you still owe the tax, so declare the interest in your return.
So the 7.4% is a pre-tax figure. For someone in a low or nil tax slab (common for retirees), that's close to what you actually keep. For someone still in the 30% bracket, the after-tax return is noticeably lower.
Early Exit
Need the money before 5 years? Premature closure is allowed, but not for free:
- Before 1 year: not allowed.
- Between 1 and 3 years: 2% of the deposit is deducted.
- Between 3 and 5 years: 1% of the deposit is deducted.
So it's reasonably liquid after the first year, with a modest penalty. Still, it's designed to be held to term.
POMIS vs SCSS vs the Alternatives
If you want monthly or regular income from a safe instrument, here's the landscape.
| Option | Rate | Payout | Max limit |
|---|---|---|---|
| POMIS | 7.4% | Monthly | ₹9L single / ₹15L joint |
| SCSS (60+) | 8.2% | Quarterly | ₹30 lakh |
| Bank FD (monthly payout) | ~7% | Monthly | No limit |
| Debt fund SWP | Market-linked | You choose | No limit |
For senior citizens, the Senior Citizen Savings Scheme usually pays more (8.2%) and allows a larger ₹30 lakh deposit, so it's often the first choice. POMIS complements it: use SCSS up to its limit, then POMIS for additional monthly income, and the two together can build a solid, government-backed income floor.
Key Takeaways
- POMIS pays a fixed 7.4% (Q FY 2025-26), credited monthly, over a 5-year term
- Maximum deposit is ₹9 lakh (single) or ₹15 lakh (joint); minimum ₹1,000
- The deposit gets no 80C benefit, and the interest is fully taxable (no TDS)
- The monthly interest can be auto-credited to your post office savings account
- Premature closure is allowed after 1 year with a 1% to 2% penalty
- Senior citizens should usually fill SCSS first (8.2%, ₹30L limit), then add POMIS
- Best as part of a safe-income plan, not a place for your whole corpus
How much monthly income does ₹9 lakh in POMIS generate at 7.4%?
For the higher-paying senior option, read the Senior Citizen Savings Scheme guide. To plan income across your whole retirement corpus, use the Retirement Corpus calculator and see low-risk investments in India.
Sources
- Post Office Monthly Income Scheme Rules, Ministry of Finance. Tenure, deposit limits, and premature-closure penalties. nsiindia.gov.in
- Ministry of Finance quarterly small-savings interest rate notifications. POMIS rate of 7.4%. dea.gov.in
- Budget 2023 revision of POMIS deposit limits to ₹9 lakh / ₹15 lakh. indiabudget.gov.in
Frequently asked questions
How much monthly income does POMIS pay?
POMIS pays a fixed 7.4% a year (Q FY 2025-26), credited monthly. On the ₹9 lakh single-account maximum that is ₹66,600 a year, or ₹5,550 a month. A joint account can hold up to ₹15 lakh, paying about ₹9,250 a month. Your full principal is returned after the 5-year term.
What are the POMIS investment limits?
The maximum is ₹9 lakh in a single account and ₹15 lakh in a joint account (both raised in Budget 2023). The minimum is ₹1,000, and the tenure is 5 years. The monthly interest can be auto-credited to your post office savings account.
Is POMIS interest taxable?
Yes. POMIS gives no 80C deduction, and the monthly interest is fully taxable at your slab rate, though there is no TDS. The 7.4% is a pre-tax figure, so it is most attractive for those in low or nil tax slabs, such as many retirees.
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