Post Office Monthly Income Scheme: 7.4% Payout Guide

The Post Office Monthly Income Scheme (POMIS) pays 7.4% a year for accounts opened in October–December 2026, credited every month for five years. A single holder can invest up to ₹9 lakh (₹5,550 a month at the current rate) and a joint account up to ₹15 lakh (₹9,250 a month). It suits anyone who wants a predictable, government-backed monthly payout, though the interest is fully taxable and the money cannot be touched in the first year.

How POMIS works

POMIS is a small savings scheme run by the Department of Posts and backed by the Government of India. As of October 2026:

• Deposit: One lump sum per account. Minimum ₹1,000, in multiples of ₹1,000.
• Maximum: ₹9 lakh in a single account and ₹15 lakh in a joint account, across all your POMIS accounts. In a joint account, each holder is treated as having an equal share for the individual limit.
• Tenure: 5 years from the date of opening.
• Rate: The rate on the opening date stays fixed for the full term.
• Payout: Interest is paid at the end of every month from the date of opening, to your post office savings account, or transferred to a bank account through ECS.
• Who can open: Resident individuals, up to three adults jointly, a guardian for a minor or person of unsound mind, and a minor aged 10 or more in their own name.

Interest that is not withdrawn does not earn additional interest inside POMIS. If you do not need the monthly money, move it somewhere productive, for example a post office recurring deposit.

POMIS at a glance

Worked example: how much monthly income

The monthly payout is simply: deposit × annual rate ÷ 12.

Over five years, a ₹9 lakh account pays ₹5,550 × 60 = ₹3,33,000 in interest, and you get the ₹9 lakh back at maturity.

Taking it further. A couple could hold one joint account of ₹15 lakh, or each could hold a single account of ₹9 lakh. Two single accounts allow ₹18 lakh in total, paying ₹11,100 a month. Check that each person's share across all their POMIS accounts stays within the ₹9 lakh individual limit.

What if you close early? Suppose you put ₹9 lakh in and need the money after 20 months. You would get the deposit minus 2%: ₹9,00,000 − ₹18,000 = ₹8,82,000, having already received 20 months of interest (₹1,11,000). If you close after 40 months instead, the deduction falls to 1%, or ₹9,000.

All figures assume the current rate and are illustrative. The FD calculator can show how a monthly-payout bank FD compares.

Tax on POMIS in FY 2026-27

• No deduction for the deposit under either regime. POMIS is not on the Section 123 (old Section 80C) list.
• Interest is taxable at your slab rate as "income from other sources", in the year it is credited.
• TDS: The post office generally does not deduct TDS on POMIS interest, but that does not make it tax-free. It appears in your Annual Information Statement (AIS), and you must report it in your return.
• Senior citizens under the old regime can deduct up to ₹50,000 of deposit interest (old Section 80TTB, now within Section 153 of the Income-tax Act, 2025).

A worked check for a 30% slab taxpayer: ₹66,600 of yearly interest loses ₹66,600 × 31.2% = ₹20,779 to tax, leaving ₹45,821, an effective post-tax yield of about 5.1%. For someone whose income stays under the new regime's ₹12 lakh rebate limit, the tax may be nil. See tax on FD, mutual funds and stocks for how interest income is taxed.

POMIS vs SCSS vs bank FD

If you are a senior citizen, the Senior Citizen Savings Scheme usually comes first because it pays 8.2% and allows ₹30 lakh, while POMIS is a useful second layer that pays monthly rather than quarterly. If you are under 60, POMIS is one of the few government-backed products that pays out monthly. Bank FDs are more flexible and have no upper limit, which matters if you want to build an FD ladder with staggered maturities.

Is POMIS right for you?

POMIS works well for:

• Retirees and people with a lump sum (from a property sale, gratuity or inheritance) who want steady monthly cash flow.
• Parents who want a fixed monthly amount for a child's school fees or a dependant's expenses.
• Conservative investors in low tax brackets, for whom the taxable interest costs little.

It is less suitable if:

• You are in the 30% slab and do not need the payouts; tax cuts the effective yield to about 5%.
• You may need the money within a year.
• You need protection against inflation over the long term. A fixed ₹5,550 a month buys less every year; see inflation's impact on savings.

How to open a POMIS account

1. Open a post office savings account first, if you do not already have one; the monthly interest is credited there.
2. Fill in the POMIS account opening form at the post office, with a nominee.
3. Submit KYC: Aadhaar, PAN and photographs.
4. Deposit by cheque (cash is accepted for smaller amounts).
5. Optionally, set up a standing instruction to move monthly interest into a post office recurring deposit.

At maturity, you can withdraw the deposit or reinvest at the rate prevailing then; the account itself cannot be extended.

Key takeaways

• POMIS pays 7.4% a year for October–December 2026, fixed for five years and paid monthly.
• Maximum deposit is ₹9 lakh single or ₹15 lakh joint; ₹9 lakh pays ₹5,550 a month at the current rate.
• No withdrawal in year 1; afterwards 2% of the deposit is deducted before 3 years and 1% from 3 to 5 years.
• Interest is fully taxable and there is no deduction on the deposit; report it even if no TDS is cut.
• Seniors usually do better in SCSS first, with POMIS as a monthly-income top-up.
• Fixed payouts lose value to inflation, so pair POMIS with growth assets for long horizons.