The Post Office Monthly Income Scheme (POMIS) is a five-year government savings scheme that pays a fixed rate of interest as a monthly payout rather than at the end. You can hold up to ₹9 lakh in a single account or ₹15 lakh in a joint account, and the rate, around 7.4% for the current quarter, is set by the government and revised every quarter. It offers no Section 80C benefit, and the monthly interest is taxable.
The appeal is the shape of the return, not its size. Instead of compounding quietly, POMIS hands you a predictable sum every month, which is why retirees and anyone wanting a steady income stream tend to look at it.
POMIS at a glance
The five-year POMIS cycle
- Day 1Deposit a lump sum, once
- Every monthFixed interest paid out to you
- Year 5Full principal returned; no auto-renewal
- Day 1Deposit a lump sum, once
- Every monthFixed interest paid out to you
- Year 5Full principal returned; no auto-renewal
What is the Post Office Monthly Income Scheme?
POMIS is one of the small-savings schemes run through India Post. You deposit a lump sum once, and the post office pays you interest every month for five years. At the end of the term you get the full principal back. The rate is a government-set figure, revised each quarter, but the rate that applies to your account is the one in force on the day you open it, fixed for the whole term.
It is not a market product. There is no unit value that rises and falls, and the monthly amount does not change. That predictability is the point, and also the limit: the return will not beat a strong year in a market-linked option, and it is not designed to.
How much can you invest in POMIS?
There are two ceilings, and they matter:
- Single account: up to ₹9 lakh.
- Joint account: up to ₹15 lakh, shared across the holders.
A joint account can have up to three adults, and each is treated as holding an equal share. The caps apply to your total POMIS holdings across every post office, not per account, so you cannot stack several ₹9 lakh single accounts. A minor can have an account opened by a guardian, and a minor above ten can operate one within limits.
How does the monthly payout work?
Interest is calculated on your deposit and paid out once a month, starting one month after you open the account. You can have it credited straight to a linked post office or bank savings account, which makes it behave like a monthly income.
A small but useful detail: if you do not withdraw a monthly payout, it simply sits in the linked account. It does not earn the POMIS rate again, so leaving it idle means it earns only ordinary savings interest. People who want the interest itself to keep working sometimes route the monthly payout into a recurring deposit, so the income compounds elsewhere rather than sitting still.
Is POMIS interest taxable?
Yes, and this is where POMIS is often misread. The monthly interest is fully taxable, added to your income under income from other sources and taxed at your slab. There is no Section 80C deduction on the amount you put in, unlike some other post office schemes.
Post office deposits do not have tax deducted at source in the way many bank fixed deposits do, so no TDS is taken from the payout. That is not the same as tax-free. You are responsible for declaring the interest each year and paying tax on it, so budget for it rather than treating the full monthly figure as spendable.
Can you exit POMIS early?
You cannot close the account in the first year. After that, early closure is allowed with a penalty deducted from your principal:
- Between one and three years: roughly 2% of the deposit is deducted.
- Between three and five years: roughly 1% is deducted.
You receive the balance after the deduction. Because the monthly income stops the moment you close, POMIS suits money you genuinely will not need as a lump sum for five years. If a portion might be needed sooner, keeping that part somewhere more liquid, such as an emergency fund, avoids the penalty entirely.
Related NYVO guides
- Post Office Savings Schemes: The Full List – how POMIS sits alongside NSC, KVP, SCSS, RD and the rest, with a side-by-side comparison.
- Recurring Deposit (RD): How It Works – one common home for the monthly POMIS payout, so the income keeps compounding.
- Senior Citizen Savings Scheme (SCSS): A Guide – the other quarterly-income post office scheme people over 60 often compare with POMIS.
POMIS is best understood for what it is: a five-year way to convert savings into a fixed, taxable monthly income, capped and government-backed. Know the caps, plan for the tax on the payout, and it does one job cleanly.
