In an era of fluctuating interest rates and market uncertainties, many investors are searching for a safe and predictable way to earn regular income. The Post Office Monthly Income Scheme (POMIS) addresses this need by offering a government-backed investment with fixed monthly payouts. Administered by India Post under the Ministry of Finance, POMIS is especially popular among retirees, senior citizens, and conservative investors who prioritize capital protection and guaranteed returns. This guide explains how POMIS works, its benefits, eligibility criteria, and how it compares to other savings instruments.
Short Summary Table
Category |
Details |
|---|---|
Scheme |
Post Office Monthly Income Scheme (POMIS) |
Tenure |
5 years |
Interest Rate |
7.4% p.a. (April–June 2025) |
Minimum Investment |
₹1,000 |
Maximum Investment |
₹9 lakh (individual), ₹15 lakh (joint) |
Monthly Payout (on ₹9L) |
₹5,550 |
Tax Treatment |
Taxable interest; no 80C benefit |
Eligibility |
Indian residents only |
Official Website |
What is the Post Office Monthly Income Scheme (POMIS)?
The Post Office Monthly Income Scheme is a small savings scheme designed to provide monthly interest income. Investors deposit a lump sum, which earns a fixed interest rate, currently at 7.4% per annum (as of April–June 2025). The interest is paid out monthly, making it ideal for those seeking consistent cash flow. As a government-supported initiative, POMIS ensures safety, reliability, and easy accessibility across India’s vast post office network.
Key Features of POMIS
Feature |
Details |
|---|---|
Minimum Investment |
₹1,000 (in multiples of ₹1,000) |
Maximum Investment (Single Account) |
₹9 lakh |
Maximum Investment (Joint Account) |
₹15 lakh (up to 3 adults) |
Interest Rate |
7.4% per annum (Apr–Jun 2025) |
Interest Payout |
Monthly |
Tenure |
5 years |
Premature Withdrawal |
Allowed after 1 year with penalty |
Tax Benefits |
None under Section 80C |
TDS on Interest |
No TDS, but interest is taxable |
Risk Level |
Very Low (Government-backed) |
How Does Monthly Income Work?
Monthly interest is calculated as follows:
Formula:
Monthly Income = (Annual Interest Rate ÷ 12) × Investment Amount
Example:
Investment: ₹9,00,000
Monthly Income = (7.4 ÷ 12)% × ₹9,00,000 = ₹5,550
Investment Scenarios and Expected Returns
Investment Amount |
Monthly Income @ 7.4% |
|---|---|
₹1,00,000 |
₹617 |
₹3,00,000 |
₹1,850 |
₹5,00,000 |
₹3,083 |
₹9,00,000 |
₹5,550 |
₹15,00,000 (Joint) |
₹9,250 |
Note: Claims of significantly higher returns by third parties may be misleading and should be verified against actual rates.
Eligibility Criteria
To invest in POMIS, you must:
-
Be an Indian resident (NRIs not allowed).
-
Be at least 18 years old (minors above 10 can invest through guardians).
-
Hold a Post Office Savings Account for interest credit.
-
Open an individual or joint account (up to 3 adults).
Benefits of Investing in POMIS
-
Government Guarantee: High safety for your capital.
-
Regular Income: Monthly payouts for better cash flow management.
-
Wide Accessibility: Available at all major post offices.
-
Low Entry Requirement: Start investing from ₹1,000.
-
No Market Risk: Fully protected from market volatility.
-
Account Transferability: Can be transferred across India.
-
Nomination Option: Simplifies fund transfer to legal heirs.
Limitations to Consider
Despite its advantages, POMIS also comes with some constraints:
-
Interest is Fixed: Returns are not adjusted for inflation.
-
No Tax Benefits: Not eligible under Section 80C.
-
Interest is Taxable: Included in taxable income.
-
Withdrawal Penalty: 2% deduction if closed between 1–3 years, 1% between 3–5 years.
-
Investment Ceiling: Maximum ₹9 lakh (individual), ₹15 lakh (joint).
How to Open a POMIS Account
-
Visit a post office offering savings schemes.
-
Fill the POMIS application form.
-
Submit KYC documents: Aadhaar, PAN, address proof, photos.
-
Link or open a Post Office Savings Account.
-
Deposit amount via cash (up to ₹50,000), cheque, or demand draft.
-
Collect passbook as confirmation of account opening.
POMIS vs Other Low-Risk Options
Scheme |
Interest Rate |
Monthly Income on ₹5L |
Tax Benefits |
Risk |
Lock-in Period |
|---|---|---|---|---|---|
POMIS |
7.4% |
₹3,083 |
No |
Very Low |
5 years |
Bank FD |
5.5–7% |
Varies |
No/Partial |
Low |
Flexible |
SCSS |
8.2% |
₹3,416 |
Yes (80C) |
Very Low |
5 years |
PPF |
7.1% |
No monthly payout |
Yes (80C) |
Very Low |
15 years |
Debt Mutual Funds |
Varies |
Not fixed |
No |
Low–Moderate |
Flexible |
Who Should Invest in POMIS?
This scheme is best suited for:
-
Retirees and pensioners needing monthly income.
-
Senior citizens prioritizing capital safety.
-
Conservative investors avoiding market risks.
-
Individuals with short- to medium-term financial goals (5 years).
Frequently Asked Questions (FAQs)
Q1. Can NRIs invest in POMIS?
No. Only Indian residents are eligible.
Q2. What happens after maturity?
You can withdraw your investment or reinvest in the same or other schemes.
Q3. Is interest from POMIS taxable?
Yes. The interest is added to your income and taxed as per your slab.
Q4. Can I withdraw early?
Yes. After 1 year, with a penalty of 2% (1–3 years) or 1% (3–5 years).
Q5. Can I open multiple accounts?
Yes, but the total investment should not exceed ₹9 lakh (individual) or ₹15 lakh (joint).
Conclusion
The Post Office Monthly Income Scheme (POMIS) is a safe, predictable, and accessible investment plan suitable for those who value regular income and low risk. While it doesn’t offer tax savings or high returns, its government backing, fixed interest rate, and straightforward process make it a sound choice for many Indian households. Always verify the prevailing interest rates on the India Post official website before investing.
