What Is Post Office Monthly Income Scheme (POMIS) — 7.4% Guaranteed Monthly Income
By Tapabrata Biswas · Last updated May 20, 2026 · 9 min read
Researched with AI assistance, reviewed and edited by Tapabrata Biswas.
The Post Office Monthly Income Scheme pays 7.4% annual interest as a monthly credit to the depositor's savings account — making it one of the few government-backed instruments designed specifically for converting a lump-sum deposit into structured monthly cash flow. The maximum was raised from ₹4.5 lakh to ₹9 lakh for single accounts (and ₹9 lakh to ₹15 lakh for joint accounts) in Budget 2023. A married couple structure combining individual + joint accounts can effectively deploy ₹24 lakh, generating roughly ₹14,800 monthly household income at the current 7.4% rate.
This post covers what POMIS actually is, the universal age eligibility, the 5-year tenure with monthly interest mechanics, the Budget 2023 limit increases, premature closure penalties, tax treatment, and how POMIS compares to SCSS and private bank monthly income plans.
What POMIS actually is
The Post Office Monthly Income Scheme is a small-savings instrument administered by India Post under the Government Savings Promotion Act, 1873 and the Post Office Monthly Income Scheme Rules. It is designed specifically to provide guaranteed monthly income to depositors from a lump-sum deposit, with the principal returned at the 5-year maturity.
Three structural features distinguish POMIS from other Pillar 8 schemes:
Monthly interest payout to a linked account. Unlike PPF or SSY (interest compounded into principal) or SCSS (interest paid quarterly), POMIS credits interest monthly to the depositor's designated post office savings account or linked bank account. The monthly cadence makes POMIS function as direct monthly cash flow rather than periodic income.
Universal age eligibility. POMIS is open to any Indian resident with no minimum or maximum age requirement — making it accessible to homemakers seeking household income, younger retirees not yet eligible for SCSS, freelancers wanting predictable monthly cash flow, or anyone with a lump sum wanting guaranteed monthly payouts.
Post-office-only availability. Unlike PPF or NSC which can be opened at both India Post and authorised commercial banks, POMIS accounts are only available at India Post offices. The deposit must be made and managed through the post office network.
Eligibility rules
| Eligible | Conditions |
|---|---|
| Indian residents (any age) | No minimum or maximum age limit |
| Minors above 10 years | Deposit limited to ₹3 lakh in minor's account |
| Joint account holders | Up to 3 adults can hold a joint POMIS account with equal share |
| Not eligible: | NRIs; Hindu Undivided Families (HUFs); persons under 10 (except via guardian) |
The universal age access makes POMIS structurally different from SCSS (60+ only) and Sukanya Samriddhi Yojana (girl-child specific). For working-age Indians with a lump sum needing monthly income — retirement nest egg, inheritance, sale proceeds from property — POMIS is the only government-backed scheme that converts that lump sum into structured monthly cash flow at a guaranteed rate.
For minors above 10, the ₹3 lakh limit is significantly lower than the adult ₹9 lakh limit. Parents or guardians can open accounts on behalf of children, but the deposit cap applies.
Deposit limits and account structure
| Parameter | POMIS rule |
|---|---|
| Minimum deposit | ₹1,000 |
| Maximum deposit — single account | ₹9 lakh (raised from ₹4.5 lakh in Budget 2023) |
| Maximum deposit — joint account | ₹15 lakh (raised from ₹9 lakh in Budget 2023) |
| Deposit denomination | Multiples of ₹1,000 |
| Number of single accounts permitted | Multiple accounts; combined deposits across all single accounts must stay within ₹9 lakh |
| Number of joint accounts permitted | Multiple joint accounts; combined deposits across all joint accounts within ₹15 lakh; proportionate share counts toward each holder's individual limit |
The Budget 2023 revision doubled the deposit limits — a meaningful change for households deploying retirement or inheritance corpus into monthly-income instruments. The ₹15 lakh joint account limit is particularly useful for married couples who can structure joint ownership to maximise household POMIS exposure.
Household-maximisation structure example. A married couple with ₹24 lakh of investable capital can:
- Spouse A: Single account, ₹9 lakh
- Spouse B: Single account, ₹9 lakh
- Joint account (A+B): ₹6 lakh remaining
But the joint account's ₹6 lakh share for each spouse counts toward their individual single-account limit — so this structure works only if each spouse's combined exposure stays within ₹9 lakh.
A cleaner structure: Spouse A single ₹9 lakh + Spouse B single ₹9 lakh + Joint ₹6 lakh (effectively pushing the household to ₹24 lakh combined). The joint account's monthly income is split equally between the two holders.
How the monthly interest payout works
POMIS interest is calculated on the deposit amount at the prevailing rate (7.4% as of Q1 2026) and credited monthly to the depositor's linked savings account.
A worked example. ₹9 lakh single-account deposit at 7.4%:
- Annual interest: ₹9,00,000 × 7.4% = ₹66,600
- Monthly interest: ₹66,600 ÷ 12 = ₹5,550
- 5-year cumulative interest: ₹3,33,000
For a ₹15 lakh joint account at 7.4%:
- Annual interest: ₹15,00,000 × 7.4% = ₹1,11,000
- Monthly interest: ₹1,11,000 ÷ 12 = ₹9,250
- 5-year cumulative interest: ₹5,55,000 (split equally among joint holders)
For the maximised married-couple structure (₹24 lakh combined across single + joint accounts):
- Combined monthly household income: roughly ₹14,800
- 5-year cumulative interest: roughly ₹8,88,000
The principal is returned at maturity — POMIS is a non-cumulative, principal-protected scheme. The monthly interest is paid out and consumed; the principal stays at the original deposit amount throughout.
The 5-year tenure and premature closure
POMIS has a fixed 5-year tenure with no extension option (unlike SCSS's optional 3-year extension or PPF's indefinite 5-year extensions).
| Closure timing | Penalty |
|---|---|
| Within 1 year | Not permitted |
| 1-3 years | 2% of deposit amount deducted |
| 3-5 years | 1% of deposit amount deducted |
| At maturity (5 years) | Full principal returned, no penalty |
| Death of depositor | Nominee receives full principal + pro-rata interest; no penalty |
The first-year closure prohibition is strict — POMIS cannot be closed within 1 year of account opening for any reason except death of the depositor. This makes POMIS structurally less flexible than SCSS for immediate access if needed.
The post-1-year penalty structure (2% in years 1-3, 1% in years 3-5) is comparable to SCSS but slightly more lenient than NSC (which has stricter early-closure rules).
Maturity reinvestment. At the end of the 5-year tenure, the principal is returned to the depositor. POMIS does not have an auto-renewal feature — the depositor must reopen a new POMIS account if they want to continue. The reopening uses the prevailing rate at that time, which may differ from the original.
Tax treatment
POMIS has the simplest tax structure among Pillar 8 schemes:
Deposit contribution: NOT eligible for Section 80C deduction. POMIS deposits don't qualify for the 80C tax saving that PPF, SSY, EPF, and SCSS deposits enjoy. This is the main tax disadvantage versus competing instruments.
Monthly interest income: Fully taxable as "income from other sources" at the depositor's slab rate. The interest income is reported under the depositor's annual tax filing.
TDS treatment: TDS is NOT applicable on POMIS interest — depositors receive the full monthly interest credit without any tax deducted at source. The tax obligation must be self-managed at year-end ITR filing.
Section 80TTB benefit for seniors: For depositors aged 60+, Section 80TTB allows up to ₹50,000 of interest income deduction across all schemes (POMIS, SCSS, bank FDs, savings accounts). This effectively shields the first ₹50,000 of POMIS interest from tax for senior citizens.
For a non-senior depositor in the 30% slab earning ₹66,600 annual POMIS interest (₹9 lakh deposit), the effective after-tax annual income is roughly ₹46,620 (₹66,600 × 70%). For a senior under 80TTB, the after-tax income on the same ₹66,600 is much higher because the ₹50,000 deduction shields most of it.
POMIS vs SCSS vs bank monthly income plans
For Indians seeking guaranteed monthly income, three structurally different options compete:
| Factor | POMIS | SCSS | Bank Monthly Income Plan (MIP) |
|---|---|---|---|
| Eligibility | Any age | 60+ (with limited early-retiree exceptions) | Any age |
| Maximum deposit | ₹9L single / ₹15L joint | ₹30 lakh per individual | Varies by bank, typically ₹2-5 crore per FD |
| Current rate | 7.4% | 8.2% | 6.5-7.5% typically |
| Income frequency | Monthly | Quarterly | Monthly or quarterly (choice at FD opening) |
| Income to savings account | Yes | Yes | Yes |
| Tenure | 5 years (fixed) | 5 years (+3 year extension) | Choice — typically 1-10 years |
| Early closure penalty | 1-2% deposit penalty | Tiered 1-1.5% | Bank-defined, typically 0.5-1% |
| 80C deduction on deposit | No | Yes (₹1.5L cap) | Tax-saver 5-year FD: Yes; others: No |
| TDS on interest | No | Yes above ₹50,000 | Yes above ₹40,000 (₹50,000 for seniors) |
| Government backing | Yes | Yes | DICGC up to ₹5 lakh |
The choice usually comes down to:
- POMIS for non-seniors with ₹9-15 lakh seeking monthly income at a higher rate than bank MIP
- SCSS for 60+ seniors with larger corpus (up to ₹30 lakh) — the higher rate and 80C deduction make it structurally better
- Bank MIP for very large corpus (above SCSS's ₹30 lakh limit) or for the convenience of bank account linkage
A common household structure for retirees: max out one SCSS account each per spouse (₹60 lakh combined) at 8.2%, then use POMIS for the next ₹24 lakh at 7.4%, then bank FDs for any remaining corpus at 6.5-7%.
For broader retirement context, see what is Senior Citizen Savings Scheme (SCSS) and what is National Pension System (NPS).
What experts say
The India Post Monthly Income Scheme page is the authoritative source for current POMIS rules, eligibility, and account-opening procedure. The Ministry of Finance Department of Economic Affairs Small Savings page publishes the quarterly rate notifications.
The Income Tax Department's Section 80TTB documentation covers the senior-citizen interest-income deduction that can offset POMIS interest taxation. The Reserve Bank of India guidance on Small Savings Schemes covers the regulatory framework POMIS operates under.
For the broader Pillar 8 context, see what is Senior Citizen Savings Scheme (SCSS) (the 60+ alternative at 8.2%), what is Public Provident Fund (PPF) (the long-term accumulation alternative), and what is Sukanya Samriddhi Yojana (the girl-child savings scheme).
Frequently asked questions
What is the current POMIS interest rate? As of Q1 2026 the POMIS interest rate is 7.4% per year — set quarterly by the Ministry of Finance and reviewed for change every three months. POMIS pays interest monthly to the depositor's designated post office savings account or linked bank account. The 7.4% rate is higher than typical bank monthly income plans (usually 6.5-7%) and competitive with NSC's 7.7%, though lower than SCSS's 8.2% for those eligible for SCSS (60+ retirees). The rate stays fixed for the entire 5-year tenure once an account is opened — subsequent rate changes don't affect existing depositors.
Who can open a POMIS account? POMIS is open to any Indian resident — there is no minimum or maximum age restriction. Minors above age 10 can also open POMIS accounts in their own name, with the deposit limited to ₹3 lakh in the minor's account. Joint accounts are permitted with up to 3 adult holders sharing equal ownership and equal income from the scheme. NRIs and HUFs are NOT eligible to open POMIS accounts. Accounts must be opened at India Post offices — POMIS is not currently available at commercial banks (unlike PPF or NSC which can be opened at both).
What is the maximum I can deposit in POMIS? The maximum POMIS deposit is ₹9 lakh in a single account and ₹15 lakh in a joint account — both revised upward from the previous ₹4.5 lakh / ₹9 lakh limits in Budget 2023. Deposits must be made in multiples of ₹1,000. A depositor can hold multiple POMIS accounts but the combined deposits across all single accounts must stay within ₹9 lakh, and combined across joint accounts within ₹15 lakh (with proportionate sharing among joint holders). A married couple structure can effectively deploy ₹24 lakh across one individual ₹9 lakh account each plus a joint ₹15 lakh account.
How does POMIS compare to SCSS or bank monthly income plans? POMIS is open to all ages while SCSS requires age 60+ — making POMIS the practical monthly-income option for younger retirees, homemakers, or anyone seeking guaranteed monthly cash flow. POMIS pays 7.4%; SCSS pays 8.2% — SCSS is better for eligible 60+ retirees with larger corpus. Vs bank monthly income plans (typically 6.5-7%), POMIS offers a higher rate and government backing. The main POMIS limitations: ₹9-15 lakh maximum (lower than SCSS's ₹30 lakh), 5-year fixed tenure with premature closure penalty, and the post-office-only requirement that some find less convenient than bank accounts.
In summary
POMIS is a 5-year India Post savings scheme paying 7.4% annual interest credited monthly to the depositor's linked account, available to any Indian resident regardless of age. The Budget 2023 limit increases (₹9 lakh single / ₹15 lakh joint) allow a married couple to deploy up to ₹24 lakh combined, generating roughly ₹14,800 monthly household income. Interest is taxable at slab rate but with no TDS — seniors aged 60+ can shield up to ₹50,000 annual interest through Section 80TTB.
For Indians seeking guaranteed monthly income who don't qualify for SCSS (under age 60), POMIS is the highest-yielding government-backed monthly-income option. SCSS-eligible retirees with larger corpus typically prefer SCSS (8.2% vs 7.4%, plus 80C deduction); POMIS fills the gap for younger depositors, homemakers, or anyone wanting to combine monthly income from multiple schemes.
This batch closes with the three investment-style monthly/quarterly income schemes (SGB for gold exposure, SCSS for 60+ income, POMIS for universal monthly income). The next and final batch covers what is NSC vs KVP — the two remaining post-office fixed-term savings certificates — plus the Pillar 8 hub page.
Sources
- India Post, Post Office Monthly Income Scheme — indiapost.gov.in/Financial/Pages/Content/Post-Office-Monthly-Income-Scheme.aspx
- Ministry of Finance, Department of Economic Affairs, Small Savings Schemes Quarterly Rate Notifications — dea.gov.in
- Income Tax Department of India, Section 80TTB Senior Citizen Interest Deduction — incometax.gov.in
- Reserve Bank of India, Master Direction on Small Savings — rbi.org.in
- Government Savings Promotion Act, 1873 — egazette.gov.in
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