Post Office Monthly Income Scheme — Complete 2026 Guide to POMIS

Post Office Monthly Income Scheme (POMIS / MIS) is a government-backed savings scheme that pays a fixed monthly income on a lump sum deposit. Current rate (April-June 2026): 7.4% per annum, paid monthly. Calculation: ₹9 lakh (maximum single) × 7.4% ÷ 12 = ₹5,550 per month. Features: 5-year tenure, sovereign guarantee, minimum investment ₹1,000, maximum ₹9 lakh (single account) or ₹15 lakh (joint account). A joint POMIS account at the maximum limit generates: ₹15L × 7.4% ÷ 12 = ₹9,250/month. This monthly cash flow — guaranteed, from India Post, with government backing — is why POMIS remains India’s most popular income scheme for retirees and conservative investors.

POMIS is most suitable for: (1) Retirees without pension: who have a lump sum corpus (from EPF, gratuity, property sale) and need regular monthly income. POMIS converts a lump sum into predictable, guaranteed monthly cash flow. (2) Senior citizen investors who don’t qualify for SCSS (which requires at least 60 years of age — POMIS has no age restriction). (3) Risk-averse investors of any age: who want guaranteed monthly income significantly better than bank savings account. (4) Conservative NRIs: NRIs are NOT eligible for POMIS — resident Indians only. (5) Not suitable for: investors in the 30% tax bracket (interest fully taxable, net return may be below inflation), young investors with long horizons (equity SIP would significantly outperform), or those needing liquidity before 5 years.

POMIS interest is credited to your post office savings account (linked at the time of opening) or to a specified bank account every month, typically on the same date as the account opening date. Auto-credit: post offices in most cities now offer direct bank account credit — the monthly interest goes directly to your savings account without any manual action. Reinvestment option: there is no automatic reinvestment option within POMIS itself — the payout is cash. If you want to reinvest: you can set up an RD (Recurring Deposit) using your POMIS monthly payout as the RD instalment — effectively compounding your POMIS returns. This POMIS + RD combination is used by many retirees to build corpus while also receiving an eventual lump sum from the RD at maturity.

Premature closure of POMIS is allowed after 1 year from the date of opening, with a deduction from principal: Closure between 1-3 years: 2% deducted from principal. Closure after 3 years but before 5: 1% deducted from principal. No closure within 1 year: if you close before 1 year, you only get back the principal — no interest. Example: ₹5 lakh POMIS closed at 2 years: ₹5,00,000 − 2% = ₹4,90,000 returned. In case of death of account holder: legal heir/nominee can claim full amount including accrued interest without any premature closure penalty.

POMIS interest is fully taxable as ‘Income from Other Sources’ at your applicable income slab rate. TDS: India Post does NOT deduct TDS on POMIS interest — you must self-report and pay tax. However, the monthly credit to your account is traceable via AIS (Annual Information Statement) which now includes post office interest data. Reporting: declare POMIS monthly interest in Schedule OS of your ITR every year. For senior citizens: the 80TTB deduction (₹50,000 on interest income from banks/post office) applies — effectively making POMIS tax-free for seniors earning below ₹50,000 total in post office interest. At 7.4% on ₹9L: annual interest = ₹66,600. Senior citizen 80TTB deduction: ₹50,000. Taxable interest after 80TTB: ₹16,600. Tax at 5% slab: ₹830. Effective after-tax return for senior citizen: ~7.3% — very competitive.