Post Office Monthly Income Scheme

5paisa Research Team

Last Updated: 25 Nov, 2022 03:55 PM IST


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The government rolls out several National Savings Schemes to provide a fixed return to investors. It is virtually risk-free and often helps create wealth for rural residents and senior citizens. This article explains one of the national savings schemes called the Post Office Monthly Income Scheme.


Key Features of the Post Office Monthly Income Scheme


The key features of the Post Office Monthly Income Scheme include the following.

1.    Eligibility: An adult can open the POMIS account individually or with a maximum of up to 3 adults. A guardian of a minor can open this account, and a child above 10 years of age can open the account in their name.

2.    Account holders: A person investing in the POMIS can hold the account individually or jointly with a maximum of three adult account holders.

3.    Deposit limits: The minimum deposit limit is floored at Rs. 1,000 in this scheme and the multiple of Rs. 1,000 thereafter. The maximum limit for the various type of accounts is as follows.

Account Type

Maximum Limit (Rs.)

Minor Account

3 lakhs

Single Account

4.5 lakhs

Joint Account

9 lakhs


4.    Maturity period: The tenure of the POMIS is 5 years from the account opening date. However, the maturity amount realized at the end of the term can be reinvested.

5.    Pre-mature closure: You can close your account early by submitting the prescribed application with your passbook to the post office. However, the lock-in period is  a year and no deposit shall be withdrawn within a year of the deposit. The penalties for early closure are as follows.



After 1 year but before 3 years

2% of the principal

After 3 years but before 5 years

1% of the principal


6.    Nomination: The nominee facility is available and is subject to update after the recipient (i.e. family member) has opened the account. However, beneficiaries can claim benefits only after the account holder's death.

7.    Transfer facility: THe POMIS account holder can transfer accounts from one Post Office to another.

8.    Scheme Bonus: Account holders who opened accounts before 1st December 2011 were eligible to receive a 5% bonus on the deposit account. This bonus no longer exists.

9.    Taxation: No TDS is applicable for the POMIS. It doesn’t fall under section 80C of the Income Tax Act and is taxable.

How does POMIS Works?

Opting for a Post Office Monthly Income Scheme (POMIS) investment is easy with minimal documentation. However, before that, you need to decide if you want to have an individual or joint account. Accordingly, you can deposit the amount.  

Suppose, you invest Rs 4,50,000 in a 5-year POMIS term. At an annual interest rate of 6.6%, you should receive a fixed monthly payment of Rs 2,475, using the Post Office Monthly Income Scheme calculator available online. You will get the deposited money back at the end of the investment period

You can withdraw the money in 2 ways: directly from the Post Office or deposited into savings account via ECS. You are allowed to withdraw the money every month. However, the investor can let it accumulate over a few months and then withdraw it, but it's not conducive as idle money will not earn you any interest.

Eligibility Criteria for POMIS

The Post Office MIS scheme is structured for risk-averse investors. Firstly, it is a government-backed investment instrument which makes it nearly risk-free. Secondly, it provides a fixed monthly income, so investors looking for a source of fixed income are the most suitable investors. It is apt for senior citizens and retired professionals looking for a regular income to sustain their lifestyles. The eligibility criteria include the following.

●    The investor should be an Indian resident. NRIs are barred from investing in POMIS.
●    Anyone above 10 years old can invest in POMIS in their name.
●    You can open an account individually or with up to 3 people.

How to Open a POMIS Account?

To open a POMIS account, you need to have a savings account with a Post office. After that, you can follow the steps below.

●    Fill up a POMIS form from your nearest Post Office.
●    Submit it with the required documents like ID proof, address proof, and Passport-size photos. Take the Original as well as the photocopies of these documents for verification.
●    Get the nominee’s signature.

Post Office Monthly Income Scheme vs. Monthly Income Plans?

With the inter-usability of terms like monthly income schemes and monthly income plans, it is confusing for people to understand the difference. Monthly income plans are of two types: Mutual Funds and Insurance. The distinct differences between these three are listed below.



Monthly Income Scheme

Mutual Fund Monthly Income Plan

Insurance Monthly Income Plan


Guarantees fixed monthly income at a 6.60%  p.a.

A debt-oriented mutual fund in which the investment is made in equity-debt instruments in a 20:80 ratio

A variant of retirement plan in which the annuities are paid to the insured as monthly income


For those who cannot afford to bear any risk such as old aged and retired people

For those risk-averse investors who like to stay somewhere in between the safe as well as risky instruments

For those who are looking to get the dual benefits of insurance and investment

Monthly income

Fixed and guaranteed

Not guaranteed. It depends on the investment return

Fixed and guaranteed

Deposit Limit

For individual accounts- Rs. 4.5 lakhs

For Joint Accounts- Rs. 9 lakhs

No limits

No limits


Fixed at 6.6%

Variable- can shoot up to 14% or go negative at times

The motive for insurance monthly income plan is to preserve and protect capital, not to maintain earnings

Lock-in period

The locking period is just 1 year after which the investor can withdraw the money, but not without incurring 1-2% penalty charges

Incurs a 1% exit load for cashing the units within 1 year of investment

Incurs surrender charges for withdrawing the amount before the policy term


TDS is not applicable but interest earned is taxable

TDS is not applicable

The monthly annuity payment is taxable



POMIS Revised Interest Rate

In the Post Office Monthly Income Scheme, monthly interest payments plummeted from 8.40% to 6.60%. Before April 1, 2016, the interest rate was 8.40%. Here, it is essential to know that interest income from this system is taxable. Moreover, a person can invest up to Rs. 4,50,000 in the monthly income scheme of the post office. This amount includes a share of the joint account. The minimum deposit amount is Rs. 1,000, and deposits are accepted in multiples of Rs. 1,000.


Benefits of Post Office Monthly Income Scheme

Post Office MIS scheme provides the following benefits.
●    Safer investment option as it is a government-backed scheme
●    Being a fixed-income scheme, the money invested is not exposed to market risk and is very safe
●    You can start with as low as Rs. 1000
●    You earn guaranteed and fixed return every month
●    You can receive monthly interest directly from the post office or have it automatically deposited into your savings account. Reinvesting interest in SIP is also a lucrative option

Documentation Required

The documents required for POMIS include-
●    ID proof: A copy of a government-issued Identity card such as a Passport, PAN card, Voter ID card, or Aadhaar card, etc.
●    Address proof: A copy of government-issued ID cards or recent utility bills like- the electricity bill, gas bill, etc
●    Photographs: 2-4 Passport size photographs

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Frequently Asked Questions

You can withdraw the money in two ways: directly from the post office or deposited into savings account via ECS. The money should be withdrawn monthly. Although investors can accumulate it for several months and then withdraw it again, it is not very useful as unused money does not accrue interest.

Yes, you can reinvest the monthly interest you get again into the POMIS.

No, there is no tax deduction at the source of the POMIS.

Yes, you can update the nominee after opening the POMIS account.

No, the interest on your tax is taxable. However, there is no TDS involved in POMIS.

If the investor does not withdraw the amount after five years, the investor will continue to receive simple interest at the postal savings account rate for up to two years.

Yes, you can withdraw early after a year. However, 2% of the deposit will be deducted if withdrawn within 3 years, and 1% of the deposit will be deducted after 3 years.