POMIS: Post Office Monthly Income Scheme Explained

The Post Office Monthly Income Scheme, or POMIS, is a savings scheme where you deposit a lump sum once and get a fixed interest payout every month for five years. Right now it pays 7.4% per annum, and the interest lands in your linked savings account each month instead of piling up till maturity. It is one of the simplest ways to turn a one-time amount into a predictable monthly income.

What Exactly Is POMIS?

POMIS is run by India Post and backed by the government, which makes it a very low-risk option. You invest a single amount, it stays locked for 5 years, and every month you receive interest calculated on that original deposit. At the end of the 5 years, you get your full principal back, untouched.

This is different from a bank recurring deposit or a mutual fund SIP, where you invest a bit every month. Here, you invest once and receive money every month instead.

How Much Can You Invest?

The scheme has clear limits depending on the type of account you open.

Account type	Minimum deposit	Maximum limit
Single account	Rs 1,000	Rs 9 lakh
Joint account	Rs 1,000	Rs 15 lakh

A joint account can be opened with up to three adults, and each holder’s share is treated equally for interest calculation. If you and your spouse already have single accounts, you can still open a joint one, as long as the combined investment across all your POMIS accounts does not cross the overall ceiling set by India Post rules.

What Is the Current POMIS Interest Rate?

For the April to June 2026 quarter, POMIS pays 7.4% per annum. The government reviews and resets small savings scheme rates every quarter, so this number can move up or down slightly in future quarters. Whatever rate is fixed when you open the account is usually the one that applies for that quarter’s fresh deposits, and the government notifies any changes before each new quarter begins.

To put it simply: if you invest Rs 9 lakh at 7.4%, your annual interest works out to Rs 66,600, which comes to Rs 5,550 a month. That monthly amount gets credited directly to your post office savings account, which you can then withdraw or use as regular income.

How Is POMIS Interest Taxed?

This is the part many investors get wrong. POMIS does not deduct TDS (tax deducted at source) on the interest it pays you. But that does not mean the interest is tax-free.

The full interest you earn from POMIS is taxable in your hands, added to your total income and taxed according to your income tax slab. So if you fall in the 20% tax bracket, you effectively lose 20% of that interest to tax when you file your return, even though nothing was deducted upfront.

Another point worth remembering: POMIS does not offer any Section 80C deduction. Your original investment does not reduce your taxable income the way PPF or NSC contributions do. It is purely an income-generating scheme, not a tax-saving one.

Can You Withdraw or Close a POMIS Account Early?

Yes, but there are conditions. You cannot touch the account in the first year at all. After that, premature closure is allowed, but a penalty applies depending on how early you exit:

• Closing between 1 and 3 years: a deduction of 2% of the deposit
• Closing between 3 and 5 years: a deduction of 1% of the deposit

This penalty is deducted from your principal before it is returned to you, so it is worth holding on for the full term if you can, especially if you invested a large sum like Rs 9 lakh or Rs 15 lakh.

What Happens at Maturity?

When the 5-year term ends, your original deposit is returned in full, with no penalty or reduction. Many retirees choose to reinvest that amount into a fresh POMIS account to keep the monthly income cycle going, while others move it into another scheme like a Senior Citizens Savings Scheme, NSC, or a bank fixed deposit, depending on what suits their needs at that time.

Who Should Consider POMIS?

POMIS works best for people who want steady monthly cash flow rather than a bigger amount at the end. It is especially popular with:

• Retirees who want a monthly income to cover household expenses, similar to a pension
• Conservative investors who prefer government-backed safety over market-linked returns
• Anyone holding a lump sum (say, from a retirement payout or property sale) who wants to put it to work immediately rather than let it sit idle

It is not designed for people chasing high growth or wanting to save tax, since there is no 80C benefit and the returns, while stable, are modest compared to equity-linked options over the long run.

How Do You Open a POMIS Account?

Opening a POMIS account is straightforward and can be done at any India Post branch that offers savings bank services. You will need a few standard documents and a small amount of paperwork.

Here is what the process usually looks like:

1. Visit your nearest post office and ask for the POMIS account opening form.
2. Fill in the form with your personal details and nominee information.
3. Submit KYC documents such as Aadhaar, PAN card, and a recent passport-size photograph.
4. Deposit the amount by cheque or cash, ensuring it falls within the Rs 1,000 minimum and the applicable maximum limit.
5. Link the account to an India Post savings account so that monthly interest can be credited automatically.

Most post offices will process this within a day, and you will receive a passbook that records your deposit, the interest rate applied, and the monthly credits going forward. Keep this passbook safe, since you will need it for any future transactions, premature closure requests, or maturity claims.

If you already have a post office savings account, linking it to your new POMIS account makes the monthly payout process smoother, since the interest is credited automatically every month without you needing to visit the branch each time.

POMIS vs Other Post Office Schemes

If you are comparing POMIS with PPF or NSC, remember the core difference: POMIS pays out monthly and returns your principal at the end, while PPF and NSC let your money compound and grow, paying out only at maturity (PPF tax-free, NSC taxable in the final year). POMIS is about liquidity and income, not compounding.

If your goal is monthly expenses, POMIS fits naturally. If your goal is building a bigger corpus over 5 or 15 years, PPF or NSC may serve you better.

Key takeaways

• POMIS pays 7.4% per annum (Apr-Jun 2026 quarter) as monthly interest on a lump-sum deposit locked for 5 years.
• Maximum investment is Rs 9 lakh for a single account and Rs 15 lakh for a joint account; minimum deposit is Rs 1,000.
• No TDS is deducted, but the entire interest is taxable as per your income tax slab, and there is no Section 80C benefit.
• Premature closure is allowed after 1 year, with a 2% penalty if closed within 1-3 years and 1% if closed within 3-5 years.
• On maturity, the full principal is returned and can be reinvested into a fresh POMIS or another scheme.
• Best suited for retirees and conservative investors who want predictable monthly income rather than tax savings or growth.

FAQs

Is POMIS interest tax-free?
No. POMIS interest is fully taxable and added to your total income for the year, even though no TDS is deducted at source. You need to declare it yourself when filing your income tax return and pay tax based on your applicable slab.

Can I open more than one POMIS account?
Yes, you can hold multiple POMIS accounts, including single and joint ones, but the combined investment across all your accounts cannot exceed the overall limits set for single (Rs 9 lakh) and joint (Rs 15 lakh) holdings under India Post rules.

What happens if I need my money before 5 years?
You can request premature closure after completing 1 year. A 2% penalty applies if you close between year 1 and year 3, and a 1% penalty applies if you close between year 3 and year 5. No withdrawal is allowed in the first year.

Does POMIS offer compound interest?
No. POMIS pays simple interest every month based on your original deposit, and this interest is credited to your savings account rather than added back to your POMIS principal, so there is no compounding effect within the scheme.

Is POMIS better than a bank fixed deposit for monthly income?
POMIS offers government backing and a fixed rate reviewed quarterly, similar in spirit to an FD with monthly payout. Compare the current rate with monthly-payout FDs from your bank and factor in the investment limits, since POMIS caps your deposit while bank FDs generally do not.

Can a joint account holder withdraw independently?
In a joint POMIS account, all holders typically need to act together for withdrawals or closure, though the interest can be split equally among joint holders as per India Post’s account rules. Check with your local post office for the specific process for signatures and withdrawal.