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Post Office Monthly Income Scheme: Account Opening and Benefits

•6 min read•by Angel One
The Post Office Monthly Income Scheme (POMIS) is a government-backed savings plan that provides a fixed monthly income for five years, with low investment risk and defined deposit limits.
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The Post Office Monthly Income Scheme (POMIS) is a government-backed savings option designed for individuals who want a stable and predictable income. It allows investors to deposit a fixed amount and receive monthly interest for a period of five years. Since the scheme is supported by the Government of India, it is considered a relatively low-risk investment. It is commonly chosen by retirees and conservative investors who prefer steady returns rather than market-linked investments. 

Key Takeaways 

  • POMIS is a government-backed savings scheme that provides a fixed monthly income for five years. 

  • Investors can start with ₹1,000, with limits up to ₹9 lakh (single) and ₹15 lakh (joint) accounts. 

  • The scheme is designed for stable income and low risk, making it suitable for retirees and conservative investors. 

  • Premature withdrawal is allowed after one year, but deductions apply depending on when the account is closed. 

What is the Post Office Monthly Income Scheme (POMIS)? 

The POMIS scheme is a government-backed savings option offered through post offices that provides a fixed monthly income to investors. Under this scheme, individuals deposit a certain amount and earn interest that is paid every month for a fixed tenure of five years. The interest rate is set by the Government of India and is revised periodically. 

The scheme is designed for investors who prefer stable and predictable returns rather than market-linked investments. Since the capital remains protected and the returns are fixed, it is generally considered suitable for conservative investors and individuals looking for regular monthly income. It is also part of the broader range of small savings schemes available through the post office network. 

Post Office Monthly Income Scheme Details

The table below shows the maximum investment limits allowed under the post office monthly income scheme based on the type of account opened. 

Account type 

Maximum investment 

Single account 

₹9 lakh 

Joint account 

₹15 lakh 

The scheme allows individuals to open either a single account or a joint account with up to three adults. The minimum investment required is ₹1,000, and deposits must be made in multiples of ₹1,000.  

The tenure of the scheme is five years, during which interest is paid every month. At maturity, the investor receives the original deposit amount along with the monthly income earned during the investment period. 

Post Office Monthly Income Scheme For Senior Citizens

The post office monthly income scheme for senior citizens is commonly chosen by retirees who prefer a steady and predictable income after retirement. The scheme provides monthly interest payouts, which can help meet regular household expenses without relying on market-linked investments. 

  • Regular monthly payout: Interest is credited every month, providing a stable income stream. 

  • Low starting investment: The minimum investment required is ₹1,000, allowing easy participation. 

  • Defined investment limits: Investors can deposit up to ₹9 lakh in a single account and ₹15 lakh in a joint account. 

  • Fixed tenure: The scheme runs for five years, ensuring consistent returns throughout the investment period. 

Early Withdrawal Penalty POMIS

If an investor withdraws money from the POMIS account before completing the five-year maturity period, certain penalty rules apply. 

  • No withdrawal in the first year: The investment cannot be withdrawn during the first year from the date of deposit. 

  • Closure after 1 year but before 3 years: A deduction of 2% of the principal amount is applied before returning the remaining balance. 

  • Closure after 3 years but before 5 years: A 1% deduction on the principal is charged if the account is closed during this period. 

  • Account closure process: The investor must submit the required application form and passbook at the post office to complete the withdrawal request. 

Key Features of the Post Office Monthly Income Scheme 

The Post Office MIS (POMIS) offers the following key features: 

  1. Qualification: POMIS accounts can be opened by adults individually or jointly with up to three other adults. Guardians can also open accounts for minors, and minors aged 10 years or above can open accounts in their own name. 

  1. Account Holders: POMIS permits both single and joint account holders, with a maximum of three adults. 

  1. Deposit Limits: The minimum deposit is ₹1,500, with subsequent deposits in multiples of ₹1,000. Maximum deposit limits vary: 

  • Minor Account: Up to ₹3 lakh 

  • Single Account: Up to ₹9 lakh 

  • Joint Account: Up to ₹15 lakh 

  1. Maturity Period: POMIS has a fixed 5-year tenure, with the option to reinvest the maturity amount. 

  1. Early Closure: Early account closure is possible, but a one-year lock-in period applies. Penalties for early closure are as follows: 

  • 1 — 3 years: 2% of the principal 

  • 3 —  5 years: 1% of the principal 

  1. Nomination: Nominee details can be updated after the account is opened, but beneficiaries can only claim funds upon the account holder’s demise. 

  1. Transfer Option: POMIS account holders can transfer their accounts between Post Offices. 

  1. Bonus Scheme: Accounts opened before December 1, 2011, used to receive a 5% bonus, but this is no longer applicable. 

  1. Taxation: POMIS is taxable and not eligible for benefits under Section 80C of the Income Tax Act. It is also not subject to TDS. 

How Does POMIS Work?  

Before proceeding, you must decide whether you want an individual or joint account and then deposit the appropriate amount accordingly. If you invest ₹4,50,000 in a 5-year Post Office MIS term at an annual interest rate of 7.4%, you can expect a consistent monthly payout of about ₹2,775. As calculated using the readily available online Post Office Monthly Income Scheme calculator.  

You will receive your deposited principal amount back at the end of the investment period. You have two options for withdrawing your funds: directly from the Post Office or by transferring them to your savings account via the ECS (Electronic Clearing Service).  

Monthly withdrawals are permitted, although you can choose to accumulate the money over several months before withdrawing it. However, this is generally avoided because accumulated interest does not earn additional returns. 

Also Read More About: Section 80C 

Eligibility Criteria for POMIS  

The Post Office Monthly Income Scheme (MIS) is designed primarily for individuals who prioritise safety in their investments. Firstly, it enjoys government backing, making it an almost risk-free investment option.  

Secondly, it offers a fixed monthly income, making it particularly appealing to those seeking a steady income source. It proves especially suitable for senior citizens and retired professionals who rely on regular income to support their lifestyles. The eligibility requirements are as follows: 

  • Investors must be Indian residents; Non-Resident Indians (NRIs) are not allowed to participate in POMIS. 

  • Individuals aged 10 years and above can invest in their own name. 

  • You have the option to open an account either individually or jointly with up to two other individuals (a maximum of three account holders in total). 

Read More About: Types of TDS 

How to Open a POMIS Account?

To initiate the process of opening a POMIS account, you may need a savings account with the Post Office to receive monthly interest payments. Once you have met this prerequisite, you can proceed by following these steps: 

  1. Obtain a POMIS application form from your nearest Post Office. 

  1. Complete the form and provide the necessary documents, including proof of identity, proof of address, and passport-sized photographs. Ensure that both the originals and photocopies of these documents are available for verification. 

  1. Obtain the signature of your chosen nominee for the account. 

Benefits of the Post Office Monthly Income Schem

The Post Office Monthly Income Scheme (MIS) offers a range of advantages, which include: 

  1. Enhanced Safety: This investment option is exceptionally secure because it is supported by the government. 

  1. Steady Income: As a fixed-income scheme, it shields your invested funds from market fluctuations, providing a high level of safety. 

  1. Low Entry Point: You can begin investing with as little as ₹1,000, making it accessible to a wide range of individuals. 

  1. Guaranteed Returns: It provides an assurance of consistent and fixed returns every month. 

  1. Flexible Withdrawals: You have the flexibility to either receive your monthly interest directly from the post office or have it automatically deposited into your savings account. Investors may also choose to reinvest the received interest in other savings or investment options. 

Documentation Required 

  1. To open a POMIS account, you will need to provide the following documents: 

  1. Identification Proof: A photocopy of an official government-issued identification document, such as a Passport, PAN card, Voter ID card, Aadhaar card, etc. 

  1. Address Proof: A photocopy of a government-issued identification card or recent utility bills, like electricity or gas bills, that serve as proof of your address. 

  1. Photographs: Passport-sized photographs of the applicant may be required as part of the account opening process. 

Read More: How To Apply for an Aadhaar Card? 

Post Office Monthly Income Scheme (POMIS) vs Other Saving Schemes of the Post Office 

The table below compares POMIS with other common post office savings schemes based on interest rates and tax deduction rules. 

Savings scheme 

Rate of interest 

TDS 

Post Office Monthly Income Scheme 

7.4% p.a.  

No TDS deducted 

Post office recurring deposit 

6.7% p.a. 

No TDS deducted 

Post office time deposit (1, 2, 3 years) 

6.9%, 7.0%, 7.1% p.a. respectively 

No TDS deducted 

Post office time deposit (5 years) 

7.5% p.a. 

TDS deducted 

National Savings Certificate 

7.7% p.a. 

No TDS deducted 

Senior citizen saving scheme 

8.2% p.a. 

TDS deducted 

Public Provident Fund 

7.1% p.a. 

No TDS deduction 

 Conclusion  

The Post Office Monthly Income Scheme (POMIS) offers a secure and convenient investment option for risk-averse individuals, providing a fixed monthly income with government backing and minimal investment requirements. It serves as a reliable source of steady returns, especially appealing to retirees and those seeking stability in their financial portfolios. 

FAQs

The minimum investment for a POMIS account is as low as ₹1,000, making it accessible to a wide range of individuals.

The Post Office Monthly Income Scheme provides fixed monthly interest for five years, which can help generate regular income. For this reason, it is commonly used by retirees seeking a predictable cash flow. 

To open a POMIS account, you will need to provide a copy of a government-issued ID proof (e.g., Passport, PAN card, Voter ID, or Aadhaar card), a copy of an address proof (e.g., utility bills), and 2–4 passport-size photographs.

Yes. The monthly interest received from POMIS can be withdrawn and invested in other financial products, such as mutual funds through SIP, if the investor chooses to do so. 

There is no requirement to maintain a minimum balance after opening the account. You only need to meet the initial deposit requirement, which starts from ₹1,000 in multiples of ₹1,000. 

The Post Office Monthly Income Scheme (POMIS) is designed with a fixed tenure of five years. It provides monthly interest payouts while returning the principal amount at maturity. 

A POMIS account can be transferred from one post office to another anywhere in India. This allows investors to continue managing their accounts even after relocating. 

Yes, a single POMIS account can be converted into a joint account. The request must be submitted at the post office with the required application and consent of all account holders. 

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