Educational Purpose Only: The POMIS interest rate is set by the Government of India and revised quarterly. Verify the current rate before investing.
How it works
The Post Office Monthly Income Scheme (POMIS) is a government-backed savings scheme that pays a fixed monthly interest income on a one-time lump-sum deposit. It is ideal for retirees and risk-averse investors who want a guaranteed, regular income without exposure to market fluctuations.
The deposit limit is ₹9 lakh for a single account and ₹15 lakh for a joint account. The scheme has a fixed 5-year tenure, after which the principal is fully returned. Interest is paid monthly directly to your linked savings account. The current interest rate is 7.4% per annum (subject to quarterly government review).
Worked example: ₹9 lakh deposit
Say you open a single POMIS account with the maximum allowed deposit of ₹9,00,000 at the current 7.4% p.a. rate. The post office pays interest monthly rather than compounding it, so the payout is a simple pro-rated share of the annual interest:
| Particulars | Value |
|---|---|
| Deposit (single-account limit) | ₹9,00,000 |
| Interest rate | 7.4% p.a. |
| Monthly payout: 9,00,000 × 7.4% ÷ 12 | ₹5,550/month |
| Total interest over 60 months: ₹5,550 × 60 | ₹3,33,000 |
| Principal returned at maturity (5 years) | ₹9,00,000 |
Because the monthly payout is credited directly to your linked savings account rather than reinvested, POMIS does not compound — the ₹5,550 you receive each month stays flat for the full 5-year tenure, and only the ₹9,00,000 principal is returned at the end.
Taxation on POMIS interest
POMIS interest is fully taxable — it is added to your total income and taxed at your applicable income tax slab rate under "Income from Other Sources." The post office does not deduct TDS on this interest, but that does not make it tax-free: you are still required to self-report the full interest received during the financial year and pay any tax due when filing your ITR.
Unlike PPF, SCSS, or Sukanya Samriddhi Yojana (SSY), the POMIS deposit itself does not qualify for a Section 80C deduction. There is no upfront tax break for investing in POMIS — the scheme's appeal is the guaranteed, predictable monthly payout rather than any tax saving.
Who should invest in POMIS?
POMIS is best suited to retirees and conservative savers who want a fixed monthly income without taking on market risk. It is often used alongside — not instead of — other government-backed instruments: many senior citizens split their savings between POMIS and the SCSS calculator to combine two monthly/quarterly payout schemes, while others compare it with the FD calculator since bank fixed deposits offer more flexible tenures but carry slightly more interest-rate and payout-frequency variation.
Retirees
POMIS provides a guaranteed monthly income stream to supplement pension. The government backing eliminates credit risk, making it safer than most fixed-income alternatives.
Risk-Averse Investors
For investors who cannot afford any capital loss, POMIS offers capital protection with a predictable monthly payout — no market exposure at all.
Regular Income Seekers
Unlike FDs that pay interest quarterly or at maturity, POMIS pays monthly — ideal for covering regular household expenses.
Senior Citizens
Senior citizens can combine POMIS with SCSS (Senior Citizen Savings Scheme) to maximise tax-efficient monthly income from government-backed instruments.
Frequently Asked Questions
What is the maximum investment allowed in POMIS?
The deposit limit is ₹9 lakh for a single account and ₹15 lakh for a joint account. A person can hold only one single account, but can have one single and one joint account simultaneously — giving a maximum personal investment of up to ₹9 lakh + a share of ₹15 lakh in the joint account.
What is the current POMIS interest rate?
The current POMIS interest rate is 7.4% per annum, paid monthly. The rate is reviewed quarterly by the Government of India and linked to government bond yields. Always verify the latest rate at your nearest post office or the India Post website before investing.
Can I withdraw POMIS before 5 years?
Yes, premature closure is allowed after 1 year. If you close between 1–3 years, 2% of the principal is deducted. If you close between 3–5 years, 1% is deducted. No premature withdrawal is allowed within the first year.
Is POMIS interest taxable?
Yes. Interest income from POMIS is fully taxable as 'Income from Other Sources' at your applicable income tax slab rate. There is no TDS deduction by the post office — it is your responsibility to include this income in your ITR. Senior citizens can also claim deduction under Section 80TTB.
What happens to POMIS after 5 years?
After the 5-year maturity, you receive your original principal back in full. You can reinvest it in a new POMIS account for another 5-year term. The principal returned is not taxable — only the interest income during the tenure was taxable.
Related Calculators
This calculator is for educational and illustrative purposes only. The POMIS interest rate is set by the Government of India and revised quarterly. Check the latest rate at your nearest post office or on the India Post website before investing.