Post Office Monthly Income Scheme (POMIS)
The Post Office Monthly Income Scheme (POMIS) is a government-backed savings deposit at post offices offering a fixed monthly interest payout at a rate currently set at 7.4% per annum, with a maximum investment limit of Rs 9 lakh for single accounts and Rs 15 lakh for joint accounts, and a 5-year tenure.
POMIS is one of India's most widely used regular-income instruments, particularly favoured by retirees, pensioners, and conservative investors who need predictable monthly cash flows without equity market exposure. The scheme is operated through India Post's extensive branch network across urban and rural India, providing access to post offices in locations where bank branches may be absent or inconvenient.
The mechanics are straightforward: an investor deposits a lump sum (minimum Rs 1,000, maximum Rs 9 lakh in a single account or Rs 15 lakh jointly), and the post office credits a fixed monthly interest to the investor's post office savings account or bank account via ECS. At the current rate of 7.4% per annum, a Rs 9 lakh single account generates approximately Rs 5,550 per month in interest income. The interest rate is set by the Ministry of Finance and revised quarterly alongside other small-savings rates, though the rate applicable at the time of account opening remains fixed for the tenure of that deposit.
The 5-year tenure is non-negotiable — there is no option to extend beyond 5 years (a fresh account must be opened). Premature closure is permitted after 1 year, with a 2% penalty on principal if closed between 1 and 3 years, and a 1% penalty if closed between 3 and 5 years. The penalty deduction from principal acts as a deterrent against premature exit and ensures that investors commit to the full tenure to maximise benefit.
POMIS interest is fully taxable as 'income from other sources' with no Section 80C deduction on the principal invested. TDS is not deducted at source on POMIS interest (unlike bank FDs), which means investors must self-report the monthly interest in their ITR filings and pay advance tax if applicable. This absence of TDS has historically led to under-reporting of POMIS income among some investors, which tax authorities have noted as a compliance gap.
For senior citizens, POMIS is often evaluated alongside the Senior Citizen Savings Scheme (SCSS), which offers higher interest (currently 8.2%), a higher individual investment cap (Rs 30 lakh), and quarterly rather than monthly payouts. SCSS is generally preferred for senior citizens due to its higher return, but POMIS remains relevant for non-senior investors seeking a government-guaranteed regular income, particularly for jointly held family accounts with the Rs 15 lakh combined limit.