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Backed by the Government of India, the Post Office Monthly Income Scheme (POMIS) is a small savings instrument designed to provide fixed, regular returns over a fixed tenure.
Unlike market-linked instruments, where capital fluctuates with equity cycles, POMIS offers absolute principal security with monthly liquidity payouts.
This article explains the Post Office Monthly Income Scheme (POMIS), its current interest rates, and taxation rules.
Key Takeaways
- POMIS provides fixed monthly interest payouts over a mandatory 5-year lock-in tenure.
- The current interest rate is 7.4% per annum, credited monthly to a linked savings account.
- Maximum investment caps are ₹9 lakh for a single account and ₹15 lakh for a joint account.
- Interest earned is fully taxable according to your income tax slab, though no TDS is deducted at source.
- You can close the account after 1 year, with a nominal penalty deducted from the principal.
How POMIS Works?
- An eligible investor opens a POMIS account at a post office.
- A lump-sum amount is deposited, subject to the applicable investment limit.
- Interest is calculated according to the rate applicable to the scheme.
- The interest is paid to the investor every month.
- The deposit continues for the prescribed maturity period.
- On maturity, the principal amount is repaid, subject to the applicable rules.
Also Check: Post Office FD Calculator
POMIS Investment Limits and Account Rules
- Minimum Deposit: ₹1,000 (multiples thereof).
- Maximum Limit (Single): ₹9 lakh.
- Maximum Limit (Joint): ₹15 lakh (can be held jointly by up to 3 adults, with all joint holders having equal share).
- Minor Accounts: Guardians can open accounts on behalf of minors, subject to specific minor-attaining-majority adjustment rules.
Monthly Payout Reference Chart (at 7.4% p.a.)
| Deposit Amount | Monthly Interest Payout | Annual Interest Earned |
| ₹1,00,000 | ₹617 | ₹7,400 |
| ₹3,00,000 | ₹1,850 | ₹22,200 |
| ₹5,00,000 | ₹3,083 | ₹37,000 |
| ₹9,00,000 (Single Max Limit) | ₹5,550 | ₹66,600 |
| ₹15,00,000 (Joint Max Limit) | ₹9,250 | ₹1,11,000 |
Note: Monthly payouts are calculated as (Principal x Annual Interest Rate) /12.
For example, on a ₹9,00,000 deposit at 7.4%, the annual return is ₹66,600, resulting in a steady monthly payout of ₹5,550 credited directly to your linked savings account.
Understand POMIS Investment Limits Before You Start
| Account Type | Maximum Investment |
| Single account | ₹9 lakh |
| Joint account | ₹15 lakh |
| Minimum deposit | ₹1,000 |
| Tenure | 5 years |
| Current interest rate | 7.4% p.a. |
Who Can Open a POMIS Account?
Adults can open POMIS accounts individually or jointly. A guardian can also open accounts for eligible minors, but minor accounts have special rules.
The scheme is mainly for investors seeking a regular income stream, not returns linked to shares or other market-based investments. It is popular with retirees and conservative investors who want stability.
What Makes POMIS Different?
Certain features set POMIS apart from normal savings accounts and market-linked investments.
- Monthly income: Interest paid monthly, not just at maturity.
- Fixed term: The scheme will operate for 5 years.
- Set investment limits: Specific minimum and maximum deposit limits.
- Low market correlation: Returns are uncorrelated with stock market performance.
- Joint account facility: The account may be held jointly with other eligible adults.
- Transfer facility: You can transfer the POMIS account from one post office to another.
- Nomination facility: The investor can nominate a person to receive the funds as per the applicable rules.
Also Read About: Post Office Sukanya Samriddhi Yojana
What Happens if You Need the Money Early
POMIS is designed for a five-year period, so investors should consider their liquidity needs before investing.
Premature closure is generally not permitted during the first year. After one year, the account can be closed subject to deductions.
If the account is closed after 1 year but before 3 years, a 2% deduction of the principal applies. If it is closed after 3 years but before 5 years, the deduction is 1% of the principal.
This makes POMIS less suitable for money you may need at short notice.
Why Investors May Consider POMIS?
The core appeal of POMIS is its predictability: it pays fixed monthly interest at the prevailing government-backed rate of 7.4% per annum, insulating your income from daily market volatility.
- Steady Cash Flow: Ideal for retirees or conservative investors who require reliable monthly payouts to manage household expenses.
- Capital Safety: Backed entirely by the central government, eliminating default risk.
Since returns are structurally fixed, investors must forgo the compounding growth and higher long-term wealth-creation potential associated with equity markets. It functions best as a defensive component within a diversified portfolio rather than a primary vehicle for capital appreciation.
POMIS Compared With Other Savings Options
POMIS is only one of several ways to generate income from savings. Comparing it with other options can help investors understand where it fits.
| Feature | POMIS | Bank FD | SCSS |
| Main purpose | Monthly income | Fixed returns | Retirement-focused income |
| Interest payout | Monthly | Depends on chosen option | Quarterly |
| Tenure | 5 years | Varies | 5 years |
| Market-linked | No | No | No |
| Investment limit | ₹9 lakh single, ₹15 lakh joint | Depends on institution | Prescribed limit |
| Risk level | Relatively low | Relatively low | Relatively low |
Is POMIS Right for You?
POMIS may suit investors who want regular income from a savings product but don’t want returns affected by market performance.
If you want to make as many investments as you can or are mostly interested in long-term capital growth, it may not suit investors seeking quick cash.
So base this decision on your financial objectives, how much money you need, when you need it, and your overall preferences for asset allocation.
Conclusion
With the Post Office Monthly Income Scheme, it's easy to turn your savings into a steady monthly income. With a five-year term, clear investment limits, and an interest rate of 7.4% per year, it may appeal to investors who want steady returns without being directly affected by market changes.
Still, you can only invest a certain amount and can't withdraw money early. Also, the interest you earn is taxed. So, investors should consider POMIS as part of their overall financial plan and weigh it against other effective ways to save money before investing.
Also Read About: Post Office Time Deposit Account
