The Post Office Monthly Income Scheme pays you a fixed amount every month for five years, backed by the Government of India. For retirees who need predictable income rather than growth, it is one of the few products where the monthly figure is contractual rather than hopeful.
This calculator shows your monthly payout, total interest across the term, and what the deposit is actually worth once tax is applied.
How the monthly income is calculated
POMIS is deliberately simple. There is no compounding — interest is calculated on your deposit and paid out monthly, and the principal is returned in full at maturity. What you deposit is what you get back.
Monthly income = (Deposit × Annual rate) ÷ 12
- ·At a 7.4% rate, a ₹9,00,000 deposit pays ₹66,600 a year
- ·That is ₹5,550 every month, for 60 months
- ·Total interest across the term = ₹3,33,000
- ·Principal of ₹9,00,000 is returned at maturity, undiminished
Rates are set quarterly
The Ministry of Finance revises small savings rates every quarter. The rate you get is fixed for your full five-year term at the rate prevailing when you open the account — later revisions do not affect an existing deposit. Enter the current rate rather than relying on a figure quoted in an old article.
Deposit limits and who can open one
A married couple can therefore hold ₹15 lakh jointly, or ₹9 lakh each in single accounts — ₹18 lakh across the household. At 7.4% that is roughly ₹11,100 a month between them.
- ·Single account: Maximum ₹9 lakh. Raised from ₹4.5 lakh in April 2023.
- ·Joint account: Maximum ₹15 lakh, with up to three adults. Raised from ₹9 lakh in the same revision.
- ·Minimum: ₹1,000, and in multiples of ₹1,000 thereafter.
- ·Eligibility: Any resident individual. A minor above ten can operate an account, and a guardian can open one on behalf of a younger minor. NRIs are not eligible.
- ·Multiple accounts: Permitted, but your combined holding across all POMIS accounts cannot exceed the individual ceiling.
The tax treatment nobody mentions upfront
POMIS interest is fully taxable as income from other sources, at your slab rate. There is no 80C deduction on the deposit and no exemption on the interest.
What catches people out is that the post office does not deduct TDS on POMIS interest. Receiving the money gross feels like receiving it tax-free, and the liability quietly accumulates until filing. If POMIS is a meaningful part of your income, set aside the tax as it arrives rather than discovering it in one lump at year end.
| Tax slab | Annual interest | Tax | Post-tax return |
|---|---|---|---|
| Nil | ₹66,600 | ₹0 | 7.40% |
| 5% | ₹66,600 | ₹3,330 | 7.03% |
| 20% | ₹66,600 | ₹13,320 | 5.92% |
| 30% | ₹66,600 | ₹19,980 | 5.18% |
Check the post-tax number against inflation
At a 30% slab, a 7.4% headline becomes about 5.2% after tax. If inflation runs near 6%, that is a small negative real return — your monthly income is steady but its purchasing power shrinks each year. Run it through the inflation calculator before committing a large sum.
Premature closure
The penalty applies to the deposit, not to the interest already received, so you keep every monthly payout made up to that point. That makes POMIS more forgiving than instruments that claw back interest — but it is still a five-year commitment and should be funded from money you genuinely will not need.
- ·Before one year: Not permitted. The money is locked.
- ·Between one and three years: Permitted with a 2% deduction from the principal.
- ·Between three and five years: Permitted with a 1% deduction from the principal.
POMIS against the alternatives
POMIS competes with a narrow set of products, and the right comparison depends on whether you qualify for the alternatives.
- ·SCSS: If you are 60 or over, the Senior Citizen Savings Scheme typically pays a higher rate, allows a much larger deposit, and carries an 80C deduction. For an eligible senior it usually wins outright — POMIS is the fallback once the SCSS ceiling is used.
- ·Bank monthly-income FD: A fixed deposit with monthly payout does the same job. Rates move with the market rather than being set quarterly, and deposit insurance covers ₹5 lakh per bank — against a sovereign guarantee on the full POMIS amount.
- ·Debt mutual funds with SWP: A systematic withdrawal plan offers more flexibility and potentially better tax treatment, but the payout is not guaranteed and the capital can fall. Different risk profile entirely.
Last reviewed August 2, 2026 · How we check our calculators