POMIS Calculator: Monthly Income From the Post Office Scheme

A Monthly Salary From a Lump Sum, Government-Backed

The Post Office Monthly Income Scheme, officially the National Savings Monthly Income Account, is one of India Post’s oldest and most popular small-savings schemes, and it has stayed popular for a very good reason. It does something simple and valuable: you deposit a lump sum, and every month for five years the scheme pays you interest at a fixed rate directly into your linked savings account.

For anyone who wants a dependable monthly income from completely safe money, whether a retiree living off savings, someone between jobs needing a bridge, or a family supplementing its regular earnings, POMIS is a natural first choice and one of the simplest such products to understand.

At 7.4 percent for the April to June 2026 quarter, POMIS pays meaningfully more than a comparable five-year bank fixed deposit, which typically offers 6.5 to 6.8 percent, while carrying the same sovereign guarantee. That 60 to 90 basis point advantage, on completely safe money, is what makes the scheme attractive to conservative investors who will not touch equity but still want their capital working harder than a bank will make it work.

To put the advantage in rupees, on a 9 lakh deposit the gap between POMIS at 7.4 percent and a bank deposit at 6.6 percent is roughly 7,200 a year, or 36,000 over the five year term, for taking on no additional risk whatsoever. For a retiree counting every rupee of a fixed income, that difference is not trivial, and it is entirely free in risk terms because both carry the same government or bank safety on the sums involved. This is why POMIS regularly features in advisers’ recommendations for the safe, income-generating slice of a portfolio.

Like its cousin SCSS, POMIS pays the interest out rather than compounding it. There is no larger maturity value building up; instead the growth reaches you month by month as spendable income, and your original principal is returned in full after five years, exactly as you put it in.

This is the defining feature to internalise before anything else: POMIS is designed to generate steady income from capital you already have in hand, not to grow that capital over time into something larger. Framing it that way is what makes it click.

The contrast with a scheme like PPF sharpens the point. PPF compounds silently for fifteen years and pays nothing until the end, building a large tax-free corpus, ideal for someone accumulating wealth during their working life. POMIS does the opposite: it pays everything out as you go and hands back exactly what you put in. Neither is better in the abstract; they suit opposite needs. If you are building wealth for a distant goal, POMIS is the wrong tool. If you have the lump sum already and need it to pay you every month, POMIS is close to ideal, and comparing it against growth schemes rather than income schemes only leads to confusion.

It pairs naturally with our SCSS calculator, which does the same job on a quarterly rhythm with a higher limit for those over 60. Many retirees use both together, maxing SCSS first for its higher rate and 80C benefit, then adding POMIS for extra monthly income. Used in combination, an eligible senior could hold 30 lakh in SCSS and a further 9 or 15 lakh in POMIS, blending quarterly and monthly payouts into a substantial, fully government-backed income stream that covers a large share of a comfortable retirement budget. Read on to understand the monthly mechanics, the account limits, the tax treatment, and the premature-closure rules.

How POMIS Monthly Income Works

The mechanics are simple once you see it as an income scheme. Four features define how POMIS pays you.

Interest is simple, paid monthly

Your deposit earns interest at the annual rate, divided by twelve and paid to you each month. Because it is paid out rather than reinvested, it never earns interest on itself, so there is no compounding. A 9 lakh single-account deposit at 7.4 percent earns 66,600 a year, paid as 5,550 every month, and that figure stays constant for all five years.

That constancy is a feature, not a limitation. Because the monthly amount never varies, you can budget around it with total confidence: the same 5,550 arrives on schedule every month for sixty months, regardless of what happens to interest rates, markets or the economy. For a retiree matching income to recurring expenses, this predictability is worth as much as the rate itself. It is the difference between an income you can plan a household around and one that keeps you guessing, and it is precisely what a government-backed fixed-rate scheme is designed to deliver.

The rate is fixed for your tenure

Although the government revises the POMIS rate quarterly for new accounts, the rate you get is the rate when you open, and it holds for the full five years. Opening at the current 7.4 percent effectively locks that rate in for you even if it is later cut for new accounts.

In a falling-rate environment this protection is genuinely valuable, keeping your monthly income steady where a series of short bank deposits might see the rate drop at each renewal.

Single and joint accounts have different limits

A single account allows up to 9 lakh and a joint account, held by two or three adults, up to 15 lakh. In a joint account all holders share the investment equally. This lets a couple deploy a larger sum for higher combined monthly income than a single account permits, which is why the joint option is popular among married retirees.

The equal-share rule in a joint account has a useful tax consequence. Because each holder owns an equal portion of the investment and its interest, a couple can split the taxable interest between their two returns, applying each spouse’s slab and each spouse’s 80TTB deduction if both are seniors. For a couple where one spouse has little other income, this splitting can meaningfully reduce the household’s overall tax on the POMIS interest compared with the whole amount sitting in one person’s hands. It is a small planning point that the joint structure enables almost automatically.

Principal returns intact at maturity

At the end of five years you receive your original deposit back in full, with no deduction. There is no maturity bonus or accumulated lump beyond your own capital, because all of the growth was paid out to you monthly along the way rather than left to build up.

You then choose whether to withdraw the principal or reinvest it in a fresh POMIS account at the prevailing rate, ideally promptly, since an unwithdrawn balance earns only the low savings rate afterwards.

This reinvestment decision at maturity is worth planning ahead of time. If POMIS rates are still attractive relative to alternatives when your account matures, rolling into a fresh five year term keeps the income flowing at a competitive rate. If rates have fallen or your circumstances have changed, maturity is the natural moment to redeploy the capital elsewhere, into an SCSS account if you have since turned 60, into a fixed deposit, or into a growth asset if your need has shifted from income back to accumulation. Diarising the maturity date avoids the trap of the money languishing at the low post-maturity savings rate.

Limits, Tax and the No-80C Catch

Two things about POMIS trip people up: the account limits and the fact that, unlike SCSS, the deposit earns no tax deduction. Getting both right matters.

The 9 and 15 lakh caps

A single account is capped at 9 lakh and a joint account at 15 lakh, both raised from lower limits in 2023. If you hold several single accounts, they aggregate to the same 9 lakh ceiling.

Any amount above the cap is simply returned to you without earning interest, so it pays to size the deposit to the limit rather than over-fund it.

No deduction on the deposit

This is the catch that surprises people. Unlike SCSS, PPF or a tax-saving fixed deposit, the POMIS deposit does not qualify for a Section 80C deduction. You get no tax benefit on the amount invested.

So if a tax deduction on the investment matters to you, SCSS may be the better home for money if you are eligible, with POMIS used for income beyond that.

It is worth being clear about why this matters in practice. Two people might each put 9 lakh into a five year scheme, one into POMIS and one into a tax-saving alternative, and receive similar headline interest, yet the one who used an 80C-eligible route also shaved up to 1.5 lakh off their taxable income in the year of investment, worth as much as 45,000 in tax saved at the top slab. That one-time benefit does not exist with POMIS. It does not make POMIS a poor scheme, its monthly income and safety stand on their own, but it does mean the deposit should not be thought of as a tax-saving move.

The interest is fully taxable

Every rupee of POMIS interest is added to your income and taxed at your slab rate as income from other sources. The headline 7.4 percent is pre-tax, so a person in the 20 or 30 percent slab keeps considerably less.

There is no TDS on POMIS, but that does not make it tax-free; you must declare and pay the tax yourself. This calculator applies your slab to show the real, after-tax monthly income. Knowing the post-tax figure rather than the headline is essential for budgeting, since a retiree planning around the gross 5,550 who is actually in the 20 percent slab would find roughly 1,100 a month less than expected reaching their account.

Senior citizens can use 80TTB

If you are 60 or above, the Section 80TTB deduction of up to 50,000 a year on total interest income applies to POMIS interest as well, softening the tax on modest deposits. It is a combined limit across all your interest income, so weigh POMIS against your fixed-deposit and savings interest when judging how much relief remains available.

POMIS Versus SCSS Versus Fixed Deposit

POMIS rarely stands alone; most conservative investors weigh it against SCSS and bank fixed deposits. Seeing the three side by side clarifies when each is the right home for safe income money.

When POMIS wins

POMIS is the right choice when you want monthly income specifically, are under 60 so SCSS is not available, or have already maxed SCSS and want more safe income. Its monthly rhythm suits covering month-to-month expenses better than SCSS’s quarterly payout, and it beats bank deposits on rate. For a working-age person wanting safe monthly income from a lump sum, POMIS is often the single best option available.

When SCSS wins

If you are 60 or above, SCSS almost always beats POMIS: a higher 8.2 percent rate, a much larger 30 lakh limit, and an 80C deduction POMIS lacks. The only edge POMIS retains for a senior is its monthly payout versus SCSS’s quarterly one, which matters if you budget month to month. Most seniors max SCSS first, then add POMIS for the monthly income and to deploy money beyond the SCSS cap.

When a fixed deposit wins

Bank fixed deposits win on flexibility: any amount, any tenure, easy online access and premature withdrawal, and some banks pay seniors a rate approaching POMIS. If you need liquidity, a non-standard tenure, or want to keep everything with one bank, an FD may suit despite the lower rate. For the safe, income-focused core, though, POMIS and SCSS usually pay more for the same safety, so deposits often serve best as the flexible, liquid complement.

Three Investors and Their POMIS Income

The scheme fits different needs, and the three below show its range. All figures are reproducible in the tool above.

Premature Closure Penalties, Priced in Rupees

POMIS allows an early exit after the first year, with a penalty on the principal that depends on how long the account has run. After you calculate, the penalties below show in rupees for your specific deposit, so you can see the exact cost of closing at each stage.

The single most important point is that the penalty applies only to your principal, never to the monthly interest you have already received, which is yours to keep whatever happens. Closure is barred entirely in the first year. From the second year the penalty is a modest 2 percent of principal, dropping to 1 percent after three years, small enough that POMIS should not be avoided for fear of being trapped.

At maturity there is no penalty at all and the full principal returns. Even so, because a penalty applies before maturity, POMIS suits money you are reasonably sure you can leave invested, with a separate liquid buffer kept aside for genuine emergencies. A sensible approach is to size your POMIS deposit to money you are confident you will not need for the full five years, and to hold a few months of expenses separately in an instant-access account, so the penalty structure never actually costs you anything in practice.

Six Points to Get Right With POMIS

A few informed choices help you use POMIS well and avoid its pitfalls. These six matter most.

POMIS Numbers Worth Remembering

These reference points let you sanity-check any POMIS quote or calculation at a glance, and spot immediately when a source has the rate, the caps, or the no-80C rule wrong.

Frequently Asked Questions on POMIS

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